Pre-Money: Aug 5, 2024

KPIs

The week’s top performance indicators

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Dots & Lines

The week’s top takeaways

• Daylight comes into view: For the first time in two years, venture investors are contemplating whether the worst is over and brighter times lie ahead. Last week saw the year’s biggest IPO, another signal that markets are receptive to strong private companies. July was a busy fundraising month following on the heels of an energized Q2. And prediction markets foresee an impending rate cut or two on the horizon for this fall. Capital calls, scarce throughout the previous few quarters, ticked up again in Q2, suggesting GPs are increasingly confident writing checks. Still, optimism is tempered by the continued challenges to finding liquidity, lengthy fundraising cycles, and rising concerns about the overall economy. But investors can look forward with more bullishness than where their sentiment has been for the past couple years.

• VCs and elections: The profession has a rep for quickly gaining expertise on topics like pandemics, missing submersibles and climate. Now it’s time for elections to come to the fore. After power brokers like a16z and Peter Thiel cast their lot for Trump, 650 VCs and counting joined “VCs for Kamala,” pledging support to the Veep’s campaign and adding to her growing cash stockpile. The escalating political battles drive downstream effects as well. They drew standout founder, investor and conservative commentator David Sacks into a kerfuffle with Rippling founder Parker Conrad ostensibly about how things went bad when they were together in the C-suite at Zenefits. The spotlight on VC also appears to be spurring interest in the ongoing fundraise for the $125M Fund II of Narya Capital, the fund VP contender JD Vance recently left. As the fall arrives, expect it to get louder and to entwine politics and investing further, like it or not.

• Search gets defensive: Google’s search has been one of the most profitable and defensible business models of all-time. But now the model is under threat of disruption from ambitious AI companies who envision a future where answers to a question are a better UX than lists of links. Perplexity, which is building an AI search engine and is already valued in the billions, launched an ad business featuring a rev share to publishers. OpenAI, busy battling it out for model superiority with open- and closed-source competitors, also announced a plan to throw its hat in the ring. All of these competitors are fighting to gain access to rich data sources, and Anthropic was the latest to get tripped up scraping data from external sites without authorization. Look for massive escalation as an Internet cornerstone comes further under attack.

• Personal devices keep coming: It was just a few months back that the Humane Pin failed to move the needle, and other companion AI tooling has muddled along as well. But they keep coming. The Friend is a yo-yo sized wearable using AI to provide an always-on partner to keep you company. It carries a price of $99 and will begin shipping in January. Its founder famously used much of the $2.5M seed round to purchase friend.com for $1.8M, a decision that drove a lot of commentary and awareness. Elsewhere, Bee raised $7M from Exor, Greycroft and others to build a $49 per month app that listens in on as you work in order to create lists, plans and reminders to enhance productivity. Personal AI wearables remains a tough space, and entrants are making products that are clever but do not seem fully baked. Still, the reward available for the first one to go viral is massive enough, so expect to keep seeing valiant attempts.

• Pre-IPO companies jockey for position in the IPO backlog, as Stripe bought Lemon Squeezy, a payment processor, and Canva bought Leonardo, a genAI tooling platform

• More than $6B of venture has been invested into vertical farming over the past five years but have yet to harvest returns

• Also in agtech, LA-based superfruit producer Agrovision raised a $100M round from Aliment Capital, valuing the company at more than $1B

• Another look at founder-market fit, a key component of startup success to evaluate when going to work at or investing in a new business

• London-based Flo Health, a consumer app tracking fertility and reproductive health for 70M monthly actives (MAU) and on track to generate $200M in revenue, raised $200M from General Atlantic

• Bilt Rewards, a loyalty program for renters based in New York, raised $150M from Teachers’ Venture Growth at a valuation said to be $3.25B

• Osapiens, a German enterprise platform to track ESG regulations, raised a $120M Series B led by Goldman Sachs

• Kobold, a startup based in Berkeley, CA, is leveraging AI to revolutionize mining metals essential to the coming energy transition, and is in the market to raise $2B

• Character AI licensed its LLM to Google, who also hired its founders, a pattern resembling a new “acqui-hire” similar to what Inflection AI did earlier this year, and which may come under regulatory scrutiny

• China and the US are wrestling over access to the AI chips that will enable advanced national security technology, another geopolitical conflict to remain cognizant of

• Texas, a pandemic hotspot for startups and tech anchored by its hub in Austin, has seen funding drop to its lowest level since 2018