Week of June 17th, 2024

Welcome to AI8’s weekly newsletter, your ultimate source for curated insights and updates from the dynamic world of venture capital!

We’ve scoured the vast landscape of the web to bring you a comprehensive roundup of the industry’s top news articles, all in one convenient place. We keep you ahead of the game and in the know about all things related to the vibrant world of investments

STARTUPS

ROUNDS AND UNICORNS

The Week’s Biggest Funding Rounds: Massive Rounds By Cruise And AlphaSense Lead Way (5 minute read)

Cruise (Autonomous cars): General Motors is investing an additional $850 million into Cruise. This comes after GM acquiredSoftBank's equity stake in Cruise for $2.1 billion in early 2022, followingSoftBank's failure to deliver a promised $1.35 billion
AlphaSense (AI): raised $650 million, co-led by Viking Global Investors and BDT & MSDPartners, at a $4 billion valuation. The company, which provides AI-powered market intelligence and search platforms, has now raised $1.4 billion since its founding
Santa Ana Bio (Biotech): the company focuses on therapies for autoimmune and inflammatory diseases, emerged from stealth with a $125 million Series B round led by GV
Alzheon (Biotech): the company develops treatments for Alzheimer's disease and other neuro degenerative disorders and raised $100 million in a Series E round led byAlerce Medical Technology Partners
Apex (Space): the spacecraft manufacturing company secured $95 million in a Series B round led by XYZ Venture Capital and CRV

Crypto Startup Funding Overcomes Blow-Ups to Hit $100 Billion (Bloomberg Law, 4 minute read)

Since the inception of the crypto industry, startups have attracted around $100 billion in venture funding, spurred by recent investments coinciding with Bitcoin and other major tokens' rallies

DeFiLlamareport $101 billion raised since 2014, while The Block Research tallies over$95 billion from 2017 onwards
Despite robust fundraising through VC and token sales, investor returns have been mixed, with few notable exits like Coinbase's $86 billion Nasdaq listing in 2021 standing out
While token investments offer liquidity and potential short-term gains, venture capitalists still focus on longer-term returns amid regulatory uncertainties and fluctuating market conditions

INDUSTRY

Early AI Funding May Be Showing Some Cracks (Crunchbase, 5 minute read)

While funding for AI-related startups remains robust, with nearly $30 billion raised this year, there are signs of "AI fatigue" among early-stage investors. The volume of deals is slowing in the second quarter, with number of deals projected to drop to about 900 vs 1,052 last quarter

Despite the decline in deal volume, the total dollar amount raised is up, with over $16billion raised in Q2
Seed funding has seen a sharp decline in deal volume, with only 423 rounds announced
Early-stage deals declined in deal volume compared to Q2 last year. However, the dollar amount raised has increased significantly to $9.8 billion vs $4.7 billion last year

Microsoft, Nvidia Lead In Investing In AI Startups, But Others Close Behind (Crunchbase, 4 minute read)

In May alone, AI startups raised $12.5 billion, constituting 40% of venture funding. Despite robust investments, regulatory scrutiny from the FTC and DOJ on Microsoft, OpenAI, and Nvidia could impact future investments

Nvidiap articipated in 10 deals this year, including seven over $100 million
Microsoft made a landmark multibillion-dollar investment in OpenAI and continued with a$1.5 billion stake in G42 and several other deals
Google and its venture arm, GV, have been active with seven deals, including a $27.5million Series A for WitnessAI
DatabricksVentures has been involved in significant deals, like a $200 million Series D for Glean

Edtech Funding Has Not Hit Bottom (Crunchbase, 4 minute read)

Edtech is currently struggling to attract venture investment, with 2024 seeing just over $1 billion in total funding, marking a potential low point in recent years. U.S. investment mirrors this trend, remaining well below pre-2021 levels

The last wave of notable IPOs was in 2021 with Duolingo, Coursera, and Udemy. However, only Duolingo has maintained its value
Despite the tough climate, some startups have secured financing, with Crunchbase data highlighting seven that raised $20 million or more this year
Advancements in AI might drive investment in new educational technologies

After Bitcoin Surge, Crypto VC Creeps Toward a Comeback (Bloomberg, 3 minute read])

Venture capital investment in cryptocurrency and blockchain companies increased by nearly one-third in the first quarter of 2024, reaching $2.5 billion, matching levels from the same period last year, according to PitchBook data.

Interest in crypto was reignited by the approval of Bitcoin exchange-traded funds (ETFs) in January
Memecointrends have resurfaced, echoing past crypto crazes

ECONOMIC SNAPSHOT

Key takeaways from the Fed’s latest interest rate decision (CNN, 5 minute read)

On June 12, the Federal Reserve announced it would maintain its benchmark lending rate, marking the seventh consecutive time it has done so. Fed officials predict only one rate cut this year, down from the three anticipated in March, and they expect inflation to be more persistent than previously forecasted

The Fed's decision keeps interest rates at a 23-year high
Officials need more evidence that inflation is moving towards the 2% target before reducing rates
May's Consumer Price Index (CPI) showed a 3.3% annual rise, down slightly from April’s 3.4%
The Fed's cautious approach indicates a preference to ensure inflation is fully under control before making any significant policy changes, aiming to balance economic growth and price stability

Apple reclaims title as world's biggest company as it races against Microsoft and Nvidia to a $4 trillion valuation (Markets Insider, 4 minute read)

Apple has reclaimed its position as the world's largest company by market capitalization, reaching$3.31 trillion, with a 4% surge in its stock. Microsoft and Nvidia also saw increases, with valuations of $3.26 trillion and nearly $3.1 trillion, respectively

The AIboom, highlighted by Apple's unveiling of "Apple Intelligence" at WWDC, has contributed to this growth
Analysts predict a race among these tech giants to reach a $4 trillion valuation within the next year, driven by AI adoption
Apple, in particular, stands to benefit from its large installed base of smartphones, with potential for a "super cycle" and the development of AI-focused apps

US inflation falls to 3.3% in May in boost to markets (Financial Times, 4 minute read)

US inflation fell to 3.3% in May, boosting the stock market and raising expectations for early interest rate cuts. The S&P 500 and Nasdaq Composite both closed at record highs following the news (gained .9% and 1.3% respectively)

TheFederal Reserve kept interest rates at 5.25-5.5%, their highest in 23 years, but signaled only one rate cut in 2024
Market reactions were volatile, with traders placing a 64% probability on a September rate cut
President Joe Biden welcomed the data, highlighting progress on reducing inflation, which is now nearly two-thirds from its peak

IMPACT & CLIMATE RESILIENCE

Women-Led Startups Grabbed 25 Percent of Venture Funding in 2023 (Inc, 5 minute read)

In 2023, U.S. startups with at least one female founder raised a record $34.7 billion, up from $32 billion in2022, with generative AI being a significant driver of this increase

Women-led startups received 24% of all venture funding in 2023, a notable rise from 15% in 2022
A substantial portion of this funding—$21 billion—went to AI-focused companies
The previous record was set in 2021, with $47.6 billion raised by female-led companies, representing 14% of total U.S. venture funding that year

Which Countries Have the Most and least Women in the Workforce? (Visual Capitalist, 3 minute read)

The ranking of countries by the rate of women in the workforce reveals that both the wealthiest and poorest nations tend to have higher participation rates compared to those with average incomes

Increased female participation in the workforce can significantly contribute to economic growth and productivity, considering women represent roughly half of the population
Madagascar, Burundi, and Mozambique have some of the highest participation rates, with around 80% of women in the workforce

IPO & EXITS

Is a chilly market for IPOs on the brink of heating back up? (Carta, 4 minute read)

The pandemic bull market saw a surge in IPO activity, peaking in 2021 with 1,035 IPOs in the U.S. However, this trend reversed sharply with only 181 IPOs in 2022 and 154 in 2023. As of mid-2024, there have been 81 IPOs, on track for a modest 18% increase over the previous year

As IPO activity decreased beginning in 2022, so did the median valuations at the latest stages of venture funding
High-profile IPOs like Reddit and Astera Labs indicate investor readiness to support profitable, high-quality companies
TheS&P 500's 13% rise since January suggests a favorable environment for IPOs, potentially encouraging more startups to go public

US senator urges UK to investigate Shein’s labour practices ahead of IPO (Financial Times, 5 minute read)

US Senator Marco Rubio wrote to UK Chancellor Jeremy Hunt, expressing concerns about Shein's business practices as the company seeks to list on the London Stock Exchange

The senator highlighted previous failed attempts by Shein to list in New York due to similar concerns and urged caution before allowing the listing in London
UK institutional investors are wary of the allegations, and the UK Treasury declined to comment
The senator also mentioned Shein's alleged practices to bypass US customs enforcement and tax rules, urging the UK to take similar actions

AI8 VENTURES HIGHLIGHT

AlphaInsights: Venture Capital Report 2023

Alpha Impact 8 Ventures is thrilled to share our latest insights into the dynamic world of investments with our 2023 Venture Capital Report, here’s an updated version with 2024 commentary that dives into the ever-evolving landscape of financial markets.

Just a few months ago, Michael Burry, the legendary fund manager who famously profited from shorting the US housing market in 2008, bet more than $1.6 billion on a Wall Street crash by shorting the S&P 500 and Nasdaq-100. Warren Buffett’s money pile reached record highs of $157 billion as Berkshire Hathaway disposed of a net $33 billion of stocks over the past three quarters. Is there something Buffett and Burry know that the rest of us don’t?

Read Full Report

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Happy reading,

AI8 Ventures’ Research & Investment Team

Tech Titans' Valuation Race