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Customers Say AI Work Tools Need Handholding. How Are Investors Responding?
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By Marc Vartabedian, WSJ Pro
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Good day. Some enterprises experimenting with artificial intelligence tools say they’re finding the technology to be more trouble than anticipated. How are venture investors and founders responding to this feedback and is it influencing how investors view potential deals?
Email responses to vcnews@wsj.com.
Last week, we asked for opinions on the investing strategy of waiting for a potential AI bubble to burst before placing bets. Several investors said they were bullish on artificial intelligence–in the long term–but for now, they are putting off investing. Here are edited excerpts from some of the responses:
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Radhika Malik, partner at Dell Technologies Capital: “Is it a bubble? For sure. Should venture investors wait for ‘good value’ investment opportunities? Definitely not. This is the technology wave of the decade, and some incredible companies will be built at all levels of the stack.”
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Zach Ullman, a principal at Lead Edge Capital: “It’s hard to know where we are in a capital cycle while we are in the midst of it. If investors avoid the category altogether, they narrow their opportunity set. They also risk underestimating the effects of this emerging technology on their existing portfolio.”
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Jake Brukhman, founder and CEO of CoinFund: “Both of these markets [AI and AI for Web3] will correct to some extent over the next one to two years, and there will be a more favorable environment from a valuation perspective though some winners will be positioned by then. I do think the successful first-to-market bets in traditional AI have already been made, so new innovations will need to drive later opportunities.”
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Diana Murakhovskaya, general partner and co-founder of the Artemis Fund: “We see this as an opportunity to double down into founders solving real, tangible problems where if you took the AI out they would stand on their own. While AI will transform so many industries from healthcare to education it’s important to not forget diverse voices that are closer to the underlying problems they are solving for.”
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And now on to the news...
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Battery-testing fixtures at Sila, whose battery anodes hold charges mostly in silicon rather than graphite. PHOTO: STEPHEN LAM FOR WSJ
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EV battery deal. A rechargeable-battery startup that is developing technology it says can help electric vehicles drive farther and charge faster raised $375 million from investors such as T. Rowe Price, The Wall Street Journal reports.
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The California startup, Sila, said the funds will help it complete construction of a factory early next year. The company plans to start delivering its battery parts to customers such as Mercedes-Benz and Tesla partner Panasonic by the fourth quarter of 2025.
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Other investors include Sutter Hill Ventures, Bessemer Venture Partners and Perry Creek Capital. Sila raised $590 million three years ago to begin construction of the factory at Moses Lake, Wash.
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$188 Billion
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Amount of investment that manufacturers have announced into U.S. EV and EV battery facilities over the past nine years.
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Bill Gates on His Climate Investments: The Early Winners and Long Shots
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It is the blessing that can help determine a climate startup’s fate: backing from Bill Gates, one of the biggest investors in efforts to transform the world’s energy use. Since 2015, Breakthrough Energy, the climate-investment firm founded by Gates, has lavished $2.2 billion on more than 160 startups and other initiatives, seeking both returns for investors and emissions reductions. He has also made investments separately outside the firm, WSJ reports. Some of those startups are pursuing relatively straightforward solutions, such as sealants that make heating systems more efficient. Others are working on ideas that might sound far-fetched, such as burying plant waste to remove carbon dioxide from the
atmosphere.
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Goldman Sachs Deploys Its First Generative AI Tool Across the Firm
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Goldman Sachs will finish rolling out its first generative artificial intelligence tool—for code generation—to thousands of developers across the company by the end of the month, WSJ reports. Chief Information Officer Marco Argenti said the company’s approach to generative AI involved centralizing all proprietary uses of the technology on an internal platform, and restricting them elsewhere. “It might have slowed us down initially, but then we definitely gained a lot of velocity afterwards,” Argenti said. “Taking this centralized approach obviously has pros and cons,” he added. Argenti said he had to push back against those who wanted to move faster and contend with some frustration over the bank’s
decision to ban the use of OpenAI’s ChatGPT within its walls, a step taken by other firms.
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Funds
MiddleGame Ventures has held the initial close of its third fintech fund, which has a target of €150 million. The Luxembourg-based firm will make investments at the post-seed to Series B stages across Europe through the new vehicle, which expects a final close early next year.
Ironspring Ventures hit the $100 million target for its second fund to continue investing across the industrial supply chain. The Austin, Texas-based firm backed 16 portfolio companies through its inaugural $61 million fund.
Soft2Bet launched a €50 million fund to provide financial and business support to iGaming and casual gaming entrepreneurs.
People
Sustainable technology-focused G2 Venture Partners said Anne Fazioli-Khiari joined the firm as partner and chief operating officer. She previously held positions at Ubiquiti Networks, BrightSource Energy and JPMorgan.
Life sciences investor Lumira Ventures promoted Nikhil Thatte to partner. He joined the firm in 2019 as principal.
Breakout Ventures, which focuses on human health and sustainability investments, appointed Sridhar Iyengar, Coco Krumme, Rebecca Nugent, Walter Solomon and Ilan Zipkin as venture partners.
Exits
AbbVie acquired Celsius Therapeutics, which is developing new therapies for patients with inflammatory disease, for $250 million in cash.
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Here is our weekly roundup of stories from across WSJ Pro that we think you’ll find useful.
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The Supreme Court ruled that Purdue Pharma’s family owners can’t use the drugmaker’s bankruptcy case to settle civil opioid lawsuits without consent from plaintiffs.
Finance chiefs’ median pay rose nearly 8.5% last year as stock-based incentives lifted compensation.
Getting full value out of AI workplace assistants is turning out to require a heavy lift from enterprises.
Poor returns on boom-era funds are threatening to become a long-term drag on the venture-capital industry.
🎧 Listen to Rubrik co-founder and CEO Bipul Sinha discuss his journey from growing up in poverty in rural India to navigating his cybersecurity firm through a $5.6 billion IPO.
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Creatio, a Boston-based provider of a no-code platform that automates customer relationship management and enterprise workflows, scored a $200 million investment. Sapphire Ventures led the round, which gives the company a $1.2 billion valuation.
Foodsmart, a San Francisco-based telenutrition provider and food benefits management platform, said TPG’s The Rise Fund agreed to lead an investment of more than $200 million in the company.
Etched, a Cupertino, Calif.-based creator of a specialized chip for transformers, picked up a $120 million investment co-led by Primary Venture Partners and Positive Sum.
Fetcherr, an Israel-based developer of a generative AI pricing, inventory and publishing engine, closed a $90 million Series B round. Battery Ventures led the investment, with Senior Partner Scott Tobin joining the company’s board.
Boston Oncology Arabia, a Saudi Arabia-based bio-generic drugs manufacturing startup, picked up a $35 million investment led by TVM Capital Healthcare.
Coder, a software development platform, collected $35 million in Series B2 funding. Georgian led the round, with Russell Moore joining the board.
Onehouse, a cloud data lakehouse startup, secured $35 million in Series B financing led by Craft Ventures. The company’s main office is in Sunnyvale, Calif.
e-Zinc, a Toronto-based developer of a battery enabling sustainable, long-duration energy storage, added $31 million in Series A2 funding. Evok Innovations led the round, which included participation from Anzu Partners and several others.
LiveEO, a Berlin-based startup using artificial intelligence and high-resolution satellite data to help companies manage climate risks impacting their infrastructure, landed €25 million in Series B funding led by NordicNinja and DeepTech & Climate Fonds.
Payabli, a Miami-based payments infrastructure platform for software companies, completed a $20 million Series A round led by QED Investors.
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Amazon’s finance teams are turning to generative AI in areas such as fraud detection, contract review, financial forecasting, personal productivity, interpretation of rules and regulations, and tax-related work. PHOTO: MICHAEL SOHN/ASSOCIATED PRESS
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Amazon leans into generative AI to manage its finances
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Madison Dearborn Partners backs defense contractor Omni Federal
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Supreme Court curbs SEC’s enforcement powers
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SM Energy to acquire Uinta Basin assets from PE-firms for $2 billion
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Amazon takes on Chinese rivals Temu and Shein with plans for new discount service
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Uber, Lyft agree to minimum wage, other benefits for drivers in Massachusetts
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As Spain gets its latest VC fund, Southern Europe appears to be on a roll (TechCrunch)
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Billionaire Steve Cohen’s Point72 Ventures lays off fintech team in pivot towards AI (Forbes)
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