Good day. David George, a general partner at Andreessen Horowitz, told us there's no AI bubble because of the strong customer demand for artificial intelligence software. What worries you about the AI sector right now? How do you weigh any fears about the bubble with fears of missing out on each deal? Please email responses to vcnews@wsj.com.

Last week, when the J.P. Morgan Healthcare Conference wrapped up, we asked what your projection was for venture-capital funding in 2026, and what biggest opportunities and hurdles you saw for investment this year. Here are your edited and condensed responses.

• Robert Jacks, chief executive of Sparrow Pharmaceuticals: “It has been a rough few years as the closed IPO window has made the path to liquidity more uncertain for private investments. As lower interest rates and less fear over political and regulatory uncertainty improve the public markets, I believe venture financing will pick up this year. Caution remains elevated after the last cycle, however, and any negative shock could lead to a pullback. I don’t see a near-term return to the go-go days.”
   
• Rajesh Devraj, chief executive of Rectify Pharma and a venture partner with Atlas Venture: “We’re seeing a clear upsurge in healthcare and biotech venture activity in 2026, largely driven by renewed confidence after the past six to seven months of strength in the biotech markets. Capital is increasingly flowing toward de-risked assets, with M&A and IPO windows beginning to reopen, reflecting just how strong the scientific foundation and opportunity set are—particularly across the U.S. and China. A key concern on the horizon centers on the current regulatory environment, where inconsistent feedback and operational challenges at the FDA could lead to meaningful approval delays.”
   
• Kamal Singh, senior vice president at WestBridge Capital: “LLMs are commoditizing primary care, shifting the best opportunities toward startups with durable moats in clinical specialization and ‘white-glove' care coordination. To remain competitive long term, startups must lean into the human layer and offer hard-to-replicate services to stay differentiated and keep LLMs at bay.”
   
• Medha Agarwal, partner at Defy: “Some of the biggest early-stage opportunities are still in software and AI that reduce administrative and labor costs—which still account for roughly 25% to 30% of U.S. healthcare spend—and deliver clear ROI without requiring major behavior change from users.”
   
• Rob Biederman, managing partner of Asymmetric Capital Partners: “Whether it's AI cannibalizing the role of physicians in the system, rapidly turbocharged drug discovery, or significant lifespan/healthspan advances driven by hitherto hidden connections among variables, we expect healthcare to consume much more than its fair share of funding in 2026 (and beyond).”

And now on to the news...

How the AI boom concentrated VC dollars in the Bay Area. Venture-capital investment in the U.S. surged more than 63% last year from 2024, to its highest level since 2021, according to market data provider PitchBook. The deluge of capital largely flowed to Northern California as venture capitalists chased jumbo deals in private artificial-intelligence startups. The result was a concentration of capital in the Bay Area. “All the tech minds and the tech talent for AI are converging to the Bay Area,” Elliot LaBreche, chief executive and founder of ​​Miami-based Vitalis Ventures, said. “I don’t think that’s changing in the near term for at least the deals that we look at.” See our analysis of regional venture capital investment.

Capital One Financial agreed to buy the fintech Brex for $5.15 billion in cash and stock, in a deal that could give the credit-card issuer more firepower with corporate clients. The privately held Brex, founded nearly a decade ago, specializes in technology used by companies to administer corporate credit cards, expenses and rewards. It also oversees nearly $13 billion in deposits held at partner banks and money-market funds. Investors in Brex have included hedge-fund firms Tiger Global Management and Lone Pine Capital and venture-capital firms Greenoaks Capital and Technology Crossover Ventures, according to PitchBook.

Shares of BitGo opened nearly 25% higher in the crypto-infrastructure firm’s New York Stock Exchange debut, marking the first major test for digital-asset company IPOs since the sector’s market downturn late last year. BitGo’s initial public offering was priced Wednesday at $18 a share, above the expected range. The company and its shareholders raised $212.8 million by selling about 11.8 million shares. Its shares, which trade under the ticker symbol BTGO, opened at $22.43 Thursday and closed at $18.49. With Thursday’s closing price, investors are valuing the company at $2.1 billion.

Funds

Heartland Ventures launched its third fund, which has a $60 million target, to invest in early-stage industrial tech startups.

People

Acrew Capital named Aliisa Rosenthal as its newest general partner. She was previously an executive at OpenAI.

NightDragon, a growth and late-stage investor focusing on cybersecurity and defense, promoted Hannah Huffman to partner, aerospace and defense; and Dorin Baniel to partner, Israel. Before joining the firm, Huffman was a senior consultant in Deloitte’s mergers and acquisitions practice, and Baniel was vice president at Glilot Capital Partners.

CapitalG, Alphabet's independent growth fund, promoted Jill Chase and Alex Nichols to general partner. Chase and Nichols joined CapitalG in 2020 and 2018, respectively.

Base10 promoted Dani London and Jacob Suh to principal. London was previously a multi-stage investor at Insight Partners, and Suh was a software investor at OpenView.

Exits

Yelp agreed to acquire customer communication platform Hatch for about $270 million in cash, with an additional $30 million in employee retention to be paid out over two to three years.

PayPal agreed to acquire Cymbio, a Tel Aviv-based commerce platform helping brands sell products across multiple channels. As part of the deal, PayPal said it will expand Store Sync, one of its agentic commerce services.

McLean, Va.-based national security AI provider BigBear.ai purchased technology from customs software startup CargoSeer.

Corxel Pharmaceuticals, a developer of therapies for patients with cardiometabolic conditions, raised up to $287 million in Series D1 funding from investors including SR One, TCG Crossover, RA Capital Management, HBM Healthcare Investments, SymBiosis and others.

Inferact, a new startup based in San Francisco whose goal is to make AI inference faster, more cost-efficient and easier to deploy, scored $150 million in seed funding at an $800 million valuation. Andreessen Horowitz and Lightspeed Venture Partners led the round.

Preply, a language learning marketplace, completed a $150 million Series D round valuing the company at $1.2 billion. WestCap led the investment, with Partner Allen Mask joining the board.

Neurophos, an Austin, Texas-based startup developing photonic AI chips, secured $110 million in Series A funding. Gates Frontier led the round, which included participation from M12, Carbon Direct Capital, Aramco Ventures, Bosch Ventures and others.

LiveKit, a San Francisco-headquartered developer platform for voice, video and physical AI agents, nabbed a $100 million Series C round at a $1 billion valuation. Index Ventures led the funding, which included contributions from Salesforce Ventures, Altimeter, Redpoint Ventures and Hanabi.

Railway, a San Francisco-based cloud platform helping developers to ship faster and more efficiently, landed $100 million in Series B funding. TQ Ventures led the round, which included participation from FPV Ventures and Redpoint Ventures.

Sage Geosystems, a Houston-based geothermal power generation and energy storage technology provider, closed on over $97 million in Series B funding co-led by Ormat Technologies and Carbon Direct Capital.

Mendra, a San Francisco-headquartered biopharmaceutical startup focused on using AI to improve the development and commercialization of rare disease therapies, closed an $82 million Series A round co-led by OrbiMed, 8VC and 5AM Ventures.

Cubby, a New York-based property management platform serving self-storage operators, collected $63 million in Series A funding. The growth equity business within Goldman Sachs Alternatives led the investment, with Kelly Wallace joining the company’s board.

Artie, a San Francisco-based real-time data streaming platform, grabbed a $12 million Series A investment led by Dalton Caldwell at Standard Capital.

Furl, a startup bringing agentic AI to security remediation for enterprises, was seeded with a $10 million investment led by Ten Eleven Ventures.

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This newsletter was compiled by Matthew Strozier and Zachary Cole.

WSJ Pro Venture Capital covers venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

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

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