Good day. From 2018 to 2021, PitchBook’s aggregate valuations of U.S. postmoney unicorns averaged nearly 16% above company-reported numbers. In the four years since, that trend has reversed, with PitchBook valuing companies almost 14% less on average from 2022 to 2025. What’s your approach to valuing older startups that were invested in at what now look like inflated prices? Please email responses to vcnews@wsj.com.

Last week, we asked how AI startups are adjusting to changing customer expectations and whether that affects VCs’ investments. Here are responses, condensed and edited.

• Niko Bonatsos, founder and managing director, Verdict Capital: “Some of the customers got burned and are more ROI focused now. Inbound is more important than ever now. When customers feel they are discovering you from third-party trusted sources (including awesome activity on social media), the sales engine takes care of itself.”
   
• Allen Duan, general partner, B Capital Group: “From a VC perspective, the higher bar and longer sales cycles are not all bad news. They can be a useful filter. Startups that can navigate more complex security reviews, legal scrutiny and ROI validation are more likely to build enduring businesses rather than transient point solutions. We increasingly look for teams that have built platforms that solve current requirements but can also adapt their AI solutions to different customer environments and evolving policies.”
   
• Umesh Padval, managing partner, Seligman Ventures: “A few years ago, boards were pushing hard for AI adoption, and companies moved quickly, sometimes before they had the right talent, security frameworks or clarity on ROI. Today, enterprises are asking tougher questions around data security, durability of vendors and measurable business impact. That naturally lengthens some sales cycles, particularly for undifferentiated tools. But if you’re building a truly differentiated platform that solves a mission-critical pain point, sales cycles remain strong and we’re not seeing a slowdown there.”
   
• Anthony Georgiades, founder and general partner, Innovating Capital: “We’re spending more time diligencing the ‘can you actually get deployed’ muscle because model quality doesn’t matter if it never makes it into production. Where it’s landing for us is a split between AI-native distribution and AI-enabled enterprise software that has to run the full enterprise gauntlet. We’re increasingly pricing risk and structuring deals based on which side a company is really on.”

And now on to the news...

‘Incredibly selective.’ Massachusetts’ largest state pension manager set aside up to $2.8 billion for private funds and deals this year, slightly less than the $3 billion upper limit it had last year but above the nearly $1.8 billion it actually committed. “The team will continue to be, as they always are, incredibly selective” when investing, said Michael Trotsky, executive director of the Massachusetts Pension Reserves Investment Management Board, at its meeting Thursday. The manager’s $19.5 billion in private-equity and venture holdings generated an 8.5% net return last year, short of its 10.3% one-year benchmark. But the portfolio’s five- and 10-year performance remained strong at 13.8% and 16%, respectively.

Sam Altman’s project to help humans distinguish themselves from bots is increasingly banking on household names to sell its far-out concept. A Gap store in San Francisco has begun helping visitors get World IDs, the “proof of human” product from the startup Tools for Humanity, by installing one of its signature “Orb” devices to take images of faces and eyes. A planned Visa payment card will let World ID holders spend digital assets including Worldcoin, the cryptocurrency people receive in most markets as an incentive to sign up. And the dating app Tinder is testing the ID in Japan to verify that users are human—and really the age they say they are.

The failure rate for startups is pretty grim. So how does that reflect on their employees? Hundreds of thousands of businesses fail every year. According to data from the Bureau of Labor Statistics, nearly half of all businesses in the U.S. fail within the first five years. Studies have shown that executives at failed firms have a harder time finding another job in the same industry. But a new study finds that working at a company that fails generally doesn’t affect the average nonexecutive employee’s future career.

People

Browser security startup Menlo Security appointed Bill Robbins as chief executive. He succeeds co-founder Amir Ben-Efrain, who will continue as executive chairman of the board.

PicnicHealth, a healthtech startup focusing on noninterventional research, promoted Luna Federici to president. She has served as chief operating officer for the past five years.

Healthcare AI agent provider Autonomize AI appointed Jennifer Rouse as vice president of marketing and Gina Collins as chief regulatory officer.

Wayve, a London-based self-driving software and systems provider, raised a $1.2 billion Series D round, bringing the company’s postmoney valuation to $8.6 billion. Eclipse, Balderton Capital and SoftBank Vision Fund 2 led the investment.

Allica Bank, a London-based digital bank for small and medium-size businesses, collected $155 million in Series D funding from investors including Ventura Capital and TCV. This latest investment values the company at nearly $1.2 billion.

Revel, a Los Angeles-based unified software platform for hardware test and control, scored $150 million in Series B funding. Index Ventures led the round, which saw contributions from Redpoint Ventures, Thrive Capital, Felicis, Abstract Ventures and others. Nina Achadjian, partner at Index Ventures, joined the company’s board.

Stay22, a Montreal-based content monetization platform for travel creators, media publishers and event organizers, fetched a $122 million growth investment from Summit Partners. Colin Mistele and Daniel Kim joined the company’s board.

Gambit Security, a startup helping enterprises stay resilient across their entire technology stack, emerged from stealth with $61 million in seed and Series A funding from investors including Spark Capital, Kleiner Perkins and Cyberstarts.

Encord, a San Francisco-based multimodal data layer powering physical AI, nabbed $60 million in Series C funding. Led by Wellington Management, the round included additional support from Y Combinator, CRV, N47 and others.

Guidde, an AI digital adoption platform with offices in Tel Aviv and Belmont, Calif., raised $50 million in Series B funding. PSG Equity led the round, which included participation from Norwest, Entrée Capital, Qualcomm Ventures and others.

Rowspace, a San Francisco-based startup helping financial firms make better decisions using their proprietary data, launched with $50 million in seed and Series A funding from investors including Sequoia Capital and Emergence Capital. 

Chariot Defense, a San Francisco-based startup developing power systems for military devices including drones, radios and sensors, secured $34 million in Series A funding. Andreessen Horowitz led the round, which included contributions from DCVC, General Catalyst, XYZ Venture Capital and others.

STS Digital, a Bermuda-based crypto options trading platform, closed a $30 million investment led by CMT Digital.

FirmPilot, a Miami-based AI-powered legal marketing platform, grabbed $22 million in Series A-1 funding. DeepWork Capital led the investment, with Partner Ken Hall joining the board. Additional investors included Data Point Capital, Blumberg Capital and Thomson Reuters Ventures.

Croissant, a startup embedding resale directly into brand checkout, gathered a $28 million equity and debt investment. Existing investors Portage, Third Prime and George Roberts led the $14 million equity portion. The company is based in New York and Nashville, Tenn.

Newity, a Chicago-based startup building AI-driven lending infrastructure for small businesses, secured an $11 million strategic investment led by CMT Digital.

• Jack Dorsey’s Block to Lay Off 40% of Its Workforce in AI Remake

• The $1.6 Trillion Meltdown That Swept Through Software Stocks

• AI Crushed Software Stocks. Now It’s Saving Them.
   
• Woman Suing Meta, YouTube Testifies It’s ‘Too Hard to Be Without’ Social Media
   
• ‘Piloting’ AI Tools Isn’t Cool Anymore
   
• AI Will Transform Every Industry, Nvidia CEO Says
   
• What AI Executives Tell Their Own Kids About the Jobs of the Future
   
• The Remote-Work Dream Isn’t Dead, but It’s Slipping Away

• A VC and some big-name programmers are trying to solve open source’s funding problem, permanently (TechCrunch)
   
• How Chinese AI chatbots censor themselves (Wired)
   
• Data centers are racing to space—and regulation can’t keep up (Rest of World)

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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