Good day. Several public software-as-a-service companies last week reported strong performance and accelerated revenue growth. Private company SaaS indexes are now adding to those signals.

As of Friday, May 1, private venture-backed SaaS stocks had rebounded 11% since bottoming out on the first day of March, according to data from the secondary exchange platform Hiive.

The Hiive50 SaaS Index is an equal-weight price index of the most liquid stocks representing late-stage venture-backed SaaS companies traded on the marketplace. 

“Much of the gain comes from AI-native SaaS companies,” said Matt Lawson, chief marketing officer at Hiive, citing strong gains by Databricks and Replit. “Absent the shift in these two stocks, the index would have had a more muted move higher.”

So is the SaaS sky falling? Or are markets on the mend? The answer depends on a company’s exposure to AI.

“There are certain companies that will benefit from AI, but it's taken a little bit longer for the market to appreciate that and for it to appear in the results,” Tomasz Tunguz, general partner at Theory Ventures, said.

That appreciation is coming faster now as the latest earnings reports are showing real results from AI product integration by software companies. Tunguz pointed to Atlassian, the publicly traded maker of productivity and collaboration software, which saw a 29% year-over-year increase in cloud revenue in the recently ended quarter. According to the company, the growth was driven partly by increased adoption of new AI capabilities in its software.

“AI companies are worth twice the multiple of non-AI businesses and that ties back to the growth rate,” Tunguz said. “The faster a company can grow, the more valuable it is.”

Still SaaS stocks have a long way to go before they return to previous highs. Hiive’s SaaS index is down nearly 17% from its peak in November.

And now on to the news...

AI oversight. The White House is weighing a new government-review process for artificial-intelligence tools that the government deems to pose cybersecurity risks, a move that could further expand its oversight of AI in response to Anthropic’s powerful Mythos model. The White House is considering a cybersecurity-focused executive order that could include formalizing a government oversight group to create standards for the most powerful AI models, such as Mythos, people familiar with the discussions said.

• The goal is to protect consumers and businesses from cyberattacks and other disruptions caused by the premature release of such models, and a range of ideas are being considered, the people said.

UCB said it agreed to buy Candid Therapeutics for up to $2.2 billion, in a deal that seeks to bolster the Belgian pharmaceutical company’s pipeline of experimental treatments for autoimmune and inflammatory diseases. Brussels-based UCB said Sunday that it would pay $2 billion upfront and up to $200 million subject to future targets to acquire Candid. Privately held Candid is developing a portfolio of experimental drugs to treat autoimmune and inflammatory diseases.

OpenAI Chief Executive Sam Altman discussed spinning out the company’s robotics and consumer-hardware divisions late last year, a move intended to give them more room to grow without weighing down the core business. As part of the plan, the two companies would have been able to raise external funding and operate more independently. But it was rejected, in part because OpenAI concluded the new entities might have to remain consolidated on its balance sheet, according to people familiar with the matter. The proposal offers a window into the difficult trade-offs OpenAI has to make as it races toward an IPO.

Funds

A16z crypto raised $2.2 billion for its fifth fund, bringing the crypto startup investor’s total committed capital to $9.8 billion. Additionally, Chief Technology Officer Eddy Lazzarin has been promoted to the fund’s fourth general partner.

Future of finance-focused investor Haun Ventures has raised $1 billion in new funds.

AlphaDrive, a $100 million fund focusing on cybersecurity and AI, has launched.

IPO

Chip startup Cerebras Systems will offer 28 million shares in its planned initial public offering at a price of $115 to $125 a share. The IPO would raise $3.5 billion at the upper end of the pricing range. Cerebras will grant the underwriters of the offering a 30-day option to purchase up to an additional 4.2 million shares. 

People

Autonomous security operations center platform Deepwatch appointed Brian Dhatt as chief executive officer. He succeeds John DiLullo, who will remain with the company as an advisor. Dhatt most recently served as chief technology officer at BigCommerce.

NuCube Energy, a developer of high-temperature modular microreactors, appointed Michael Green as chief legal officer. He joins the company from Oklo.

Sierra, a startup helping businesses build improved customer experiences with AI, is raising $950 million in new funding led by Tiger Global Management and GV at a valuation of over $15 billion.

Panthalassa, a Portland, Ore.-based renewable energy and ocean technology startup, landed $140 million in Series B funding. Peter Thiel led the investment, which included additional support from Founders Fund, TIME Ventures, SciFi VC, Susquehanna Sustainable Investments and Gigascale Capital. The financing will be used to accelerate deployment of the company’s nodes, which will perform AI inference computing at sea using power generated from ocean waves.

Reserv, a New York-based startup whose operations include property and casualty insurance claims administration and data analytics, scored $125 million in Series C funding led by KKR & Co.

DeepInfra, a Palo Alto, Calif.-based cloud platform for high-throughput AI inference,  nabbed $107 million in Series B funding. Co-led by 500 Global and Georges Harik, the round included additional contributions from A.Capital Ventures, Felicis, Nvidia, Samsung Next and others.

Iterative Health, a startup building a multispecialty clinical research network that embeds research directly into clinical care, closed a $77 million Series C round led by Intrepid Growth Partners and GV. Ajay Agrawal, co-founder and partner at Intrepid Growth Partners, will join the company’s board. Iterative Health is headquartered in Cambridge, Mass. and New York.

Anello Photonics, a Santa Clara, Calif.-based provider of navigation technology for autonomous systems navigating in GPS-denied and contested environments, added $25 million in Series B2 funding. MESH Ventures led the round, which included participation from Washington Harbour Partners and others.

InstaSwitch, a New York-headquartered startup developing account activation infrastructure for business banking, was seeded with a $4.7 million investment led by Chicago Ventures.

• Palantir Beats Forecasts With $1.63 Billion Quarter as Sales Accelerate

• Elon Musk Megatrial Kicks Off Second Week 
   
• Anthropic and FIS Are Building an AI Agent to Help Banks Police Financial Crimes
   
• Amazon Built a Massive Supply Chain for Itself. Now It’s for Hire.
   
• SpaceX Wants to Blast Data Centers Into Orbit. Here’s What It May Take.
   
• The Roomba Guy’s Second Act: A Robot You’ll Want to Snuggle

• AI godfather Yann LeCun's blunt advice for the AI age (Axios)
   
• Startups challenge Apple over curbs on AI ‘vibe coding’ apps (FT)

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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