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Competition for AI Startups Fires Up Venture Dealmaking Metabolism
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By Marc Vartabedian, WSJ Pro
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Good day. In June, venture capitalist Anna Barber thought she was moving fast enough in pursuing a deal with a healthcare AI startup.
A partner at early-stage firm M13, Barber emailed the founder on a Wednesday, met her at a coffee shop on Friday, and scheduled a follow-up meeting for Tuesday. Going into her weekend, Barber felt she could unwind and worry about the deal on Monday.
One problem: This was a hot AI deal.
On Monday morning, Barber logged on to find an email from the founder: Over the weekend an investor at a top-tier seed-stage firm flew cross-country to hammer out a term sheet with them. It was a done deal.
“It had my head spinning,” Barber said. “You can’t sleep on the weekends. It speaks to the excitement in the market right now.”
Competition between investors to snap up promising artificial intelligence startups has reached a fever pitch. Soaring valuations and talent wars among large mature AI companies have become the norm. At the early and seed stages, investors targeting AI-related startups describe an environment where deals can disappear in an instant. In response, venture investors, already accustomed to moving quickly, are going to extra lengths to win deals.
While mountains of capital have already been plowed into private AI companies over the last several years, venture capitalists say there is still value to be mined. Backing fledgling AI startups, they say, is the investment opportunity of a lifetime.
“Investors feel tremendous pressure to be in the right deals to capture that value,” Barber said.
Read the full article.
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And now on to the news...
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Big institutional investors have followed Yale into private equity. PHOTO: JESSICA HILL/AP
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PE strategy. Universities, pensions and foundations have piled into private equity for decades, hoping to match the blockbuster returns of Yale’s legendary endowment chief, David Swensen. But Swensen’s approach is becoming harder and harder to copy, even at Yale.
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Swensen, who died from cancer in 2021, produced an annualized return of 13.1% during his 36-year run at the Ivy League school. Much of his gains came from so-called alternatives to stocks and bonds. Big institutional investors have since followed Yale into these less-liquid markets, particularly private equity.
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But in recent years private equity has lagged behind the S&P 500. And much of what those funds earned for their investors in that time was on paper.
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The Large Gender Gap in Who Uses AI
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Are men more likely than women to use generative artificial intelligence? The answer, according to a recent working paper, is yes. The authors looked at generative AI adoption globally and found a pronounced gap in men’s and women’s usage of AI, both professionally and in everyday life. For example, in one part of the study the authors found that women made up 42% of the roughly 200 million average monthly users at ChatGPT, 42.4% at Perplexity and 31.2% at Anthropic’s Claude. This data was collected between November 2022 and May 2024 and reflects monthly averages.
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California Assembly Tries Again to Combat PE Medical Takeovers
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California lawmakers took another stab at restricting private-equity investors’ control over medical practices, a year after Gov. Gavin Newsom shot down a similar proposal. The state Assembly on Friday passed SB 351, a bill that would strengthen the state’s existing bans on corporate medicine, on a 61-0 vote, according to a state legislative aide. The bill, introduced in February by Democratic Sen. Christopher Cabaldon, would prohibit a private-equity firm or hedge fund from exercising any control over a medical or dental practice it backs.
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People
Nutrition therapy platform Berry Street appointed Richard Fu as chief commercial officer and Anita Khosla as chief product officer. Fu most recently served as CCO of Flume Health. Khosla was previously head of reading subscriptions selection at Amazon.
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Commonwealth Fusion Systems, a Devens, Mass.-based fusion energy company, scored $863 million in Series B2 funding from investors including Gigascale Capital, Emerson Collective, Khosla Ventures, Breakthrough Energy Ventures and Future Ventures.
OpenLight, a Goleta, Calif.-based chip design and manufacturing startup, closed a $34 million Series A round co-led by Xora Innovation and Capricorn Investment Group.
Phasecraft, a U.K.-based quantum computing startup, raised $34 million in Series B funding co-led by Plural, Playground Global and Novo Holdings.
Maisa, a startup developing hallucination-resistant AI agents, was seeded with a $25 million investment led by Creandum. The company has co-headquarters in Spain and San Francisco.
Bench IQ, a Toronto-based judicial intelligence platform for law firms, secured $5.3 million in seed financing led by Battery Ventures and Inovia Capital.
Darwin AI, a São Paulo-based AI worker training provider, added $4.5 million in seed funding led by Base10 Partners.
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Bumble CEO Whitney Wolfe Herd. PHOTO: GARY HE FOR WSJ
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