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Companies Test Their Risk Tolerance When it Comes to Generative AI
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By Yuliya Chernova, WSJ Pro
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Good day. The rapid adoption of generative AI poses privacy, cybersecurity, compliance, bias and other dilemmas. Concerns abound among vendors, customers, investors, acquirers and managers tasked with monitoring how the technology is used internally.
Lawyers, meanwhile, are issuing warnings, trying to fit emerging AI use cases to existing laws and writing disclaimers into contracts.
“They are all about shifting risk,” is how Mark Wittow, a partner at law firm K&L Gates focused on intellectual property, put it. Wittow was speaking about contract negotiations around generative AI at a webinar hosted by the law firm Tuesday on managing risks of the technology. Customers don’t want to be responsible, for example, should algorithm outputs infringe on someone’s copyright—and neither do AI providers.
For firms investing in or buying companies that use generative AI, Wittow had this advice: “You want to specifically inquire about the training sets, how the algorithms were developed and how they are maintained and improved over the course of time.”
Beyond the legal pitfalls, deploying the technology to ill effect can also hurt reputations, said K&L Gates Partner Julie Rizzo, who is part of the capital markets group.
Despite the risks, many companies are pursuing the use of the technology, driven partly by an imperative to maximize returns. They must weigh the risks of using generative AI against its advantages. “It becomes more of a question of risk tolerance,” Rizzo said.
And now on to the news...
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Psilocybin gummies at Karl Goldfield’s home. ‘Think of it as a smart drug,’ he said.
PHOTO: CLARA MOKRI FOR THE WALL STREET JOURNAL
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Magic bullets. Elon Musk takes ketamine. Sergey Brin sometimes enjoys magic mushrooms. Executives at venture-capital firm Founders Fund, known for its investments in SpaceX and Facebook, have thrown parties that include psychedelics, The Wall Street Journal reports.
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Routine drug use has moved from an after-hours activity squarely into corporate culture, leaving boards and business leaders to wrestle with their responsibilities for a workforce that frequently uses. At the vanguard are tech executives and employees who see psychedelics and similar substances, among them psilocybin, ketamine and LSD, as gateways to business breakthroughs.
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109.7
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The Conference Board’s consumer confidence index for June hit a 17-month high, above what economists polled by The Wall Street Journal had forecast.
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Private-Equity Giants Settle for Bite-Size Deals
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Megadeals are out. Little deals are in.
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Blackstone, KKR and other buyout giants are using their record war chests to snap up smaller companies in deals that typically are easier to accomplish in an era of soaring borrowing costs and economic uncertainty, WSJ reports.
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Volatile markets and a cloudy economic outlook have made it harder for buyers and sellers to agree on the worth of a business. More expensive debt and a dearth of bank financing are also making large buyouts more challenging, bankers and private-equity deal makers say.
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So far this year, PE-backed deals have an average value of $65.9 million, the smallest for the comparable period since the global financial crisis, according to Refinitiv, a data provider.
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Online Real-Estate Debt Provider Peer Street Files for Bankruptcy
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Peer Street, a real-estate debt provider aiming to make financing more accessible for wealthy investors and institutions, has filed for bankruptcy due to reduced mortgage demand and scarcer venture-capital funding, WSJ reports.
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The El Segundo, Calif.-based online platform, which counts venture-capital firms including Andreessen Horowitz and World Innovation Lab as backers, plans to sell itself as part of a chapter 11 filed Monday.
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The company entered bankruptcy with both assets and liabilities of up to $100 million. It plans to keep operating while looking for buyers for its loans and other holdings, according to the filing.
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RTP Global Raises $1 Billion Fund
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RTP Global, an early-stage venture-capital firm, raised a $1 billion fund, derived almost entirely from the reinvestment of proceeds from its previous investments.
The fund, RTP’s fourth, will be deployed across North America, Europe, India and Southeast Asia and target startups that are in seed and Series A stages developing tech in sectors including artificial intelligence, enterprise software, financial tech, e-commerce and edtech.
The fund earmarks $660 million for new investments and $340 million to existing portfolio companies.
Notable early-stage investments made by RTP include Datadog, a monitoring and security platform for cloud applications, online food ordering service DeliveryHero, and Cred, a rewards-based credit-card payment app.
RTP's last fund was a $650 million vehicle that closed in 2020. Since then, the firm has grown its presence to include offices in London, Paris, Amsterdam, New York, Dubai and Bangalore.
RTP said that since it was founded in 2000, it has made over 110 investments worldwide.
RTP investment partner Julius Schwerin credits the firm’s expansion in part to its use of its own capital for funds. Not being beholden to liquidity pressure from external limited partners allows it to work with founders to set their own timelines to grow their companies, Schwerin said.
“It aligns our incentives [with founders] and has helped our reputation over the years,” Schwerin said.
—Marc Vartabedian
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Funds
Unshackled Ventures, a preseed investor helping immigrant founders start companies in the U.S., closed its third fund with $35 million in commitments.
Joyful Ventures closed on $23 million toward a targeted $25 million sustainable protein fund.
People
Tixr, a ticketing and event commerce marketplace, named Irene Hedges as chief strategy officer. She was most recently senior vice president of corporate business development and strategy at Warner Bros.
Exits
Publicly-traded HashiCorp, a multicloud infrastructure automation software provider, acquired BluBracket, a developer of code security technology for developers and security engineers. Terms weren’t disclosed.
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Cyera, a data security startup, collected $100 million in Series B funding. Led by Accel, the round included participation from Sequoia Capital and others.
Redpanda Data, a San Francisco-based streaming data platform for developers, raised $100 million in Series C funding. Lightspeed Venture Partners led the round, which included participation from GV and Haystack Management.
Nuvocargo, a digital platform focused on modernizing U.S.-Mexico cross-border trade, snagged $36.5 million in Series B funding led by QED Investors, bringing the company’s valuation to more than $250 million. The company is based in Mexico City and New York.
Betr, a Miami-based sports-betting and media company, scored $35 million in Series A2 funding at a $300 million premoney valuation. Roger Ehrenberg via IA Sports Ventures and Eberg Capital, along with Fuel Venture Capital, co-led the round.
Venn Software, a New York-based startup whose technology secures remote work on any computer, landed $29 million in Series A funding led by NewSpring Capital.
Astrix Security, a Tel Aviv-based startup helping cloud-first companies defend against a new generation of supply-chain attacks, raised $25 million in Series A funding led by CRV.
CalypsoAI, a Washington, D.C.-based artificial-intelligence security startup, gathered $23 million in Series A1 financing led by Paladin Capital Group.
Fero Labs, a New York-based startup whose software helps drive real-time emissions reduction for the steel, cement and chemical sectors, closed a $15 million growth round. Climate Investment led the funding, and Investment Principal Felicity O'Kelly joined the board.
BentoML, a San Francisco-based platform for artificial-intelligence application developers, secured $9 million in seed financing. DCM led the round, with General Partner Hurst Lin joining the company’s board.
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An all-electric pickup, the Endurance, at the Lordstown assembly plant in Lordstown, Ohio.
PHOTO: REBECCA COOK/REUTERS
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