April 24, 2025

Model behavior

Hi there,

We just dropped our ninth annual AI 100 list. See the most promising emerging AI companies here.

And now, here is this week’s Hot or Not.

Hot: LLM explainability

Anthropic just made its first-ever direct investment in a startup — and it’s all about cracking open the AI black box.

The Claude-maker joined Goodfire’s $50M Series A with a $1M check, backing the startup’s push to decode large language models (LLMs) from the inside out.

Goodfire’s platform, Ember, gives engineers and AI teams the tools to inspect how LLMs make decisions and adjust that behavior in real time.

It’s part of a growing field known as mechanistic interpretability — essentially reverse-engineering neural networks to make them safer and more controllable.

We spotlighted mechanistic interpretability in our 2025 Tech Trends report, forecasting a wave of demand for transparent AI in industries like healthcare, finance, and defense.

Goodfire was among the 6 startups we profiled. See the other 5 in the full report.

Not: Tesla's car business

Tesla’s profits are slumping — and its auto business is under pressure.

The EV giant reported a 71% drop in Q1 profit, then trimmed its full-year capital spending plans by $1B. In a Wednesday filing, Tesla said it now expects $10B in capex for 2025, down from the $11B it projected just three months earlier.

On the company’s Q1 earnings call, Elon Musk said Tesla isn’t on “the ragged edge of death” but acknowledged a rocky road ahead. Rising tariffs, brand backlash, and softening demand are weighing on the company’s most important segment: automotive.

Musk is betting big on a pivot — away from traditional personal vehicle sales and toward “moonshots” like robotaxis and humanoid robots. He predicted Tesla could become “the most valuable company in the world by far,” but that hinges on flawless execution — and investor patience.

Meanwhile, Tesla’s energy business is gaining traction. As one exec put it, that side of the business is thriving — but “the negative impact of vandalism and unwarranted hostility” is dampening auto demand in some markets.

Still, cars are the backbone of the business today. Tesla’s automotive segment brought in nearly 79% of its revenue in 2024, far outpacing its energy and services units.

Catch the full breakdown of Tesla’s Q1 FY 2025 earnings — and why its core car business isn’t the main event anymore.

Hot: Bitcoin

Bitcoin is climbing again — but this time, it's not riding tech’s coattails. 

After spiking 8% in just two days to top $90K, BTC is showing signs of decoupling from US tech stocks and tracking closer to gold’s safe-haven status. 

The shift comes as institutional interest in crypto rebounds, with Q1’25 funding for blockchain companies hitting $6.6B — on pace to surpass $20B for the year, per CB Insights data.

Bitcoin’s recent rally — up 20% since April 7 — suggests investors are rethinking digital assets as hedges against macro uncertainty.

Get the data behind crypto’s comeback in our State of Venture Q1’25 report.

Not: Non-AI startups 

Startups without AI are feeling the squeeze.

Across categories, the median deal size for AI startups in Q1’25 was 67% larger than for their non-AI peers — and in areas like auto tech and robotics, the gap was even wider.

Investors are betting on AI’s ability to drive measurable results — from regulatory approvals to operational efficiency — and rewarding companies that can prove it.

That’s pushed capital downstream to mature AI-native platforms with traction, while non-AI startups are increasingly boxed out. If you’re not building with AI, raising without it is only getting harder.

According to CB Insights Commercial Maturity scores (as seen below), AI startups are also outpacing their peers on commercial deployment and distribution — a sign that the funding edge may be about more than just hype.

Check out the latest post from Jason Saltzman, Head of Insights, for more on the data behind the shift.

The +1

Joint effort. When hot dogs go down, weed use goes bluntly up.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

​​P.S. Want to hear directly from the analysts who picked this year’s most promising AI startups? We just dropped the recording of our AI 100 briefing — packed with insights on the companies, trends, and tech bets shaping 2025. Get the recording here.

Get started with CB Insights

CB Insights' emerging technology insights platform provides all the

analysis and data from this newsletter. Our data is the easiest way to discover and respond to emerging tech. 

Was this email forwarded to you? Sign up here