Good day. We have seen a surge in venture funding for physical AI startups, and some investors see this as the next big stage of AI development. “This is where the next real race is,” Nicole Fraenkel, a partner at Khosla Ventures, told WSJ Pro, “and we’re just at the inflection of the hockey stick curve of all the capital going into this space.” Where do you think the next opportunities in AI and frontier technology will be? Please email responses to vcnews@wsj.com.

Last week, we asked how to expand opportunities for female founders and executives in biotech and other sectors. What has worked and what can be done? Here are responses, edited for length and clarity:

• Julia Moore, co-founder and managing partner of Breakout Ventures: “The real opportunity isn't just backing more first-time female founders. It's ensuring they have the capital and mentorship to become the repeat founders and industry leaders who change what the next generation thinks is possible.”
   
• Elise de Reus, co-founder and head of customer success and partnerships at Cradle: “When your results speak for themselves, it's harder to be dismissed. But there's still a gap between the number of women in scientific roles and those making the leap to founder or executive. The further you move from the bench toward the boardroom, the more traditional networks matter, and those have historically favored men. Why take a chance on a diversity hire when you can play it safe with a candidate from within the known network? The industry needs to stop treating diversity as a liability and start having the courage to put talented female scientists in leadership positions, while providing the resources, support and networking opportunities needed to succeed.”

And now on to the news...

Recruiting FDEs. A once-rare engineering role has taken over Silicon Valley, promising to bridge the gap between cutting-edge artificial intelligence and the less tech-savvy customers who want to deploy it. But not everyone is pumped about it. Tech companies are gaga for the idea of “forward deployed engineers,” who they say play a critical role in ensuring customers can actually use their sometimes complex AI offerings. The only problem? Few engineers want the job, which has historically been seen as demanding, undesirable and less prestigious than product-focused engineering roles.

Microsoft is betting on healthcare as a path to become more competitive in artificial intelligence. The company’s biggest push yet: a new tool it describes as an AI concierge doctor—one that can access your medical records and health data, with your consent. On Thursday, the company unveiled Copilot Health, a feature within the Copilot app that lets the chatbot dispense personalized healthcare advice informed by the user’s disease history, test results, medications, doctors’ visit notes and biometric data as recorded by wearable devices.

Authorities in Oregon are weighing whether they can use a new anti-private-equity law to prevent an out-of-state physician group from taking over emergency services in the main hospital serving the city of Eugene. But there are a few hurdles: The physician group says it isn’t connected to private equity, and state authorities don’t know whether the new law applies.

Funds

StageOne Ventures closed its fifth fund with $165 million in commitments to back Israeli startups focusing on AI infrastructure, cybersecurity, physical AI, agentic orchestration and vertical AI.

Elaia closed its third deep-tech seed fund at €134 million (about $154 million) to invest in pre-seed and seed-stage B2B startups across Europe.

Audeo Ventures has exceeded the original $50 million target of its second fund, with $65 million in commitments, to continue making early-stage investments mainly in the U.S. and Latin America. The firm plans to close the fund at the end of this month with up to $5 million in additional capital.

Nexthop AI, a Santa Clara, Calif.-headquartered AI infrastructure builder, closed a $500 million Series B round, increasing the company’s valuation to $4.2 billion. Investors included Lightspeed Venture Partners and Andreessen Horowitz.

Quince, a San Francisco-based developer of a manufacturer-to-consumer operating system, scored $500 million in Series E funding, bringing the company’s valuation to $10.1 billion. Iconiq led the round, which included participation from Basis Set Ventures, Wndrco, MarcyPen Capital Partners, Notable Capital and DST Global.

Replit, a San Francisco-headquartered AI coding assistant developer, landed a $400 million Series D round, valuing the company at $9 billion. Georgian led the investment, which included contributions from G Squared, Prysm Capital, Andreessen Horowitz, Craft Ventures, Accenture Ventures, Okta Ventures and Databricks Ventures.

Axiom Math, a Palo Alto,Calif.-based AI startup building a self-improving, mathematical superintelligence, snagged $200 million in Series A funding at a $1.6 billion valuation. Menlo Ventures led the investment, which included additional support from Greycroft, Madrona and B Capital.

Sunday, a startup building home robots, raised $165 million in Series B funding at a $1.15 billion valuation. Coatue led the round, which saw participation from Bain Capital Ventures, Fidelity Management & Research Co., Benchmark, Tiger Global Management, Xtal Ventures and others.

Wonderful, an Amsterdam-based enterprise AI agent platform, secured $150 million in Series B funding. Insight Partners led the investment, which included participation from Index Ventures, Bessemer Venture Partners and others.

Genspark.ai, a Palo Alto, Calif.-based startup building agentic AI for global knowledge workers, added $110 million in Series B extension funding, bringing the company’s valuation up to about $1.6 billion. Series B investors included Emergence Capital, HartBeat Ventures, Markham Valley Ventures and others.

Tropic, a U.K.-based company developing improved varieties of tropical crops, completed a $105 million Series C round co-led by Forbion and Corteva Catalyst. Joy Faucher, general partner at Forbion, will join the board.

ORO Labs, a Palo Alto, Calif.-based enterprise procurement orchestration platform, nabbed $100 million in Series C funding. Brighton Park Capital and the growth equity business within Goldman Sachs Alternatives led the round, with Mike Gregoire and Clare Greenan joining the company’s board.

Axiamatic, an agentic platform for enterprise transformations, emerged from stealth with $54 million in funding from Greylock Partners and Bessemer Venture Partners.

Qdrant, a Berlin-based vector search engine for production workloads, grabbed $50 million in Series B funding led by AVP.

Cryptio, a New York-based financial data platform allowing institutions to move digital assets from experimentation to regulated financial products, collected $45 million in Series B funding co-led by BlackFin Capital Partners and Sentinel Global.

Bold Security, a New York-based endpoint security startup, emerged from stealth with $40 million in funding from investors including Bessemer Venture Partners, Picture Capital and Red Dot Capital Partners.

• Silicon Valley’s New Obsession: Watching Bots Do Their Grunt Work

• Tesla’s Grand Plan for the Future Is a Car With No Steering Wheel

• Amazon’s Win Against Perplexity Kicks AI Shopping Wars Into High Gear

• The AI Trade That’s Separating Wall Street’s Winners and Losers

• Nvidia to Invest $2 Billion in Nebius to Expand AI Cloud Infrastructure

• Oracle Allocates Extra $500 Million to Cover Restructuring Costs

• Grammarly faces class action over ‘expert review’ feature (Wired)
   
• China becomes agentic AI’s biggest lab with OpenClaw stampede (Bloomberg)
   
• Tinder tries to lure people back to online dating with IRL events, virtual speed dating (TechCrunch)
   
• Don't get used to cheap AI (Axios)

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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