Good day. Some big venture-backed companies have been acquired recently: first Cursor, then OpenRouter and just this week Hugging Face, which Nvidia said it would buy for about $13 billion.

VCs, we want to hear from you: Do you expect acquisitions to emerge as the most viable exit for the bulk of today’s fast-growing AI startups? Or do you think the IPO window will soon open wide enough to accommodate AI companies that aren’t, say, Anthropic or OpenAI? Please send your thoughts to vcnews@wsj.com.

Last week, we asked emerging managers to tell us what strategies they’re using to stay competitive as valuations rise and LP attention is increasingly trained on billion-dollar funds. Here are edited and condensed highlights of the answers:

• Sandhya Venkatachalam, founder of Axiom Partners: Everyone else is racing to write the biggest check into the most obvious deal. We’re racing to be in the room before it’s obvious at all. Our team is made up of AI operators from OpenAI, HubSpot and various startups building products for customers on today’s latest tech. We give founders and LPs a level of speed and access that large, multi-stage funds can’t match. Rather than competing head-on with those funds for allocation, we’ve built deal-sharing relationships with many of them, so we’re often the first check that leads to their later ones.
   
• Rob Biederman, managing partner of Asymmetric Capital Partners: It is an obvious reality that more than 95% of venture dollars—both at the LP level and then, consequently, those going into direct deals—are currently chasing the largest and most competitive markets. We see a select few extremely return-sensitive allocators, like sophisticated family offices and discerning endowments, that remain focused on timeless variables like competitive intensity, capital efficiency and game selection.
   
• Anis Uzzaman, founder and CEO of Pegasus Tech Ventures: A large portion of our LP base is strategic corporations, not just financial investors, and that changes what we can offer a portfolio company after we write the check. When we bring a company into our network, we’re opening doors to real business development with our corporate LPs. That’s the kind of value founders remember. It’s also what keeps our LPs engaged with us, they’re not just earning a return, they’re getting visibility into the startups shaping their industry. In a market where every fund is chasing the same billion-dollar names, that ongoing, post-investment relationship is what earns us a seat at the table early and keeps us there through subsequent rounds.

Please note: This newsletter won't be published Monday in observance of the Labor Day holiday. We'll see you back here Tuesday.

And now on to the news...

Many times over. John Borthwick and his team at venture firm Betaworks picked Hugging Face as one of eight startups to join its 2016 accelerator among 450 applicants. A decade later, New York-based Hugging Face, which pivoted to becoming a platform for open-weight AI models, said it is being acquired by Nvidia for close to $13 billion, including about $11.9 billion for stockholders and $1 billion in equity retention for employees.

• Betaworks wrote a $150,000 check into the company, which was developing a chatbot for teens at the time. Another $50,000 was syndicated to angel investors. It still owns a roughly 5.5% stake in the company, according to a person familiar with the situation. 
   
• That translates to roughly $650 million at the acquisition price. The firm invested in Hugging Face out of its $48 million first venture fund. That math suggests that the acquisition will return its fund several times over.

Also: The ‘Deeply Nerdy’ Founders Behind Nvidia’s Bet on Hugging Face

Smart-ring maker Oura made its IPO paperwork public on Thursday, aiming to list on the Nasdaq as soon as this month. The San Francisco-based company expected to fetch a valuation well above the $11 billion mark achieved in a funding round last year, The Wall Street Journal previously reported.

• For the nine months ended June 30, Oura posted revenue of $1.21 billion, up 74% from the same period last year. The company said it recently turned profitable and earned $60.8 million in the period, up from $1.6 million in the same period last year.
   
• Subscribers opened the Oura app more than 3.5 times a day on average in the first three quarters of the fiscal year, the company said.
   

China’s Moonshot AI has confidentially submitted an application for an initial public offering to Hong Kong’s stock exchange, people familiar with the matter said. The Beijing-based artificial-intelligence startup’s latest private funding round values it at $50 billion, the Journal has reported.

• A rising star on China’s increasingly competitive AI scene, Moonshot jolted the industry in July with its new large-language model Kimi K3, whose performance rivals that of some top-tier American offerings.
   
• If successful, the listing, which is subject to approval by Chinese regulators, could become one of the largest IPOs in Hong Kong in recent years. 

Funds

Swish Ventures closed a $250 million third fund, bringing the firm’s assets under management to about $800 million. The new vehicle plans to make seed and Series A investments across sectors including cybersecurity, technology infrastructure, physical AI, defense, AI for industrial applications and government technology.

People

Felicis appointed Tony Shi as partner and promoted Michelle Delcambre to general partner and managing director. Shi was previously an investor at Pear VC, Dorm Room Fund and Redpoint Ventures. Prior to joining Felicis, Delcambre led talent and people functions at Atlassian, Databricks, Okta and Stripe.

Out-of-home advertising-focused Onescreen named Adam Skinner as chief executive officer. He was previously managing director, retail media at Epsilon.

Exits

Digital infrastructure provider Vertiv will add microgrid controls, onsite power generation and energy-storage orchestration to its offerings with an agreement to acquire Utility Innovation Holdings for about $1.45 billion in cash. The deal comes with additional consideration of up to $1.15 billion based on achieving certain earnings targets.

Lyte, a Sunnyvale, Calif.-headquartered spatial intelligence platform for robots, raised $165 million in Series C funding, valuing the company at $1.6 billion postmoney. Maverick Silicon led the round, with Managing Partner Andrew Homan joining the company’s board.

TabaPay, a Palo Alto, Calif.-based startup powering money movement infrastructure for fintechs, lenders and other platforms, secured $155 million in strategic growth financing. FTV Capital led the investment, with Partner Robert Anderson joining the board.

iPronics, a Spain-headquartered developer of silicon photonics-based optical circuit switching for AI infrastructure, scored $125 million in Series B funding. Maverick Silicon and Light Street Capital co-led the investment, which included participation from Nvidia, Triatomic Capital, Bosch Ventures, Catalight Capital, Fine Structure Ventures and others. Manish Muthal, senior managing director at Maverick Silicon, will join the iPronics board.

Scan.com, a London-headquartered medical imaging network, closed on $220 million in Series C funding, including $90 million in equity led by Noteus Partners.

Physical Superintelligence, a Cambridge, Mass.-based startup building an AI-native physics research lab, was seeded with a $58 million investment led by Breakthrough Energy Ventures.

Conveo, a New York-headquartered AI-moderated video interview platform providing consumer data to brands, landed $50 million in Series A funding from investors including DST Global Partners, Balderton Capital, Visionaries, 6 Degrees Capital and Y Combinator.

Aitan, a startup developing edge-AI robotic weapon systems, emerged from stealth with a new $41 million investment co-led by Deep33 Ventures and Dell Technologies Capital.

Guardio, a Tel Aviv-based consumer cybersecurity startup, picked up a $40 million investment, valuing the company at $1.1 billion. Investors included ION Crossover Partners, Union Tech Ventures, Vintage, Cerca Partners and Emerge Ventures.

• Corporate America Is Axing the ‘Micro-Team’ Boss
   
• Musk’s Boring Co. Pushes Investors for Recruiting, Business Help
   
• Hollywood’s New Shows Take Aim at Big Tech
   
• Nothing Makes Humans Happier Right Now Than Watching Robots Fail
   
• Adobe Names Anil Chakravarthy as Chief Executive Amid AI Transformation
   
• Mac-and-Cheese Disruptor Goodles to Be Acquired by Barilla
   
• The Hunt for AI-Proof Assets Is Leading Investors to Sports, Casinos and Travel
   
• AI Spending Is Up. So Is the Guesswork.

• There's an Easter egg hiding inside the $12.9303 billion price tag of the Nvidia-Hugging Face deal (Business Insider)
   
• Crypto billionaire Chris Larsen drops $500,000 on SF district race (San Francisco Standard)
   
• Noise and Motion Monitors in Their Homes? These Tenants Say No. (New York Times)

This newsletter was compiled by Sarah Klearman and Zachary Cole.

Share your tips, comments and questions: vcnews@wsj.com

The team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Sarah Klearman.

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