Good day. As venture capitalists pull back from startup investing, they often cite a common concern: Re-upping with limited partners that invest in their funds might be wishful thinking until the overall venture market thaws. New data illustrates this dynamic and just how much less capital firms are getting from LPs.

In this year's first quarter, U.S.-based venture firms raised roughly $9 billion from LPs—roughly 11% of what they raised all of last year, according to the Venture Monitor report from analytics firm PitchBook Data and the National Venture Capital Association. Factor in that last year’s fundraising was down 57% from 2022 and the deep chill in the venture arena comes into perspective.

The fundraising struggle has venture firms making fewer startup investments. The 3,925 deals venture investors signed from January through March was about 3% fewer than in the same quarter a year earlier and 28% fewer than in the first quarter of 2022, according to the report.

“Slowed fundraising portends to LP hesitancy toward VC, and should predict a more difficult dealmaking environment down the road,” the report said.

And now on to the news...

Relocating tech workers. New York gained more tech workers on the move than any other U.S. city last year, according to a new report, indicating the local tech market continues to thrive despite the city’s high cost of living, WSJ Pro's Yuliya Chernova reports.

• The greater New York City area attracted 14.3% of all employees in the tech sector who relocated around the country in 2023, according to an analysis of LinkedIn data by venture firm SignalFire. Meanwhile, New York lost 10.7% of relocating tech workers nationwide, giving it a 3.6% net gain, the highest in the country.
   
• Austin, Texas, had the second biggest net gain at 1.4%, followed by the greater Los Angeles area at 0.6%, SignalFire said.

Generative AI is reshaping the conversation around hiring at many companies as they realize that one way the pricey technology will pay off is if it helps them employ fewer people to do more work, The Wall Street Journal reports. While early wins from using generative AI don’t necessarily portend future layoffs, they hint at the need for companies to hire less, chief information officers say. This observation comes as business technology leaders look for returns for their increased spending on AI. “We’re looking at a lot of interesting tools and they have a lot of promise—but then when you look at the cost of the tool you say, ‘Am I really going to realize that productivity internally or am I just going to increase my technology cost?’” said KeyBank CIO Amy Brady.

Franklin Templeton, long known as a big investor in stocks and bonds, has quietly become a major force in private markets, The Wall Street Journal reports. The 77-year-old asset manager made its name marketing mutual funds for individual investors. Thanks to a recent spate of acquisitions, it now manages more than $260 billion in so-called alternative assets such as private credit. In just the past five years, Franklin acquired private-credit manager Benefit Street Partners; private real-estate investment firm Clarion Partners—as part of a deal for asset manager Legg Mason; Lexington Partners, a major player in the business of buying stakes in private-equity funds; and European credit manager Alcentra. Alternatives accounted for 18% of assets and 25% of management fees as of the end of last year.

Funds

Lakestar raised $600 across its Lakestar Early IV and Lakestar Growth II funds, bringing the European investor’s assets under management to €2 billion. Both funds will focus on sectors including artificial intelligence, digitalization, deep tech, healthcare and fintech.

Brightwood Capital, a private-credit lender to small and midsize businesses, faces a legal challenge over a roughly $253 million continuation-fund deal set up with Banner Ridge Partners involving several Brightwood funds.

People

Interplay Learning, an immersive skilled trades training provider, appointed Elias Tavarez as chief revenue officer.

Enterprise commerce platform Spryker appointed Dustin Deno as chief revenue officer. 

Deals

New York Life Insurance Company acquired a minority ownership stake in Fairview Capital, a venture capital and private equity investment management firm headquartered in West Hartford, Conn.

Abre, an edtech startup, closed a $24 million Series A round. PeakSpan Capital led the investment, with Partner Sanket Merchant joining the company’s board.

Proxima Fusion, a Munich-based fusion energy startup, raised €20 million in seed funding. Redalpine led the round, which included participation from Plural and others.

Prothea Technologies, a U.K.-based lung cancer diagnosis and treatment startup, launched with €12 million in Series A funding from investors including Earlybird Venture Capital.

Udio, a New York-based AI-powered music creation app, collected $10 million in seed funding from investors including Andreessen Horowitz.

Mode, a San Mateo, Calif.-based startup focused on advancing digital transformation at factories and construction sites, closed on nearly $8.8 million in Series B financing from investors including True Ventures.

PeerDB, a San Francisco-based data movement platform, was seeded with a $3.6 million investment from 8VC, Y Combinator and several others.

• China tells telecom carriers to phase out foreign chips in blow to Intel, AMD
   
• Apple’s smartphone sales slump as China rivals rise
   
• Samsung Electronics gets $6.4 billion for Texas chip plants
   
• Roku says hackers gained access to 576,000 accounts in latest data-breach incident
   
• Hybrids extend lead over EVs in green vehicle race

• Venture capital dry powder has nowhere to go (Financial Times)
   
• Revolution or roulette? Considerations for investing in AI startups (Forbes)

This newsletter was compiled by Marc Vartabedian 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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