Good day. Venture debt is flashing a warning sign.

Data from market analytics firm MSCI shows loan markdowns in venture debt have more than doubled in recent years. From the first quarter of 2022 to the third quarter of 2025, the proportion of venture debt marked down at least 20%—a typical threshold for distress—grew from 9% to 24%.

Loan markdowns are a lagging indicator. Measures from last year’s fourth quarter may not be available until this spring. That means steep markdowns in the MSCI data are not yet reflecting recent downturns in software-company valuations, making analysts uneasy about the future of venture debt.

“It’s a big shoe that could drop,” said Patrick Warren, vice president of research and development at MSCI.

Venture debt, which includes loans made to startups, is distinct from venture capital that typically exchanges funding for equity. Data on venture-debt performance is aggregated from closed-end, drawdown funds that use MSCI’s portfolio-management tools.

Current loan markdowns have come largely from the healthcare sector, which accounts for roughly a fifth of the venture-debt market. Information technology has so far shown below-average distress rates.

Nicolas Sauvage, president of TDK Ventures, said any future markdowns in information technology would not be a surprise given the current re-evaluation of revenue streams based on selling individual “seats” that many software-as-a-service companies rely on.

“As AI compresses the need for incremental head count, some of these revenue assumptions weaken, which naturally increases write-down pressure,” he said.

And now on to the news...

Lean AI startups. Boosted by powerful new artificial-intelligence tools, Silicon Valley startups are running leaner than ever, spawning new benchmarks like revenue-per-employee and even talk of the billion-dollar, one-person company. AI coding products like Anthropic’s Claude Code and OpenAI’s Codex, along with AI tools for sales, marketing and other functions, have reduced the need to hire, some founders and Silicon Valley insiders say. But some entrepreneurs say there is such a thing as being too lean, especially when selling to corporate clients who demand a human touch. Startups are trying to find the right balance.

It doesn’t take much to cause tumultuous stock moves in a market top-heavy with tech shares and jumpy about the prospects for artificial intelligence. But nothing underlines the sensitivity of stocks right now quite like what happened on Monday, when one of the factors behind the Dow’s 800-point drop was a 7,000-word hypothetical. A viral report by Citrini Research tapped into a new strain of fears about AI, painting a dark portrait of a future in which technological change inspires a race to the bottom in white-collar knowledge work.

U.S. artificial-intelligence startup Anthropic said three Chinese AI companies set up more than 24,000 fraudulent accounts with its Claude AI model to help their own systems catch up. The three companies—DeepSeek, Moonshot AI and MiniMax—prompted Claude more than 16 million times, siphoning information from Anthropic’s system to train and improve their own products, Anthropic said in a blog post Monday. Earlier this month, an Anthropic rival, OpenAI, sent a memo to House lawmakers accusing DeepSeek of using the same tactic, called distillation, to mimic OpenAI’s products.

People

CAVU Consumer Partners, an investor focused on the branded consumer sector, promoted Jared Jacobs to managing partner. Prior to joining CAVU in 2017, he was an associate in the consumer and retail group at AEA Investors.

Axonius, an asset intelligence platform for unified security operations and exposure management, appointed Meghan Marks as chief marketing officer. She was previously CMO at Orca Security.

Cyber incident response management provider BreachRx appointed Young-Sae Song as chief marketing officer.He most recently served as CMO at Grip Security.

SentiLink, a provider of identity verification and fraud detection technology, named Kathleen Waid as chief revenue officer. She previously held senior revenue leadership positions at Prove Identity, NeuroID, Fiserv and Point Predictive.

Exits

Uber Technologies agreed to acquire SpotHero in a move to bring parking reservations on to the ride-hailing platform.

SambaNova, a San Jose, Calif.-headquartered AI chip startup, scored more than $350 million in Series E funding. Led by Vista Equity Partners and Cambium Capital, the round included participation from Intel Capital, Battery Ventures, GV and several others.

Ubicquia, a Fort Lauderdale, Fla.-based intelligent critical infrastructure technology developer, completed a $106 million Series D round led by Marunouchi Innovation Partners and 67 Capital.

Aalyria, a Livermore, Calif.-based aerospace communications startup, closed a $100 million Series B round led by Battery Ventures and J2 Ventures, valuing the company at $1.3 billion.

Humand, a San Francisco-based AI-powered operating system for deskless workforces, landed $66 million in Series A funding. Kaszek and Goodwater Capital co-led the round, which saw contributions from Y Combinator and others.

Nimble, a New York-headquartered enterprise platform for real-time agentic web search, raised $47 million in Series B funding. Norwest led the round, which saw participation from Databricks Ventures, Target Global, Square Peg and Hetz Ventures.

Slang AI, a New York-based provider of an agentic voice AI platform for guest communications in hospitality settings, secured $36 million in Series B financing. U.S. Venture Partners led the round, which included participation from Thayer Capital, Homebrew, Wing, Underscore VC and others.

Hypercore, a Tel Aviv-based loan-management platform for private-credit funds, nabbed $13.5 million in Series A funding. Insight Partners led the round, with Managing Director Hagi Schwartz joining the company’s board.

Giant, a San Francisco-based interactive storytelling platform, collected $8 million in seed funding led by Matrix, Decasonic and Griffin Gaming Partners.

General Magic, a Toronto-based AI insurtech startup, was seeded with a $7.2 million investment led by Radical Ventures.

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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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