December 2023 Top 10

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ESO Fund's top 10 events affecting the private markets for the month of December 2023.

December's Top Ten:

  1. OpenAI is continuing to dominate, as its annualized revenue has reportedly topped $1.6 billion. The sky high growth OpenAI has experienced this year isn’t expected to slow down any time soon, with some executives believing its annualized recurring revenue will nearly quadruple next year to $5 billion. The news comes as the company is hoping to raise new funding at a valuation of at least $100 billion.
  2. Buzzfeed, a once high-flying digital media startup, is close to an agreement to sell most of its Complex Networks business to Ntwrk, a live video shopping and e-commerce startup. However, the price will likely be far below the $150 million price tag that Buzzfeed CEO Peretti was hoping to get. People familiar with the sale have indicated the ticket price is likely to be closer to $100 million, which puts Buzzfeed in a pickle as they will have to raise another $100 million to pay off most of what it owes on convertible notes that come due for repayment in December of 2024.
  3. Palo Alto Networks completed their acquisition of Talon Cyber Security at the end of December for $625 million, according to Pitchbook. The purchase will allow Palo Alto Networks to enhance browser security technology.
  4. Although not at the level of OpenAI, their competitor, Anthropic, is projecting to generate more than $850 million in analyzed revenue by the end of 2024. The news comes as the company is in discussions to raise $750 million in a funding round led by Menlo Ventures.
  5. Reddit, one of the top VC-backed contenders for a 2024 IPO, is expected to finish the year with ad revenue growth of 20% to $800 million. While this growth rate is faster than companies such as Snap and Pinterest, its below their target to achieve over $1 billion in ad revenue by 2023.
  6. Okta, the identity and access management company, is acquiring Spera for approximately $100 million to $130 million. Spera has around 25 employees and had raised $10 million prior to the Okta acquisition.
  7. Antitrust red tape continues to impact the VC world, as Adobe and Figma call off their pending acquisition due to no longer seeing a path toward regulatory approval. The deal process started 15 months ago at a price of $20 billion. Adobe will be required to pay Figma a reverse termination fee of $1 billion in cash as a result.
  8. VAST Data, a data infrastructure company, raised $118 million in its latest funding round during December. The round valued the company at $9.1 billion, more than double what it was worth two years ago. The company is rumored to be preparing for an initial public offer in 2024.
  9. Elon Musk’s AI startup, X.AI, filed with the SEC in December to raise up to $1 billion in an equity offering. The company has already brought in nearly $135 million from four investors.
  10. The VC winter has begun taking casualties, with OpenView abruptly winding down. The wind down comes just eight months after securing $570 million for its Fund VII to invest in high growth startups, and was a result of key partner departures and paper losses. Countdown Capital also shut down last month, with solo GP Jai Malik blaming “funding industrial startups is not inefficient enough to justify our existence” as the reason for returning capital to limited partners.

Why this matters: OpenAI and Anthropic’s growth numbers are no joke, and likely indicate money is going to be continuing to flow into the AI sector in 2024. However, the question remains if these smaller AI companies will be able to capture enough meaningful market share from these big guys.

For more insights from ESO Fund check out our newsletter ESO's Monthly Start-Up which lands in your inbox the first Tuesday of every month.

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