Good day. The software selloff that sent markets on a rollercoaster ride last week wasn’t only a problem for public companies. Some aging venture-capital funds also have reason to worry.

Levels of unspent cash that have been committed to U.S. venture funds but not yet invested—commonly called dry powder—have been stubbornly high over the past five years. In funds that are two to five years old, dry powder ticked up nearly 7% from 2024 to 2025 and now accounts for 52% of all dry powder, according to market data firm PitchBook.

Some of that cash is stuck in funds raised to invest in software startups, a sector that has been upended by advances in artificial intelligence. Falling valuations of public software companies could add to the challenge for these older-vintage venture funds.

“You have a massive amount of capital raised under one set of macro assumptions now operating in a very different reality,” Emanuele Colonnelli, a professor of finance at the University of Chicago Booth School of Business, said.

Although some funds may be able to adjust investment strategies, dry powder that has been earmarked for subsequent funding rounds typically can’t be diverted to other companies, according to Tomasz Tunguz, managing partner at Theory Ventures.

There is a silver lining scenario: The selloff better aligns expectations on pricing and future values, releasing dry powder through high-conviction new bets and necessary follow-on investments in a portfolio’s clear winners.

"The market always reacts to the here and now, and we certainly don't believe that SaaS is dead,” Sandesh Patnam, managing partner at private and public market investor Premji Invest, said. 

Read the full article.

And now on to the news...

Jennifer Garner startup goes public. Once Upon a Farm is betting the MAHA era is its moment.

• The maker of organic children’s food made its debut on the New York Stock Exchange on Friday, during a time when food is under scrutiny by consumers and government officials.
   
• Once Upon a Farm, co-founded by veteran food executive John Foraker and actress Jennifer Garner, caters to millennial and Gen Z parents with pouches, oat bars, frozen meals and pantry snacks made without added sugar, preservatives or artificial ingredients.
   
• U.S. consumers are more focused than ever on health and wellness, paying particular attention to foods’ ingredients and the way they are made. The Trump administration’s “Make America Healthy Again” movement is fueling that focus, sending food companies scrambling to update their offerings to satisfy regulators as well as consumers.

Elon Musk took a gulp of water on stage at the World Economic Forum in Switzerland last month and started talking up one of his latest passions: data centers orbiting Earth. “The lowest-cost place to put AI will be space,” Musk said. “That will be true within two years, maybe three.” Behind the scenes, the groundwork was already under way for a megamerger of SpaceX and xAI—his artificial-intelligence startup—intended to make the sci-fi vision a reality. Within days, bankers from Morgan Stanley provided an estimated valuation of both companies that could be used to structure a merger, according to people familiar with the matter and investor disclosures viewed by The Wall Street Journal.

The Trump administration has greenlighted its first new bank, and it is a startup that takes its name from a mountain where dwarves stored their treasure in J.R.R. Tolkien’s “The Hobbit.” Erebor Bank, which will cater to startups and high-net-worth individuals, on Friday became the first newly created bank to receive a national charter under the second Trump administration. Launching with $635 million in capital, it says it will occupy a hole in the market left by the collapse of Silicon Valley Bank, which served California’s tech companies, founders and venture-capital firms. The bank is the brainchild of Palmer Luckey, one of the tech industry’s early supporters of Donald Trump, and its funders include Lux Capital, Andreessen Horowitz, 8VC, Elad Gil and Peter Thiel’s Founders Fund.

People

AI company Seekr said it has named Darcey Villasenor its chief people officer. She has more than two decades of experience with venture- and private-equity-backed technology companies. Villasenor joined Seekr from SpryPoint, where she was head of people and culture.

Lunar Energy said it raised $102 million in a Series D round led by B Capital and Prelude Ventures and a $130 million Series C round led by Activate Capital. The company, founded in 2020, said it develops intelligent software and advanced hardware to electrify homes and connect communities to form clean, resilient virtual power plants.

Willie’s Remedy+, an Austin, Texas-based line of THC-infused beverages inspired by Willie Nelson, landed $15 million in Series A funding. Left Lane Capital led the round, which saw participation from Second Sight Ventures.

Apeiron Labs, a Cambridge, Mass.-based startup building a platform to deliver real-time ocean intelligence, closed a $9.5 million Series A round co-led by S2G Investments, RA Capital Management's Planetary Health Fund and DYNE.

Advance, a financial platform built for insurance, said it has raised more than $8.5 million in seed funding. The round was led by nvp Capital, with participation from Crystal Venture Partners and other investors.

• I’m Signing Off From This Column After 12 Years. Here’s What’s Changed in Tech.
   
• A Critical AI Niche Is Dominated by One Little-Known Japanese Company
   
• The Car Industry Is Racing to Replace Chinese Code
   
• Trump’s New Tax Law Saved Amazon Billions

• Google workers demand end to cloud services for immigration agencies (New York Times) 
   
• AI math startup cracks previously unsolved problems (Wired)

This newsletter was compiled by Matthew Strozier and Brian Gormley. 

Share your tips, comments and questions: vcnews@wsj.com

The team: Matthew Strozier, Yuliya Chernova, and Brian Gormley.

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