Good day. Arif Janmohamed, previously a partner at Lightspeed Venture Partners, and Trevor Oelschig, a longtime managing director at General Catalyst, have paired up to form a new venture firm, Duration Ventures, according to people familiar with the situation.

They are looking to raise about $375 million for their debut fund to invest in early-stage startups across enterprise artificial intelligence, from chips to applications, the people said. 

Palo Alto, Calif.-based Duration is launching in one of the most difficult fundraising markets for first-time funds in recent history. Just 106 venture firms managed to raise capital for first-time funds last year in the U.S., the lowest total in a decade, according to the latest PitchBook-NVCA Venture Monitor. Limited partners are now focusing their attention on late-stage funds, as well as very large pools of $1 billion or more.

However, new firms formed by longtime VCs with notable investing track records hold some appeal for institutional limited partners even in an otherwise tepid fundraising market.

Janmohamed has spent 18 years as an investor at Lightspeed, where he backed enterprise software businesses, especially in infrastructure and security. Earlier this year, he said in a LinkedIn post that he’s moving to a venture-partner role at Lightspeed and embarking on building “a new, early-stage venture firm.”

Oelschig, meanwhile, had been a managing director at GC for close to a decade after joining from Bessemer Venture Partners. He has served as a board member of e-commerce platform Shopify and invested in numerous other startups.

He recently signed documents incorporating Palo Alto, Calif.-based Duration Ventures, according to Delaware state filings.

Read the full article.

And now on to the news...

Losing ground in AI race. Elon Musk’s artificial-intelligence model, Grok, lags far behind its fast-growing competitors—and an agreement by parent company SpaceX to rent massive computing power to Anthropic raises questions about whether it can still catch up.

• The deal, signed in early May, will give the maker of the Claude AI model and chatbot all the computing capacity at one of Musk’s main data centers.
   
• Since its launch two years ago, Grok has reached millions of users through its integration with Musk’s social network, X, and controversial features such as a sexualized AI companion. But new data shows its growth appears to have flattened.

S2G Investments raised $1 billion to back companies that help strengthen energy and agriculture supply chains, as the firm expects that rising fuel and food costs driven by the war in Iran will help make such businesses more valuable. The growth investment firm previously known as S2G Ventures wrapped up S2G Solutions Fund I after about 20 months in the market, said Managing Partner Aaron Rudberg.

BuzzFeed said media mogul Byron Allen has agreed to pay $120 million for a majority stake in the digital-media company. Allen, whose company Allen Media Group owns the Weather Channel and more than 30 network affiliate broadcast channels, plans to acquire 40 million shares for $3 apiece, BuzzFeed said Monday. Upon closing, Allen’s affiliate Allen Family Digital will own 52% of BuzzFeed’s shares outstanding. The deal will be funded with $20 million in cash and a $100 million promissory note due five years from closing, which will accrue 5% in annual interest.

Funds

Top Down Ventures closed its Founders Fund I at $28 million, which was above the original $25 million target. The firm focuses on early-stage software and AI startups serving the managed service provider market.

Skinos Ventures raised $26 million for its debut fund to make early-stage investments in cybersecurity and AI startups.

Cowboy Space, a San Carlos, Calif.-based startup building vertically-integrated infrastructure to power and run AI compute in space, scored a $275 million Series B round at a $2 billion valuation. Index Ventures led the round, which included participation from IVP, Blossom Capital, Andreessen Horowitz, New Enterprise Associates and others. Cowboy Space was previously known as Aetherflux.

Grand Games, an Istanbul-based mobile gaming startup, nabbed $70 million in Series B funding led by Balderton Capital.

Frame Security, a New York-based human security startup focused on defending enterprises against AI-powered social engineering attacks, picked up $50 million in funding from investors including Index Ventures, Team8 and Picture Capital.

Vapi, a San Francisco-based platform for deploying AI voice agents, snagged $50 million in Series B funding. Peak XV Partners led the round, which included participation from M12, Kleiner Perkins, Bessemer Venture Partners and others.

Eyeo, an imaging startup developing nanophotonic color-splitting technology, raised $40 million in Series A funding. Innovation Industries led the investment, which saw participation from imec.xpand, Invest-NL and High-Tech Gründerfonds. The company is headquartered in the Netherlands.

Algorithmiq, an Italy-headquartered quantum software startup, secured an €18 million (about $21.2 million) investment led by United Ventures and CDP Venture Capital.

Ciridae, a San Francisco-based startup building AI operating systems for mid-market companies in sectors including restoration, logistics and industrial services, was seeded with a $20 million investment. Accel led the funding, which saw contributions from Andreessen Horowitz, General Catalyst, Sunflower Capital and Backcountry Ventures.

Boundary, a New York-based stablecoin startup, closed a $2 million pre-seed round led by Galaxy Ventures.

Grego AI, a Miami-based startup providing an AI method for detecting critical software vulnerabilities, emerged from stealth with a $2 million investment led by cyber•Fund.

• Microsoft CEO Testifies About Sam Altman’s Firing in Elon Musk Megatrial

• AI’s Next Phase Plays Into TSMC’s Hands
   
• Why Companies Are Racing to Put Satellites in Low-Earth Orbit
   
• The Way Companies Aim for Net Zero Is Flawed. It’s Also Working.

• Jensen Huang to college grads: "Run. Don't walk" toward AI (Axios)
   
• Google says it likely thwarted effort by hacker group to use AI for ‘mass exploitation event’ (CNBC)

This newsletter was compiled by Matthew Strozier and Zachary Cole.

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

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

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