Good day. Unicorn down rounds are on track to fall to a decade low this year, according to PitchBook. But that data point doesn’t tell the full story.

Just six companies that achieved a valuation of $1 billion or more have raised funding at a decreased valuation this year, according to PitchBook. That suggests a sharp dropoff from 31 such rounds recorded last year, and a decline from 2022’s low of 22. But the decline comes as close to half of the 1,743 global unicorns tracked by PitchBook haven't raised funding in more than two years.

“Perhaps these companies have not seen enough traction since then, or, frankly speaking…are somewhat afraid of raising a primary round, so they don’t get that step down in valuation,” said PitchBook's Franco Granda, a senior research analyst.

That fear might explain the drop in down rounds. Were these dormant unicorns to raise another round of funding, it is likely many would be doing so at a valuation lower than their peak, Granda said.

The dynamic comes as the future of many venture-backed startups founded before the rise of generative artificial intelligence appears uncertain. Indeed, 43% of the unicorns that haven't raised funding in more than two years are software-as-a-service companies, which are facing down “SaaSpocalypse” fears. A further 30% are AI and machine-learning companies, and 19% are fintech companies, a category that includes crypto and blockchain technology companies.

Just look at workflow software maker Airtable, which last raised a $735 million funding round at an $11 billion valuation in late 2021. The company agreed to be acquired by Italian technology company Bending Spoons this month at an enterprise value of $1.29 billion. The deal implies an equity value of $2.25 billion, inclusive of Airtable’s cash and cash equivalents balance, the companies said. Still, that is a fraction of Airtable’s peak valuation.

Airtable isn’t alone. PitchBook is tracking 15 companies that achieved unicorn status in 2021 and have since been acquired for less than their peak valuations. It’s a fate startups want to avoid, PitchBook senior research analyst Harrison Rolfes said.

To escape the limbo state they’re in, these unicorns need a broader funding market or an exit market that warms to them, Rolfes and Granda wrote in a report on unicorns published this week. And yet, based on data from the first half of this year, neither scenario appears to be materializing, they concluded in the report. 

And now on to the news...

OpenAI results disappoint. The ChatGPT maker told investors its revenue grew by 18% from the first to the second quarter, while its losses deepened, results that disappointed some shareholders who had hoped the startup would show more progress catching up to rival Anthropic. 

• The company said its revenue grew to $6.7 billion in the three months ended in June, up from $5.7 billion in the first quarter. Meanwhile, its operating margin sank further into the red, pushing the company further away from profitability ahead of a much-anticipated initial public offering, people familiar with the matter said.
   
• Anthropic more than doubled its revenue to $11.6 billion in the same period, marking the first time its sales surpassed its older rival.

One of the most hyped projects in the energy market is an excavation pit scattering dust in the high desert of the Snake River Plain, where nuclear startup Oklo is building one of America’s first new reactors in a generation. Renewed interest in nuclear power is colliding with mania over artificial intelligence here at the Idaho National Laboratory’s desert campus, a remote site that spans an area nearly twice the size of Los Angeles. Oklo and rival developers hope to drive an AI revolution and nuclear renaissance that powers the American economy for decades to come—but they have much to prove.

Opening arguments in a child safety trial against Meta Platforms began Tuesday in what could be the most consequential social-media harm case yet. The case, brought by the state attorneys general of California, Kentucky, Colorado and New Jersey, will explore whether Meta violated state consumer protection laws and the federal Children’s Online Privacy Protection Act of 1998 by knowingly making its platforms addictive and going after young users. The trial comes on the heels of Meta’s nearly $1 billion loss in New Mexico state court and could cost the tech company 200 times as much money if it loses, according to a recent filing.

People

Siddharth (Sidd) Ramakrishnan has been promoted to partner at Scale Venture Partners, where he focuses on AI infrastructure, applications and physical AI. Prior to joining the firm, he led product strategy at Attentive.

Velaura AI, a Santa Clara, Calif.-based AI compute infrastructure startup developing ultra-low-power silicon and software technologies, scored $110 million in Series A funding, bringing the company’s valuation to more than $1 billion. Seligman Ventures led the investment, which included participation from Capricorn Investment Group, Prosperity7 Ventures, Mayfield, Samsung Catalyst Fund and others.

Smack Technologies, an Austin, Texas-based startup building AI decision-making tools for national security, landed $61 million in Series B funding. Costanoa Ventures and First In led the round, which included contributions from Point72 Ventures, Geodesic Capital, Felicis, Fortitude Ventures and others.

Boom, an Austin, Texas-headquartered startup providing a leasing operating system for property management, snagged a $15 million Series A round led by S3 Ventures.

Rezolv, an India-based AI platform for lending and debt collection, raised $12.5 million in Series A funding. Norwest led the round, which included participation from Vertex Ventures Southeast Asia and India and 3one4 Capital.

Lanyon AI, a Princeton, N.J.-based startup building a new kind of scientific AI backed by mathematical proofs of correctness, emerged from stealth with a $10.6 million investment led by Dimension.

Synthefy, a San Francisco-based developer of a foundation-model platform for structured data, was seeded with a $6.5 million investment led by Wing Venture Capital.

• Investors Slam SEC Plan to Remove Best-Price Rule
   
• What Parents Need to Know About OpenAI’s New ChatGPT for Teens
   
• New Housing Law Boosts Prospects for Factory-Built Homes
   
• Harvey Remakes Its AI Legal Platform by Adding Memory
   
• Tech Stocks Slide With Global Bond Selloff Picking Up Steam
   
• Why Do Boards Keep Giving Misbehaving CEOs Second Chances?

• OpenAI Makes AI Safety Changes in Wake of Hugging Face Breach (Bloomberg)
   
• The push for AI watermarks is spawning a new wave of tools to remove them (Business Insider)
   
• The Cop Who Took On Flock (Wired)

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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