Good day. Investors are still jumping into artificial-intelligence startups. Several notable deals have been announced over the past week.

• Hugging Face, which helps companies leverage AI, raised a $235 million series D at a $4.5 billion valuation. Investors in the deal include Google, Amazon, Nvidia, Intel, Advanced Micro Devices, Qualcomm, International Business Machines, Salesforce and Sound Ventures. Hugging Face says it hosts over a million repositories including 500,000 models and 250,000 datasets, allowing companies to store and use AI software.
   
• Modyfi, an AI-infused image-editing startup, raised $7 million in seed funding led by New Enterprise Associates. The Los Angeles-based startup allows users to make photoshop-style edits by typing in basic commands. Modyfi said the new capital will be used to fuel early user adoption and product development. Previous investors, including General Catalyst, participated in the round.
   
• Qualiti.ai, a startup which offers an AI-powered platform that software engineers can use to automatically test code to spot bugs, raised a $6.5 million seed round. The Utah-based software startup tapped investors including Sierra Ventures and Epic Ventures.

AI is one of the few bright spots in the startup sector. While venture investment has been relatively dry this year, global AI and machine-learning startups netted nearly $40 billion in the first two quarters, according to PitchBook Data. Last year, the sector tallied $73 billion.

"AI is and will continue to dominate most discussions related to venture investing for the foreseeable future," said Conor Moore, head of private enterprise in the Americas for professional-services company KPMG. "There will be game changing and world changing AI-based solutions developed in the next 18 months."

Moore added that investors will be pitched AI solutions that purport to be AI-based but are not and that investors who can decipher between the two will be successful. 

And now on to the news...

Exit ahead. Instacart’s profit climbed in the first half of the year, though growth in its core grocery delivery business slowed, the company said ahead of its long-planned initial public offering, The Wall Street Journal reports.

• In documents filed Friday with the Securities and Exchange Commission, Instacart said its revenue increased about 31% to $1.5 billion for the first six months of 2023 compared with a year ago. The company generated $242 million in profit, up from a $74 million net loss.
   
• San Francisco-based Maplebear, which does business as Instacart, detailed the results ahead of its planned listing on Nasdaq under the ticker symbol CART. Instacart has been among the buzziest IPO candidates in what has been a slow patch for new listings, and its offering will serve as a signal for whether the market has opened for new IPOs.

The federal government is escalating efforts to make cryptocurrency investors comply with tax law, nearly 15 years after people started trading bitcoin, WSJ reports. The Treasury Department proposed new rules Friday with twin goals: making it harder for crypto investors to dodge income taxes when they sell digital assets, and simplifying complicated tax messes for people who are trying to follow the law. When they are fully implemented, the rules will require crypto exchanges such as Coinbase to deal with the Internal Revenue Service in a manner similar to brokers who handle investors’ stock and mutual-fund portfolios.

Few companies have seen their value change as much in the past year as CoreWeave, a specialized cloud provider offering access to the advanced chips, futuristic data centers and accelerated computing that fuel generative artificial intelligence. It owns the mighty GPUs that have become engines of modern innovation, and CoreWeave sells time and space on supercomputers to clients in desperate need of the processing power that AI requires. CoreWeave has quickly and improbably become one of the largest GPU providers and leaders in the arms race for AI infrastructure. Now it’s racing to keep pace with the fastest software-adoption curve in history, WSJ reports.

Funds

New York-based Geek Ventures closed its inaugural fund with $23 million in commitments to support immigrant founders at the pre-seed and seed stage.

People

Climate change-focused Prelude Ventures said Matt Eggers joined the firm as a managing director. He was previously a partner at Breakthrough Energy Ventures.

Behavioral healthcare provider aptihealth said Chris Betz joined the company as chief technology officer. He was most recently senior director of software engineering at Brightside Health.

HR tech startup ThisWay Global appointed Jim Duddy as its chief revenue officer. He was most recently senior vice president of sales at Rev.com.

Targeted cancer therapy startup Elucida Oncology named Ramzi Benamar to the post of chief financial officer. He was previously CFO at Bellus Health.

Cement decarbonization startup Fortera named Kas Farsad as chief strategy officer.

Companion Protect, a Leawood, Kan.-based pet insurance and pet wellness administration startup, landed $27 million in Series A funding from Avanta Ventures and others.

Holy, a Berlin-based brand offering a healthier alternative to traditional soft drinks, raised a €10.5 million Series A round led by Left Lane Capital.

Crate, a Los Angeles-based startup that helps users organize pieces of the internet into one central location, picked up $5 million in seed funding from investors including MaC Venture Capital and Bessemer Venture Partners.

Panobi, a San Francisco-based growth platform for product and marketing teams, was seeded with a $5 million investment led by Index Ventures.

Irys Insurtech, a Tampa, Fla.-based insurtech startup, closed a $3.5 million seed round led by Markd.

Zivian Health, a Cleveland-based startup connecting nurse practitioners and physician assistants to physicians, secured a $3 million investment from Wireframe Ventures and others.

• Binance drops sanctioned Russian banks from peer-to-peer service
   
• Can Elon Musk make politics work on X?
   
• Buying the best EV under $60,000
   
• Claimant data breached in Genesis, FTX and BlockFi bankruptcy cases

• Two 20-year-olds beat grim market to mint India’s newest unicorn (Bloomberg)
   
• Lending startup Captain winds down, seeks buyer amid VC drought (Insider)

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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