Good day. We recently looked at how the slower venture market is testing junior investors. But some firms have increased their pace. Felicis Ventures, which is deploying $900 million raised in 2021, is in that camp.

We spoke with Aydin Senkut, the firm’s founder and managing partner, about his approach to the current market and his strategy for developing talent at the firm. Menlo Park, Calif.-based Felicis has nine investment professionals. Here’s a slightly edited excerpt of our conversation.

How was 2022 different from 2021 for Felicis?

We ended up closing 2022 with 37 new deals, and we did only 24 in 2021. The capital deployed also went up a little but not at the same percentage rate, because we did more early-stage deals. We are all out again and hoping to pass our record last year. So far this year we made four new investments. It’s not that we are taking risky bets in a market that looks bleak. But we are able to find companies that are able to grow at incredible rates in a tough environment. So at Felicis, not only are deals are not drying up, but our junior team has never been more active.

You said your junior investors sometimes get board-observer seats at companies that Felicis backs. Why is that important?

Getting board-observer status is very important because that shows that these investors earned enough trust from founders to be allowed to be board observer but also our tacit support—often we will have a partner with them, so they can be mentored in the board role with the goal that as they mature in their careers, they can then do exact same things, but solo as needed.

What are the ways you credit your junior team for deals?

We can give credit to two deal leads and two deal sourcers. This allows people who have really worked on the deal and had great impact to be recognized, and one person not getting the spotlight solely for a deal. This is a business that relies on investors’ ability to source, diligence and lead investments, especially convincing founders. We promoted three people from vice president to deal partner last year, recognizing their hustle.

Note to readers: There will be no newsletter on Monday, Feb. 20, in observance of Presidents Day. The WSJ Pro VC newsletter returns on Tuesday, Feb. 21.

And now on to the news...

Demand for AI apps. A tightening economy and the popularity of ChatGPT is spurring business interest in new enterprisewide AI applications, the WSJ’s CIO Journal reports. But chief information officers say they cannot keep up with demand, citing the time and costs linked with building, training and rolling out AI models. Magesh Sarma, chief information and strategy officer for AmeriSave Mortgage Corp., said his team has been inundated with requests to build AI apps aimed at tackling various cost issues. “We cannot say ‘yes’ to all their requests,” he said.

More: 

• GE HealthCare Makes Push Into Artificial Intelligence
• Microsoft Defends New Bing, Says AI Upgrade Is Work in Progress

Susan Wojcicki, the chief executive of YouTube, said she is stepping down after nearly a decade in the role, The Wall Street Journal reports. Ms. Wojcicki said in a blog post Thursday that she plans to focus on her family, health and personal projects. She’ll also have an advisory role at Google and Alphabet Inc., which owns YouTube. Neal Mohan, chief product officer, will be the new head of YouTube, according to the blog post. The change is effective immediately, a YouTube spokeswoman said. “The time is right for me, and I feel able to do this because we have an incredible leadership team in place at YouTube,” Ms. Wojcicki said in the post.

The biggest manager of Massachusetts’ public-pension assets on Thursday reduced the amount allocated for new private-equity commitments this year, even as it slightly increased its target range for the proportion of assets that can be held in such funds, WSJ Pro reports. The Massachusetts Pension Reserves Investment Management Board’s budget plan calls for committing $2.2 billion to $3 billion to private-equity funds and co-investments this year, according to a presentation for its trustees on Thursday. The manager oversaw $92.4 billion at the end of last June, a separate document shows.

Funds

SignalFire closed on over $900 million in fresh capital and launched its executive-in-residence program. The firm, which now has more than $1.8 billion in assets under management, invests across sectors including artificial intelligence/machine learning, developer tools, healthcare and cybersecurity.

Counteract held the first close of its inaugural £35 million (about $42 million) venture-capital fund to invest in companies focusing on greenhouse-gas removal technology. Limited partners include Anglo American, The Grantham Foundation and Extantia Allstars. The London-based firm’s recent investments include Ecolocked, RepAir, Agricarbon, Chloris Geospatial and Vesta.

People

Eclipse, which focuses on investing in physical industries such as manufacturing, supply chain and transportation, appointed Marc Stoll as a new partner to help lead the firm’s early growth strategy. He was most recently president and chief operating officer at Nextiva.

Government technology platform Thentia Cloud appointed Kevin Houston as chief financial officer. He previously headed up finance at Founderpath. Thentia is backed by investors including Spring Mountain Capital and BDC Capital.

Deals

Blueground, which offers a network of furnished apartments for monthly or yearly leases, acquired housing on-demand provider Travelers Haven for an undisclosed amount. New York-based Blueground is backed by investors including WestCap, Geolo Capital, VentureFriends and Prime Ventures.

Primary care technology platform Elation Health acquired Lightning MD, a provider of medical billing and payer services, for an undisclosed sum. Last July, San Francisco-based Elation Health said it raised a $50 million Series D round from Generation Investment Management, Ascension Ventures, Threshold Ventures, Ascend Partners and others.

Lukka, a crypto financial data provider, purchased Web3 blockchain analytics company Venato. Terms weren’t disclosed. Early last year, New York-based Lukka closed a $110 million Series E round from Marshall Wace, Summer Capital, Soros Fund Management and Liberty City Ventures.

Deepwatch, a managed security services provider with offices in Denver and Tampa, Fla., landed $180 million in equity and strategic funding from Springcoast Capital Partners, Splunk Ventures and Vista Credit Partners. Holger Staude, managing partner at Springcoast, will join the company’s board.

R-Zero, an indoor clean air provider, closed a $105 million Series C round from investors including BMO Financial Group, Qualcomm Ventures, Upfront Ventures, DBL Partners, World Innovation Lab, Mayo Clinic, Bedrock, SOSV and John Doerr. The company’s UV-C technology improves indoor air quality while reducing reliance on harmful HVAC systems and chemicals.

Loam, an Australia-based soil carbon capture startup, raised 105 million Australian dollars (about $72 million) in Series B funding. Led by Lowercarbon Capital and Wollemi Capital, the round included participation from Horizons Ventures, Acre Venture Partners, Main Sequence, Clean Energy Finance Corp., Grok Ventures and others. Loam’s microbial technology enables greater volumes of carbon to be stored in soils for improved crop productivity.

Apkudo, a Baltimore-based provider of supply-chain automation for connected devices, completed a $37.5 million Series C round. Closed Loop Partners and Piper Sandler Merchant Banking co-led the investment, which included additional support from MissionOG, Harbert Growth Partners, Grotech Ventures, Lavrock Ventures and Point Field Partners.

Spiffy Inc., a Durham, N.C.-based on-demand car-care provider, secured $30 million in Series C financing. Lead investor Edison Partners was joined by Tribeca Venture Partners, Bull City Venture Partners, IDEA Fund Partners, Trog Hawley Capital, Private Access Network, Shell Ventures, Goodyear Ventures and others in the round. 

Smile Identity Inc., an identity verification startup serving Africa, nabbed $20 million in Series B financing. Led by Costanoa Ventures and Norrsken22, the round saw additional participation from Commerce Ventures, Courtside Ventures, Two Culture Capital, ValueStream Ventures, Intercept Ventures, Latitude, Future Africa and 500 Global. Lexi Novitske from Norrsken22 will join the Smile Identity board.

Superplastic, a Burligton, Vt.-based character design studio that creates synthetic celebrities who appear in social media, music, gaming, high-end collectibles, fashion, animated entertainment, Web3 and live experiences, grabbed a $20 million Series A extension. Amazon's Alexa Fund led the investment, which included contributions from Craft Ventures, GV, Galaxy Digital, Scribble Ventures, Day One Ventures and Betaworks.

VUV Analytics Inc., a developer of vacuum ultraviolet detector technology for gas chromatography and automated analyzer applications, picked up a $20 million investment led by S3 Ventures and New Science Ventures.

ZEVX Inc., a Gilbert, Ariz.-based electric vehicle technology startup, snagged more than $20 million in the first tranche of a funding round led by Reynolds Capital. The company also named Don Listwin as chief executive, Kevin J. Kennedy as chairman, and David L. Shimek and Sidney Haider as new board members. Mr. Listwin was previously at Cisco Systems, Sana Security, Openwave Systems and RapidAI. ZEVX provides battery electric power systems and data intelligence for e-mobility applications.

ChargerHelp, a Los Angeles-based electric vehicle technology startup, fetched $17.5 million in Series A funding. Lead investor Blue Bear Capital was joined by Aligned Climate Capital, Exelon Corp., Energy Impact Partners and non sibi ventures in the round. ChargerHelp provides on-demand repairs and maintenance support to electric vehicle charging stations.

Zerocater, a San Francisco-based office catering and corporate cafeteria startup, scored $15 million in Series C financing. Cleveland Avenue led the investment, which included support from Remus Capital.

Stuf Inc., a Brooklyn, N.Y.-based self-storage startup, closed an $11 million Series A round. Altos Ventures and Allegion Ventures led the funding, which saw participation from Wilshire Lane Capital and Harlem Capital.

• Bitcoin’s future depends on a handful of mysterious coders
   
• DocuSign plans to lay off 10% of workers
   
• Ford’s entrenched problems complicate CEO Jim Farley’s EV future
   
• Inside Meta’s push to solve the noisy office
   
• Tech progress is slowing down
   
• Smartphones are changing the war in Ukraine

• Rise of ‘zombie’ VCs haunts tech investors as plunging valuations hammer the industry (CNBC)
   
• A Bullpen Capital VC explains how startups should structure their pitch decks when fundraising (Insider)
   
• Sequoia partner on AI: ‘this time it’s not vaporware’ (Bloomberg)

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, Angus Loten, and Marc Vartabedian.

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