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How Will the AI Talent Wars Shape Venture Capital?
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By Yuliya Chernova, WSJ Pro
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Good day. This week, I wrote about cases of AI startup founders getting poached by Big Tech and the implications for venture investors. We would like to hear from you. How does the AI hiring spree affect venture capital? What can investors do to ensure resulting deals are fair to them? Please email responses to vcnews@wsj.com.
Last week, we asked whether a proliferation of new venture shops would be beneficial to humanity. Adeo Ressi, chief of Decile Group and chairman of startup accelerator Founder Institute, says there need to be “about 20,000 to 25,000 more VC firms” to establish startup ecosystems around the world. This question garnered a lot of discussion. Edited excerpts of some responses follow:
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Leslie A. Jump, CEO and co-founder, Different: “Adding more small firms, who themselves are uncapitalized, won’t solve problems in the market now. What we need are interdisciplinary thinkers, familiar with the broader financial toolkit, who can design new ways to underwrite and capitalize small businesses.”
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Greg Sands, founder and managing partner, Costanoa Ventures: “Startups are our best hope for solving the world’s biggest challenges, especially as corporate R&D fades and public investment in science lags. With venture capital being a necessary condition for a healthy startup ecosystem, more firms is unquestionably better.”
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Lisa Cawley, managing director, Screendoor: “New VC firms matter; they have an opportunity to drive competition and disrupt incumbent complacency. The question shouldn’t be ‘How many VCs,’ but why are there so many mediocre ones? 25,000 carbon copies? No, thank you. New competitors with new ideas? Yes, please!”
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Maddi Holman, co-founder & general partner, Daring Ventures: “The Covid-era proliferation of new funds offers a cautionary tale. As capital flowed freely, we saw a surge in emerging managers, yet many delivered subpar results due to loose diligence practices and unsustainable valuations.”
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Nicolas Sauvage, president, TDK Ventures: “What entrepreneurs truly need are fewer, more focused firms that fill specific gaps. For instance, Series B/C in deep tech remains underserved.”
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Don Butler, managing director, Thomvest Ventures: “Traditionally, emerging managers have outperformed more traditional funds, so having more emerging managers would indeed be a good thing for humanity. The problem, however, is conflating this with the stated goal of trying to get half of the major cities in the world to have functional venture-capital ecosystems. This underestimates the social and cultural dimensions of company-building needed to make an ecosystem viable.”
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Amit Aysola, managing partner, Create Health Ventures: “I’m not sure how realistic it is to add 25K new venture firms because these funds would need to raise from a finite LP base; however, if LPs wanted to enable a surge in innovation, then funding VCs would be the right approach.”
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And now on to the news...
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Tesla’s autonomy business of robotaxis is still in its early days. PHOTO: JOEL ANGEL JUAREZ/REUTERS
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Musk tells Tesla investors to focus on a future filled with robots. Tesla Chief Executive Elon Musk is telling investors the carmaker’s future is closer than ever—and it doesn’t depend on selling electric vehicles. Musk glided past Tesla’s falling sales and loss of profits from car sales and EV credits on a call with Wall Street Wednesday evening as he described Tesla as a company in transition. He encouraged investors to look past Tesla’s poor financials and focus on its recent achievements with autonomous robotaxis and robots, which he said could make the shrinking EV maker into “the most valuable company in the world.”
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15%
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Intel will cut 15% of its workforce and scrap plans to spend tens of billions of dollars on new chip facilities in Europe, as it takes steps to revive its sagging fortunes.
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Why Walmart Is Overhauling Its Approach to AI Agents
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Walmart is overhauling its AI agent strategy as it aims to simplify the user experience. Agents refer to artificial-intelligence tools that can independently take some action on behalf of a user, and Walmart in recent months has built dozens. Maybe too many, since they were typically accessed through different interfaces in different systems, and things were starting to get confusing for users. Now the retail giant is taking a step back and consolidating all those agents into four discrete interfaces it calls “super agents.”
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Private-Equity Firm Altamont Scores Big Win in Accelerant IPO
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Private-equity firm Altamont Capital Partners scored a sizable gain on its Accelerant Holdings’ investment as the insurance technology company started trading with a market value of some $6 billion. It was the first initial public offering for Altamont, which typically backs small companies with check sizes of up to $150 million and manages more than $4 billion in assets. The Palo Alto, Calif., firm sold about eight million shares at $21 each and retained a controlling stake, valued at more than $2 billion based on Accelerant’s $26.50 Thursday closing price. That is more than twice the size of the $1 billion fund through which Altamont first backed Accelerant in
2018.
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People
S2G Investments appointed Kevin Lo as an operating partner. He most recently served as a senior adviser to the Defense Advanced Research Projects Agency and the U.S. Department of Defense.
BridgePort, a startup developing market infrastructure for digital assets, appointed Steven Bartfield as chief product officer.
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Vanta, a San Francisco-based AI-powered trust-management platform for organizations, scored $150 million in Series D funding at a $4.15 billion valuation. Wellington Management led the round, which included participation from Sequoia Capital, Craft Ventures and the growth equity business within Goldman Sachs Alternatives.
Armada, a developer of modular data centers for remote and rugged industrial environments, secured a $131 million strategic funding round from investors including Founders Fund, Lux Capital, Felicis and M12.
April, a New York-based AI tax platform, closed a $38 million Series B round. QED Investors led the funding, which included participation from Nyca Partners and Team8.
Artificial Intelligence Underwriting Co., a San Francisco-based startup helping enterprises to deploy AI agents with confidence, picked up a $15 million seed investment. Nat Friedman at NFDG led the round, which included participation from Emergence, Terrain and others.
Cambridge Terahertz, a Sunnyvale, Calif.-based concealed weapon detection startup, was seeded with a $12 million investment. Felicis led the round, which included contributions from Plug and Play, Amazon and others.
Octup, a Tel Aviv-based real-time AI operations platform for third-party logistics providers, completed a $12 million seed round co-led by Shine Capital and JAL Ventures.
Hypernatural, an AI video creator, has raised $9.2 million in funding led by AIX Ventures and Underscore VC.
NZN, a U.K.-based biofertilizer developer, was seeded with a $6.6 million investment from World Fund, Azolla Ventures and others.
Lyra, a meeting platform for sales teams, grabbed $6 million in seed funding led by 468 Capital.
IdentifAI, an Italian deepfake detection platform, secured a €5 million investment led by United Ventures.
Volca, a New York-based marketing platform for home services businesses, collected $5.5 million in seed funding led by Pathlight Ventures.
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Sen. Ted Cruz (R., Texas) speaks with Advanced Micro Devices CEO Lisa Su at a tech event in Washington on Wednesday. PHOTO: CHIP SOMODEVILLA/GETTY IMAGES
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