Good day. TechCrunch Disrupt is over, and now only time will tell which predictions made by venture capitalists and entrepreneurs at the conference—many involving AI, and some even humanity itself—will ring true.

Will generative AI advance to the point where humans dating bots will be normal? This was predicted by Dmitry Volkov during a talk titled “AI and the Future of Digital Connection.” Volkov is the founder and chief executive of Social Discovery Group, a social-networking company, investment fund and venture studio.

Will AI replace the role of journalists? Not likely, said May Habib, co-founder and chief executive of generative AI platform Writer on the panel called “AI Can Write Words—But Can It Understand Them?” Bots might not make great reporters, she said, and missing the nuances of language could make for stilted wording.

Will the cost of integrating AI into companies’ processes or products eventually pencil out? As models get more effective, costs will go down, predicted CapitalG partner Jill Chase on a panel examining how software startups can rapidly grow in today’s market.

The San Francisco conference played host to scores of panelists and an exhibition hall where eager founders promoted their young companies. Entrepreneurs and investors were optimistic despite the sagging venture market.

Global venture deal activity has experienced a significant setback this year, dropping 24% to 36,176 deals during the first eight months of the year compared with the same period last year, according to analytics firm GlobalData.

Despite the generally cheery mood at Disrupt, acknowledgement of the tough times occasionally did surface. During the panel on how software startups can grow, the moderator asked what companies could do to adjust to the fact that they are “not in Kansas anymore” and can no longer burn cash indiscriminately. Chase from CapitalG said, for many startups, reducing spending on sales and marketing would be prudent.

And now on to the news...

Cisco’s largest-ever acquisition. Cisco Systems has struck a $28 billion deal to buy analytics and security-software company Splunk as the networking-equipment giant looks to tap further into the rise of artificial intelligence, The Wall Street Journal reports.

• The deal will create one of the world’s largest software companies, Cisco said, and will immediately boost its cash flow in the first year after closing, which is expected by the end of September 2024. The combination will expand Cisco’s software portfolio and produce more recurring revenue, it said, along with enabling Cisco to provide customers with AI and other tools to analyze their data and detect security threats.
   
• Splunk, founded in 2003, makes software used by companies’ information-technology and security operations to monitor and analyze data. Cisco sells network equipment such as routers, switches and provides security services as well as software products.

While quantum hardware remains immature, companies say they found another way to put complex quantum algorithms to work: running them on the same chips used for powering artificial intelligence, WSJ reports. This process, known as simulation, has in recent years received a boost from the growing scale of computing power that graphics-processing units and other advanced chips offer. “Nobody thought this was possible,” said Jack Hidary, CEO of quantum software company SandboxAQ, which spun off from Google in 2022. “We don’t have to wait for a quantum computer. We’re not using a quantum computer, but we’re using quantum equations, quantum software on GPUs. And that’s a big breakthrough.”

The Biden administration’s antitrust cops sued one of the country’s biggest anesthesiology providers on Thursday, launching a novel assault on Wall Street ownership of healthcare companies, WSJ reports. The Federal Trade Commission’s lawsuit against U.S. Anesthesia Partners is one of the first challenges of a private-equity strategy known as a roll-up, in which smaller companies in the same industry are bought up and combined to create a more powerful competitor.

Venture firm GGV Capital said it will split its China operations from the rest of the firm, following scrutiny by the U.S. government of the firm’s activities in China.

“Over the last decade, the investment landscape has shifted significantly, and the operating environment has become highly complex,” the firm said in a statement announcing the split posted on social-media platform X, formerly known as Twitter, on Thursday.

GGV’s U.S. partnership, led by Managing Partners Glenn Solomon, Hans Tung, Jeff Richards and Oren Yunger, will invest in North America, Latin America, Israel, Europe and India/U.S. cross-border deals, the firm said. Its Asia operations, led by Jenny Lee and Jixun Foo, will invest in China, Southeast Asia and South Asia from Singapore.

The Wall Street Journal previously reported that GGV was one of the venture firms that the House Select Committee on the Chinese Communist Party contacted about its activities.

WSJ Pro previously reported that a limited partner in GGV's funds, Los Angeles County Employees Retirement Association, had said that it was monitoring the situation regarding the House committee's inquiry to GGV. 

The Biden Administration has since issued an executive order that seeks to prohibit investments by U.S. entities into some Chinese technology sectors. Sequoia Capital is another venture firm that announced a split from its China operations earlier this year.

Foreign investments into Chinese startups have been declining. About 10% of all startup investment deals in China in the first half of this year included participation from a foreign investor, the lowest proportion on an annual basis since at least 2015, according to a recent report by data provider PitchBook Data.

—Yuliya Chernova

Funds

Arlington, Va.-based alternative asset management firm EJF Capital closed its EJF Ventures Fund LP with about $104 million in commitments. The vehicle will invest in early-stage fintech startups, with an emphasis on blockchain infrastructure, bank technology and capital markets software.

Columbus, Ohio-based venture studio Rev1 Ventures launched Rev1 Catalyst Fund III, a $30 million vehicle focused on early-stage healthcare investments.

People

645 Ventures hired Kelly Hardeman as head of investor relations, and appointed Mendy Yang and Willy Hess as senior associates. Hardeman most recently led North American fundraising at Jerusalem Venture Partners. Yang was previously at Lerer Hippeau, Soma Capital and Vista Equity Partners. Hess was previously at Thrive Capital.

Project A appointed Malin Posern as partner and managing director U.K. She joins the London- and Berlin-based firm from Passion Capital.

Cato Networks, a Tel Aviv-based secure access service edge platform, scored a $238 million investment. LightSpeed Venture Partners led the funding, with Ravi Mhatre joining the company’s board.

HiBob, a Tel Aviv-based HR platform, secured a $150 million round of funding. Farallon Capital led the investment, which included participation from Alpha Wave Global and others.

Openly, a homeowners insurance provider, raised $100 million in Series D funding. Eden Global Partners led the round, which included participation from Clocktower Technology Ventures and others. David Dwek, chief executive of Eden Global Partners, joined the board.

Harbinger Motors, a Garden Grove, Calif.-based electric-vehicle startup, collected $60 million in Series A funding. Led by Thor Industries and Ridgeline, the round included contributions from Greycroft, Tiger Global, Riverstone Holdings, Acequia Capital and Squarepoint Capital. Ridgeline’s Ryan Clinton will join the board. Harbinger makes EV technology targeted to the medium-duty chassis platforms used in the RV industry as well as other types of vehicles.

MotherDuck, a Seattle-based serverless data analytics platform, landed $52.5 million in Series B funding. Felicis led the round, which included additional support from Andreessen Horowitz, Madrona Venture Group and others. Viviana Faga, general partner at Felicis, will join the board.

Legit Security, a Palo Alto, Calif.-based application security posture management provider, raised $40 million in Series B funding led by CRV.

Plan A, a corporate carbon accounting, decarbonization and ESG reporting software provider, snagged a $27 million investment led by Lightspeed Venture Partners. The company has offices in Paris, London and Berlin.

Dentologie, a Chicago-based dental group, closed a $25 million Series B round from investors including Beringea.

Diligent Robotics, an Austin, Texas-based builder of robots that assist hospital staff with routine activities, fetched a $25 million investment. Canaan led the funding, and Rich Boyle will join the board.

Mujin, a Tokyo-based industrial robotics company, obtained $25 million in funding from Pegasus Tech Ventures. The investment was part of the company’s $85 million Series C round.

Jura Bio, a Boston-headquartered startup developing immune-based therapeutics using machine learning and synthetic biology, landed a $16.1 million investment from Fontus Capital and others.

Secoda, a Toronto-based data management platform, secured $14 million in Series A financing led by Craft Ventures.

Briya, a healthcare data exchange platform, closed an $11.5 million Series A round led by Team8.

“The worst thing we can do is something that would cause our core Hispanic consumers to say, ‘That’s not my Modelo,’” said Greg Gallagher, Modelo Especial’s vice president overseeing brand marketing on its strategy that helped overtake Bud Light in U.S. sales.

The bid to free private-equity managers from regulatory oversight may not be a long shot. 

Thanks to disaster relief offered by the IRS, companies in California have been allowed to put off this year’s federal tax payments until October. It’s helped plump some balance sheets.

Small-time crypto traders who invested with Celsius Network have been going toe-to-toe with legal and financial heavyweights in the platform’s bankruptcy case—and notching some unlikely victories.

• Crypto companies are looking outside the U.S. for growth
   
• Tether is lending its stablecoins again
   
• Inside Apple’s spectacular failure to build a key part for its new iPhones
   
• Amazon makes Alexa chattier and more capable using generative AI

This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

The Team: Matthew Strozier, Yuliya Chernova, Brian Gormley, Angus Loten and Marc Vartabedian.

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