Good day. The venture-capital world never tires of debating what city will emerge as the next U.S. tech hotspot. A report published last week provides fresh fodder to the derby.

A caveat: The third quarter was a tough one. The number of U.S. venture deals skidded 24% from the prior quarter to 2,794 deals and deal value fell 32% to $37.5 billion, according to a report by analytics firm PitchBook Data and the industry group National Venture Capital Association.

So the question wasn't which metro areas thrived. It was which areas were least thumped.

The top performers, so to speak, were the Austin, Texas, and Miami areas. Austin's deal count dropped 10% from the second quarter, just ahead of Miami, where deal count fell 11% over the same period. Still, the two areas performed relatively better than other cities in terms of deal value, generating 25% and 75% jumps during the third quarter, respectively.

Morgan Flager, managing partner of Austin-based venture firm Silverton Partners, said it was difficult to draw any big conclusions on what sustained Austin’s third-quarter performance, but he felt deal-making activity had picked up this year after a slowdown in 2022.

Silverton made two new investments in the third quarter, both in artificial intelligence startups, Flager said. His firm is on pace to make seven or eight more investments this year, roughly the firm’s average over 18 years. The firm did just four deals in 2022, Flager said.

“Within that particular band of time, I think it's just statistically about what happens in the metro [area] over that period, rather than a central theme,” Flager said.

Meanwhile, the worst performers were the Washington D.C. area and the Denver region, where deal count fell 27% and 29%, respectively, in the third quarter from the prior quarter. Those regions also lagged in deal value, notching 78% and 20% drops, respectively.

The San Francisco area, cradle of venture capital, saw deal count fall 24%, also the national average. Deal value fell by half in the third quarter in San Francisco.

And now on to the news...

Google backs new nuclear plants to power AI. Google will back the construction of seven small nuclear-power reactors in the U.S., a first-of-its-kind deal that aims to help feed the tech company’s growing appetite for electricity to power AI and jump-start a U.S. nuclear revival, The Wall Street Journal reports. Under the deal’s terms, Google committed to buying power generated by seven reactors to be built by nuclear-energy startup Kairos Power. The agreement targets adding 500 megawatts of nuclear power starting at the end of the decade, the companies said Monday.

Insight Partners has tapped the private-equity secondary market to generate cash for its fund investors at a time when high interest rates and valuation uncertainty still hamper the sale and listing of technology businesses, WSJ Pro reports. The $80 billion investment firm, an early backer of technology companies, raised a $1.5 billion vehicle to acquire stakes in multiple software companies held by older funds under its own management, the firm said. Backers of those older funds were given the option to retain their stakes or cash out to a group of buyers led by Boston-based private-markets firm HarbourVest Partners.

Amazon.com and startup Databricks struck a five-year deal that could cut costs for businesses seeking to build their own artificial-intelligence capabilities, WSJ reports. Databricks will use Amazon’s Trainium AI chips to power a service that helps companies customize an AI model or build their own. Amazon says customers pay less to use its homegrown chips compared with the competition, such as Nvidia’s graphics processing units, or GPUs, which dominate the AI chip market.

Asia watching China’s policy push closely. Asia is scrutinizing China’s unprecedented efforts to keep its economy humming. If Beijing doesn’t succeed, the fallout will ripple across the region, just as economies there get onto firmer ground, WSJ reports. China’s been an engine of regional growth for the past three decades, but its mounting economic woes have cast a shadow over its neighbors. As China’s top leaders get serious about reviving the economy, Beijing’s next policy steps could determine if it will again be a regional tailwind.

Funds

Swell Partners closed their second fund with $11.5 million in commitments. The New York-based firm makes pre-seed and seed-stage investments in sectors including business-to-business infrastructure, artificial intelligence, space, healthcare, commerce and defense.

Port, a platform for creating internal developer portals, scored $35 million in Series B funding led by Accel.

Stoïk, a French cyber insurance platform, raised €25 million in Series B funding. Alven led the round, which included participation from Andreessen Horowitz and others.

Gladia, a Paris-based AI transcription and audio intelligence provider, closed a $16 million Series A round led by XAnge.

Lidwave, a Jerusalem-headquartered 4D on-chip sensing technology provider, secured $10 million in seed financing led by Jumpspeed Ventures and Next Gear Ventures.

FullyRamped, a San Francisco-based AI role play platform for sales teams, landed $2.3 million in pre-seed funding led by BoxGroup, MaC Venture Capital and NOMO Ventures.

Nomos, a Berlin-based startup helping businesses launch their own energy plans, collected $2.1 million in pre-seed funding led by Speedinvest.

• China’s top carmaker dominates foreign rivals with $14,000 plug-in hybrid

• More children are depressed and anxious. Is social media really behind it?

• Used EVs sell for bargain prices now, putting owners and dealers in a bind

• U.S. tech firms to invest more than $8 billion in U.K. data centers amid AI frenzy

• Credit cards don’t require signatures. So why do we still sign?

• Stripe, Wise founders want a ‘tech renaissance’ in Europe to help region rival Silicon Valley (CNBC)
   
• This threat hunter chases U.S. foes exploiting AI to sway the election (Washington Post)
   
• Demis Hassabis’s drug discovery startup accelerates spending to ‘solve’ diseases (Financial Times)

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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