Good day. Given the surge in recent exit activity, some venture fund vintages seem to be improving. For 2018 funds, for instance, the median internal rate of return increased to 8.4% in the second quarter, the most significant quarter-over-quarter improvement for that vintage in several years, according to a report from financial-software company Carta.

We would like to hear from readers: How will venture fund managers capitalize on the positive outlook? Will they focus on returning capital to limited partners? Raise fresh funds themselves? Please email responses to vcnews@wsj.com.

Last week, we asked how AI startups can position themselves to generate sustained revenue. Here are edited excerpts of responses:

• Mathew Focht, founding managing partner at Emerging: “Most AI startups enter through pilots, but fewer than half ever scale—success hinges on quick ROI and seamless integration into existing workflows. Pilots that demonstrate measurable impact in 90 days are far more likely to survive. To generate durable revenue, startups must position as infrastructure—not tools—building data moats.”
   
• Mark Montgomery, founder and CEO of KYield: “Do the work necessary to provide customers with what they need prior to launch, including security, accuracy, affordability, ease of use and financial sustainability. In most cases, running GenAI and agentic AI won’t meet the needs of enterprise customers because they are running on LLMs.”
   
• Ankur Saxena, investment director at TDK Ventures: “Durable revenue requires structuring pilots as launchpads with prenegotiated scale-up terms, addressing critical problems with outsized ROI and embedding solutions into core workflows.”
   
• Noah Lin, analyst and investor at Defy: “The best startups turn pilots into lasting contracts by making the business case undeniable—clear ROI or a product so valuable users can’t imagine losing it. They act as co-strategists: aligning on success metrics, securing executive sponsorship and delivering results quickly. Then they reduce friction with smooth integrations, hands-on onboarding and clear expectations.”

And now on to the news...

Deal aims to ease adoption of AI agents. OpenAI and Databricks signed a multiyear, $100 million deal to sell artificial-intelligence services to large business customers, aiming to make it easier for them to build AI agents with their own data. The pact between the two San Francisco-based firms is the latest instance of tech vendors teaming up to make it simpler for businesses to use AI agent technology on data that they own. Based on the deal structure, OpenAI and Databricks are expected to generate $100 million in revenue over a multiyear period.

Nscale Global Holdings said it raised $1.1 billion from Nvidia, Dell Technologies, Nokia and other investors as it seeks to roll out data centers across Europe, North America and the Middle East. The U.K.-based artificial-intelligence infrastructure startup owns data centers that provide the networking, storage and computing needed to power AI. The company has struck partnerships with the likes of ChatGPT maker OpenAI and Microsoft.

Big U.S. companies are facing heightened scrutiny from Capitol Hill over their use of foreign employees on H-1B visas, with lawmakers raising concerns about layoffs and slumping job prospects for Americans. On Wednesday evening, Judiciary Committee Chairman Chuck Grassley (R., Iowa) and ranking member Dick Durbin (D., Ill.) sent letters to the country’s largest users of H-1B visas—including Amazon.com, Apple and JPMorgan Chase—asking them to explain why they continue to hire thousands of H-1B visa holders while also cutting other jobs.

Will spending on AI ever pay off? The artificial-intelligence boom has ushered in one of the costliest building sprees in world history. Over the past three years, leading tech firms have committed more toward AI data centers, plus chips and energy, than it cost to build the interstate highway system over four decades, when adjusted for inflation. AI proponents liken the effort to the Industrial Revolution. A big problem: No one is sure how they will get their investment back—or when.

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Funds

Touring Capital closed its debut fund with an oversubscribed $330 million in commitments. The San Francisco-based firm, which focuses on AI-powered software startups at the early-growth stage, has made 12 investments since launching in 2023.

People

Early-stage healthcare and life sciences investor Santé Ventures promoted Michael Gutbrod to principal and added Alana Horowitz as senior associate. Gutbrod joined the firm in 2021. Prior to joining Santé, Horowitz was a consultant in McKinsey & Co.'s life sciences practice.

Modular, a Los Altos, Calif.-based AI infrastructure platform, scored $250 million in its third financing round, valuing the company at $1.6 billion. US Innovative Technology led the investment, which included participation from GV and General Catalyst.

Signal AI, a global risk and reputation intelligence platform, landed a $165 million growth equity investment. Battery Ventures agreed to lead the funding, with principal Collier Searle and private-equity partner Dave Tabors joining the Signal AI board.

Inspiren, a New York-based AI-powered platform for senior living, raised $100 million in Series B funding. Insight Partners led the round, which included participation from Primary Venture Partners, Scale Venture Partners, Story Ventures and others.

Thyme Care, a Nashville, Tenn.-based startup providing personalized cancer-care navigation and clinical support, landed $97 million in Series D funding from investors including CVS Health Ventures, Foresite Capital and a16z Bio + Health.

Sparrow Pharmaceuticals, a Portland, Ore.-based startup developing a novel, targeted therapy for patients with Type 2 diabetes, closed a $95 million Series B round. RA Capital Management and Forbion co-led the investment, which included participation from OrbiMed and others. Zach Scheiner from RA Capital and Nanna Lüneborg from Forbion joined the board.

WeTravel, an operating system for multiday group travel businesses, raised $92 million in Series C funding. Sapphire Ventures led the round, which included contributions from Left Lane Capital, Base10 Partners and others. Rajeev Dham, partner at Sapphire Ventures, joined the board. WeTravel is based in San Francisco and Amsterdam.

Factory, a San Francisco-based agent-native software development startup, secured $50 million in Series B financing from investors including New Enterprise Associates, Sequoia Capital and Nvidia.

RedotPay, a stablecoin-based payments startup, picked up a $47 million strategic investment from Coinbase Ventures, Galaxy Ventures and others.

Fetcherr, an Israel-based developer of a generative AI pricing engine and demand prediction technology for airlines, completed a $42 million Series C round. Led by Salesforce Ventures, the funding included participation from Battery Ventures and Left Lane Capital.

Leo Cancer Care, developer of an upright radiotherapy system used for cancer treatment, collected a $40 million investment led by Catalio Capital Management. The company has offices in the U.K. and Middleton, Wis.

Juicebox, a San Francisco-based AI recruiting platform, has raised $36 million in funding, including a $30 million Series A round. Sequoia Capital led the latest round, which included additional support from Lux Capital, BOND and others.

Light, an accounting and finance platform for businesses, grabbed a $30 million Series A round. Balderton Capital led the investment, which included contributions from Atomico and Seedcamp.

Corintis, a Switzerland-based semiconductor cooling startup, emerged from stealth with $24 million in Series A funding led by BlueYard Capital.

• Intel Seeks Help From Apple and Others as U.S. Backs Comeback Bid

• Unusual Trading Ahead of Crypto-Treasury Deals Draws Scrutiny From U.S. Regulators

• Microsoft Disables Some Cloud Services Used by Israel’s Defense Ministry

• Trump Administration Agrees to Use AI Models From Musk’s xAI

This newsletter was compiled by Matthew Strozier 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.