Good day. Privately held software companies aren’t dodging the valuation hit from the software selloff. At least that is what data from Hiive, a pre-IPO marketplace for private stocks, indicates.

An index of software-as-a-service companies from Hiive declined 22.5% from highs reached in November 2025 through the first two weeks of February this year. That mirrors a drop in an exchange traded fund of public software companies tracked by Dow Jones Market Data that has lost 28% since the end of October.

Matt Lawson, the chief marketing officer at Hiive, said there is precedent for private markets following public ones. He pointed to interest rate hikes in 2022 and tariffs in early 2025 that both moved private markets and public markets in similar directions.

“Indexes that are uncorrelated during good times tend to become correlated when bad times hit,” he said.

There are several caveats to consider. Hiive’s private marketplace is only open to accredited investors and approved purchasers, typically individuals or organizations with high net worths and the ability to meet elevated investment minimums. Prices for private stock reflect supply and demand and are separate from traditional venture valuations.

The Hiive 50 SaaS index includes roughly a dozen companies, a relatively small sample size compared with a public market index. Of those, five accounted for nearly 90% of all transaction volume in the index, a concentration typical of pre-IPO marketplaces.

The activity concentration means price swings in just a few stocks can have outsize effects on the index. For example, the declines that started in November were largely attributed to just three companies, Hiive said.

Typically, the relative illiquidity of private markets and the time it takes to reprice individual companies leads to a lag. But as public market institutions have become increasingly entwined with private exchanges, some expect the lines between public and private markets to blur.

“Venture used to sit somewhat outside of Wall Street. Now Wall Street owns parts of the plumbing,” Angela Lee, a professor at Columbia Business School and founder of investing network 37 Angels, said. “As that infrastructure matures, private markets start behaving more like public ones—including how quickly they reprice.”

And now on to the news...

Buyer caution. The golden age of unbridled spending on AI software might be behind us, as vendors say it’s a lot harder to make a sale than it used to be. Last year represented something of a boon era for vendors pedaling AI apps. Vendors say big companies have become more cautious about what they buy. They’re taking longer to evaluate solutions, involving more internal stakeholders from legal and finance teams, and placing more emphasis on the kind of financial returns they might get out of the investment. 

Eric Trump is pouring money into a sector that is a growing focus of the Pentagon his father oversees: drones. The president’s son is investing in the Israeli drone maker Xtend as part of a $1.5 billion deal to take the company public through a merger with a small Florida construction company. Battle-tested during Israeli operations in Gaza in recent years, Xtend markets some of its drones as “low cost per kill” munitions that align with U.S. defense directives to help wage modern warfare.

OpenAI’s move to hire the creator of OpenClaw, the viral maker of personal AI assistants, is a testament to the ferocious competition that still exists for bold and unexpected ideas in artificial intelligence and the people who come up with them. Peter Steinberger, an Austrian coder and entrepreneur who hacked together OpenClaw as a side project in November, is set to join OpenAI. His creation will be managed through a separate foundation.

Funds

Thrive Capital closed its Thrive X fund with over $10 billion in commitments. The New York-based firm said $9 billion has been designated for growth-stage investments, with $1 billion set aside for early-stage deals.

Battery Ventures closed on $3.25 billion for its 15th fund to continue backing technology companies globally, with a focus on the U.S., Europe and Israel.

People

CRV promoted Veronica Orellana to general partner. Before joining the firm, she was at Saturn and Insight Partners.

Temporal, a Bellevue, Wash.-based open-source platform powering agentic applications, scored $300 million in Series D funding at a $5 billion valuation. Andreessen Horowitz led the round, which included participation from Lightspeed Venture Partners, Sapphire Ventures, Madrona and others.

Heron Power, a Scotts Valley, Calif.-based energy infrastructure startup building a next-generation power grid, closed a $140 million Series B round co-led by Andreessen Horowitz’s American Dynamism Fund and Breakthrough Energy Ventures.

Render, a San Francisco-based cloud infrastructure builder, added $100 million in Series C extension funding, valuing the company at $1.5 billion. Georgian led the round, which included participation from Addition, Bessemer Venture Partners and General Catalyst.

Braintrust, a San Francisco-based startup building infrastructure that helps teams measure, evaluate and improve their AI products, raised $80 million in Series B funding led by Iconiq.

ChipAgents, a Santa Clara, Calif.-based agentic AI platform, closed a $50 million Series A1 round. Matter Venture Partners led the investment, with Founding Managing Partner Wen Hsieh joining the board. Bessemer Venture Partners and others also invested in the round.

Selector, a Santa Clara, Calif.-based AI-driven observability and network intelligence provider, secured a $32 million investment. AVP led the funding, which saw contributions from Ansa Capital, Two Bear Capital, SineWave Ventures and others.

Avantos, a New York-based AI-native operating system for financial services firms, collected $25 million in Series A funding led by Bessemer Venture Partners.

VulnCheck, an exploit intelligence startup, nabbed $25 million in Series B funding led by Sorenson Capital.

SurrealDB, a London-based multimodal database for AI agents, added $23 million in Series A funding from investors including Chalfen Ventures, Begin Capital, FirstMark and Georgian. Mike Chalfen of Chalfen Ventures will join the company’s board.

Seasats, a San Diego-based developer of autonomous surface maritime vehicles, completed a $20 million Series A round led by Konvoy Ventures.

Zero Homes, a Denver-based digital home upgrade platform, snagged $16.8 million in Series A funding. Prelude Ventures led the round, which included contributions from SJF Ventures, Watsco Ventures and VoLo Earth Ventures.

Kana, a San Francisco-based agentic AI marketing platform, launched from stealth with a $15 million investment led by Mayfield.

Breaker, a startup developing voice command technology for military operators, was seeded with a $6 million investment led by Bessemer Venture Partners. The company is headquartered in Sydney and Austin, Texas.

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• AI impact on corporate growth seen as limited outside Big Tech (Bloomberg)
   
• More than 20,000 sign a petition for OpenAI to resurrect GPT-4o (Business Insider)

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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