Good day. Roughly a year ago, when two investors teamed up to raise a debut crypto fund, the industry was still shedding its bad-boy image. Regulators were circling, asset prices had plateaued and the collapse of crypto exchange FTX had scared off many mainstream investors.

At the time, Arche Capital Management’s two co-founders said these were short-term hurdles. They forged ahead in raising up to a $100 million fund based in Austin, Texas, to target crypto startups including blockchain-related infrastructure projects in financial services, digital security and crypto projects that harness artificial intelligence in ways that could boost security and computing.

A year later, the clouds have cleared for Vanessa Grellet and William Wolf. Regulatory winds at the Securities and Exchange Commission have shifted in crypto’s favor, and companies in the sector are lining up to go public. Venture funding for crypto startups soared 195% to roughly $17.5 billion this year through June, relative to the same period last year, according to analytics provider CryptoRank.

Still, crypto isn’t out of the woods. Crypto venture funds raised roughly $9 billion in the first quarter, which is up from the prior two quarters, but far below the record $84 billion raised in the second quarter of 2022, according to crypto financial services and data firm Galaxy.

WSJ Pro spoke with Grellet, who before co-founding Arche was managing partner of Paris-based Aglaé Ventures, and Wolf, who was an investment partner at blockchain-focused firm Polychain Capital. The pair discussed the new landscape, the difficulties that remain and emerging crypto trends. The interview has been edited for length and clarity.

Read the interview here.

And now on to the news...

Defense tech. Inside an unassuming redbrick building tucked beside railroad tracks in the Bavarian capital, engineers behind doors marked “maximum security“ toil on drone prototypes, flight simulators and lines of code they believe will shape the next era of warfare.

• Helsing, a 4-year-old artificial-intelligence defense startup, has quietly emerged as one of Europe’s fastest-growing companies—and a poster child for a continent urgently re-engineering its defense in an era of fracturing alliances.
   
• The company’s pitch: Only by fusing software and steel at scale can Europe safeguard its sovereignty.

Putting private equity into Americans’ 401(k) accounts could set off a wave of lawsuits from class-action attorneys who specialize in suing companies over excessive retirement-plan fees, lawyers say. Private-equity firms, which typically manage money for big institutions and the rich, are now knocking at the door of the U.S.’s roughly $12.2 trillion defined-contribution retirement industry. Large 401(k) managers and administrators—Vanguard, BlackRock, Voya Financial and Empower—say they plan to introduce private assets into target-date retirement funds.

The war among some of the richest companies on the planet for talent is playing out in an unprecedented frenzy of talent raids, secret deals and betrayals, leading brainy AI researchers whose minds have never been so highly valued to become as rich as NBA players and Hollywood stars. The most powerful CEOs in tech are dangling pay packages worth more than $300 million to their most prized recruits—and even that kind of money isn’t always enough to win them over.

People

Seattle-based Tola Capital appointed Vahé Torossian as venture partner. He was previously deputy CEO of Builder.ai and corporate vice president at Microsoft.

AI security startup HiddenLayer appointed Chelsea Strong as chief revenue officer. She previously held senior leadership positions at companies including Human Security, Blue Lava and Obsidian Security.

Procurement platform Levelpath named Jerry Brooner as chief revenue officer. He most recently served as president of global field operations at Enable.

Corsha, a machine identity platform built to secure operational systems and critical infrastructure, added Sam Whelan as chief revenue officer and Brian C. Reed as chief market officer. Whelan was previously CRO at Viso Trust, and Redd was senior vice president of marketing at Appdome.

Q.ANT, a Germany-headquartered startup developing photonic processors for AI and high-performance computing, secured €62 million in Series A financing led by Cherry Ventures, UVC Partners and imec.xpand.

BrightAI, a San Francisco-based startup providing real-time sensor data to operators of critical infrastructure, landed $51 million in Series A funding co-led by Khosla Ventures and Inspired Capital.

Firestorm Labs, a San Diego-based developer of unmanned aerial systems for deployment in expeditionary and combat environments, picked up $47 million in Series A funding led by New Enterprise Associates.

Stellaria, a French startup developing a molten-salt nuclear reactor, has raised €24 million in funding, including €14 million in equity, co-led by At One Ventures and Supernova Invest.

Empirical Security, a Chicago-based cybersecurity startup, was seeded with a $12 million investment led by Costanoa Ventures.

Quandri, a Vancouver-based insurtech startup, grabbed a $12 million investment led by Framework Venture Partners.

Retirable, a New York-headquartered personalized retirement planning platform, collected $10 million in Series A funding led by IA Capital Group.

Mango, a Mexico-based fintech platform for the construction industry in Latin America, was seeded with a $3 million investment. Ironspring Ventures led the funding, with General Partner Ty Findley joining the company’s board.

• How Sam Altman outfoxed Elon Musk to become Trump’s AI buddy
   
• The AI exec who isn’t trying to become God
   
• Millions stolen, death threats: should banks do more to fight ‘pig butchering’?
   
• AI is dividing the fortunes of the Magnificent Seven
   
• He had dangerous delusions. ChatGPT admitted it made them worse.
   
• Coldplay, a viral kiss-cam moment—and a CEO’s abrupt resignation 
   
• The ‘smart’ restrooms that can solve America’s public bathroom crisis 

• A new opportunity for AI startups? A VC is betting 'multiplayer mode' can forge more human connections. (Business Insider)
   
• Why a Y Combinator startup tackling AI agents for Windows gave up and pivoted (TechCrunch)

This newsletter was compiled by Marc Vartabedian and Zachary Cole.

WSJ Pro Venture Capital is a premium service of The Wall Street Journal. We cover venture capital and the global startup ecosystem. Share your tips, comments and questions: vcnews@wsj.com

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

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