Good day. Primary Venture Partners has raised $625 million to win deals in the expanding market for seed-stage startups.

“We need to make sure we can show up and compete not only with small seed funds but with the big multistage and megafunds, as well,” said Benjamin Sun, the firm’s partner and co-chief investment officer.

The firm decided to raise more capital for that purpose and to scale its team, he said.

New York-based Primary collected $425 million for its fifth fund for seed and pre-seed investments, as well as $200 million for its fourth opportunities fund for follow-on investments in existing portfolio companies, Sun said. That compares with the $280 million for its prior seed fund and $175 million for the previous opportunities fund, raised in 2023.

Primary has expanded its fund size and geographic purview since it started out as a New York-focused firm. Over the past three years, New York deals represented less than 30% of the firm’s activity.

“Our strategy and our ability to support founders has scaled beyond our backyard,” said Sun.

Thanks to several portfolio companies that are growing quickly, Primary’s fourth seed fund stands at about three-times total-value-to-paid-in capital on a net basis, Sun said. By comparison, venture funds in the 90th percentile of the 2023 vintage had net TVPI of 1.36 times as of the third quarter of last year, according to research by Carta.

Primary will be expanding its team of 60 to about 80 over the next couple of years, Sun said.

The seed market in the U.S. is about four-times larger than it was when Sun and Brad Svrluga, Primary’s managing partner and co-CIO, launched the firm a decade ago. Seed startups raised more than $20 billion in venture capital last year in the U.S., compared with about $5 billion in 2015, according to the PitchBook-NVCA Venture Monitor report.

“Seed is just a lot bigger now and more competitive and founders have more choice. Because of that, you need to come to the table with what are you going to offer that’s different,” Sun said. For Primary, the answer is a team of core investors, each focused on a specific sector, from consumer to cybersecurity, as well as a large operating team that helps portfolio companies with recruiting, sales and other tasks.

And now on to the news...

OpenAI executive who opposed ‘adult mode’ fired for sexual discrimination. OpenAI has cut ties with one of its top safety executives, on the grounds of sexual discrimination, after she voiced opposition to the controversial rollout of AI erotica in its ChatGPT product. The company fired the executive, Ryan Beiermeister, in early January, following a leave of absence, according to people familiar with the matter. OpenAI told her the termination was related to her sexual discrimination against a male colleague.

• “The allegation that I discriminated against anyone is absolutely false,” Beiermeister said in a statement in response to a request for comment.
   
• In a statement, an OpenAI spokeswoman said Beiermeister “made valuable contributions during her time at OpenAI, and her departure was not related to any issue she raised while working at the company.”

The artificial-intelligence scare broadened from technology to financial services Tuesday, dragging wealth-management stocks down in the process. Financial-technology firm Altruist during morning trading announced an AI tool that it says can create personalized tax strategies by interpreting financial documents without manual entry. Investors were already unnerved by the recent pullback in software and tech stocks, a retreat that accelerated after AI companies unveiled new tools capable of automating high-level industry-specific functions.

Vision Ridge Partners has raised about $2.4 billion to invest in businesses such as battery-system developers, electric vehicle-fleet operators and sustainable food producers around the world, as the private-equity firm expects to capitalize on decreasing costs of clean-energy technologies. The total raised for Vision Ridge’s Sustainable Asset Fund IV and related parallel vehicles far exceeded the $1.25 billion the Boulder, Colo.-based firm collected for a predecessor pool that wrapped up in 2021. 

Naboo, a Paris-based startup, raised a $70 million Series B round led by Lightspeed Venture Partners. The company offers AI tools to help corporations book, manage and run corporate events.

Entire, a Seattle-based startup co-founded and led by Thomas Dohmke, former chief executive of GitHub, has raised a $60 million seed round at a $300 million valuation led by Felicis. The company is building a developer platform where humans and AI agents collaborate. Other investors include Madrona, M12, Basis Set, 20VC, Cherry Ventures, Picus Capital and Global Founders Capital.

Trener Robotics, developer of an AI robot skills platform for manufacturing, raised a $32 million Series A round led by Engine Ventures and IAG Capital Partners, with participation from strategic investors Cadence and Geodesic Capital, through Nikon's NFocus Fund. Trener Robotics, which has offices in San Francisco and Trondheim, Norway, said its total funding to date is over $38 million.

Tenna Systems, a New York-based defense-tech company offering software-driven spectrum intelligence, raised an oversubscribed $13.5 million seed round led by Costanoa, with participation from Viola Ventures, Fresh Fund, 202 Ventures and existing investors.

• A Bitcoin Blunder for the Ages: $40 Billion Accidentally Given Away

• Robinhood Gets a Prediction-Market Lift, Despite Cooling Crypto Business

• Inside OpenAI’s Decision to Kill the AI Model That People Loved Too Much

• Spotify Shares Jump on Strong Earnings, Subscriber Growth

This newsletter was compiled by Yuliya Chernova and Matthew Strozier.

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

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

Join us on LinkedIn.