Good day. Sales cycles for AI tools are getting longer, some vendors say. We’d like to hear from you. How do AI startups adjust to changing expectations from customers, and how does that affect how VCs evaluate investments? Please email responses to vcnews@wsj.com.

Last week, we asked how you are navigating the market after the selloff in software. Here are edited and condensed responses:

• Daniel Docter, managing director at Dell Technologies Capital: “The meltdown is all we're talking about in the office, and downright scary for investors who own large shares of what they thought were proven software companies. But one thing I've learned in 25 years of investing is that it's never as bad as it seems. Software companies are quickly embedding AI to pre-empt many market concerns, and I believe the market fervor is also undervaluing the brand value of these software stalwarts. The AI pressure's on, but all is not lost.”
   
• Nicolas Sauvage, president at TDK Ventures: “Software isn’t the problem. Pricing models built around humans as bottlenecks are. The per-seat era is being disrupted by AI that scales output without scaling head count. Investors need to (re)think about software tied to real-world outcomes, automation leverage and durable economics, not legacy multiples anchored to yesterday’s productivity constraints.”
   
• Nnamdi Okike, co-founder and managing partner, 645 Ventures: “What the market is missing in its overreaction is that SaaS companies, and the VCs who are invested in them, are not standing still. There is no magical moat that prevents SaaS companies from leveraging AI themselves to counterattack the new entrants, leveraging their resources, which include large installed bases, valuable customer data, products that are already embedded in customer workflows and, in some cases, cash-rich balance sheets…. Over the next few years, I expect SaaS incumbents, both private and public and especially in vertical markets, to engage in acquisitions to bring the best new AI products and engineers in-house, just like we've seen the hyperscalers do over the past few years.”

And now on to the news...

Mar-a-Lago crypto fest. In an ornate ballroom in Palm Beach, Fla., where a golden eagle loomed over a conference stage, recently pardoned Binance founder Changpeng Zhao made a triumphant return to the U.S.—his first visit since his release from a California federal prison in 2024.

• Zhao, whose crypto exchange has been barred from operating in the U.S. since 2023 for violating anti-money-laundering rules, posted a picture of himself Wednesday on X listening to a top federal crypto regulator speak. “Learned a lot,” he wrote.

Individual investors who embraced high-risk, high-reward stock bets in recent years are now flocking to prediction markets.

• For the cohort that piled into options—which give the right to buy or sell a stock at a set price, in a certain time frame—prediction platforms such as Kalshi and Polymarket offer a vast range of wagers, in a “yes or no” format.
   
• That makes prediction markets easier to navigate than the options market for certain kinds of bets, said Andrew Courtney, a former Susquehanna International Group trader who writes a Substack about prediction markets.

Peak Rock Capital is acquiring the employee health and safety software business of UL Solutions, a safety science company that evolved from certification provider Underwriters Laboratories. The transaction value exceeds $200 million, according to a person familiar with the matter. The firm plans to rebrand the carved-out business as PureEHS after the deal close, expected during this year’s second quarter. The sale will let Northbrook, Ill.-based UL focus on its Ultrus risk and compliance software business. 

People

Vie Ventures, an investor focused on autoimmune and immune-mediated diseases, named Jeff Bluestone as managing director. He most recently co-founded and led Sonoma Biotherapeutics.

Growth equity investor FTV Capital promoted Adam Hallquist to partner, where he will continue to focus on vertical software, payments and financial technology and services. Prior to joining the firm, he was an investment banking analyst at Financial Technology Partners.

DCVC promoted Rachel Slaybaugh to general partner. She focuses on climate, sustain­ability and energy investments at the firm.

Growth investor Lead Edge Capital promoted Zach Ullman to partner. Prior to joining the firm in 2017, he was a product manager at National Vision Administrators.

Exits

Hims & Hers Health agreed to acquire Eucalyptus in a transaction valued at up to $1.15 billion. The health and wellness platform will pay $240 million in cash upon closing for Eucalyptus, which builds and operates digital healthcare companies, in an effort to help the company expand into Australia and Japan, and grow its presence in the U.K., Germany and Canada.

Johnson Controls signed an agreement to acquire Alloy Enterprises, a startup that provides a thermal-management platform for data centers, for an undisclosed amount.

Vestwell, a New York-based company offering workplace savings programs, scored $385 million in Series E funding. Blue Owl Capital and Sixth Street Growth led the round, which included participation from Neuberger Berman, TIAA Ventures, HarbourVest Partners and others.

Kavak, a Mexico City-based digital platform for buying, selling, financing and servicing pre-owned vehicles in Latin America and emerging markets, landed a $300 million Series F investment. Andreessen Horowitz led the funding, which included participation from WCM Investment Management, Galdana Ventures and several others.

Code Metal, an automated code translation and optimization provider, fetched $125 million in Series B funding at a $1.25 billion valuation. Salesforce Ventures led the investment, which included participation from Accel and several others. The company also appointed Ryan Aytay as president and chief operating officer.

Jump, a Salt Lake City-headquartered AI assistant and intelligence engine for financial advisers, completed an $80 million Series B round. Insight Partners led the round, which included additional support from F-Prime, Allianz Life Ventures, TIAA Ventures, Battery Ventures, Citi Ventures and others.

Novig, a New York-based sports trading platform, closed a $75 million Series B round. Pantera Capital led the investment, which included contributions from Multicoin Capital, Forerunner Ventures, Perceptive Ventures, NFX and others.

DG Matrix, a Morrisville, N.C.-based developer of a multiport solid-state transformer powering AI data centers and electrification, closed a $60 million Series A round. Engine Ventures led the funding, which saw participation from Helios Climate Ventures, Fine Structure Ventures, MCJ and others.

Efficient Computer, a Pittsburgh-based startup building energy-efficient general-purpose processors for AI, raised $60 million in Series A funding. Triatomic Capital led the investment, which saw participation from Eclipse, Union Square Ventures and others.

Cogent Security, a San Francisco-based startup building agentic systems to fight escalating AI threats, grabbed $42 million in Series A funding. Bain Capital Ventures led the round, which included contributions from Greylock Partners and Definition.

FYLD, a London-based frontline intelligence platform for the global infrastructure sector, snagged a $41 million Series B round. Energy Impact Partners led the investment, which included participation from Partech.

Venice, an adaptive privileged access platform with offices in Tel Aviv and New York, launched with $33 million in funding, including a $25 million Series A round led by IVP.

Onshore, a New York-based AI-powered tax platform formerly known as SPRX, secured $31 million in Series B financing led by FPV Ventures.

Eagle Wireless, a Cleveland-based cellular module manufacturer, closed a $30 million Series B round led by Asymmetric Capital Partners and The O.H.I.O. Fund.

• Uber, Latest Victim of Disruption Panic, Still Has Role in Robotaxis
   
• West Virginia Attorney General’s Lawsuit Alleges Apple’s iCloud Allows for Distribution of Child Pornography
   
• From Paris to New Delhi, the Push to Ban Teens From Social Media Is Going Global
   
• Elizabeth Warren Has Questions About the Shake-Up Inside the Fed’s Banking Regulator

• Ring’s Founder Knows You Hated That Super Bowl Ad (New York Times)
   
• Software Rout Wipes $7.2 Billion Off Atlassian Founders’ Wealth (Bloomberg)

This newsletter was compiled by Yuliya Chernova 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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