| Here’s your daily VC briefing: - 📝 VCs are ramping up their influence efforts as Congress drafts AI legislation
- 💰 U.S. startups closed 115 mega rounds of more than $100M from the start of the year to mid-May, up 58% YoY
- 📢 Andreessen Horowitz launched the American Dynamism Engineering Fellows Program for engineers and technologists
Thank you. Karan
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| 1 | | With Congress set to draft AI legislation following the Senate's recent AI report, startups and venture capitalists are ramping up their influence efforts on Capitol Hill. Startups and VC firms want to ensure their priorities aren't overshadowed by Big Tech's lobbying power. VCs are also hoping to push for their priorities, per Axios. More: - Y Combinator CEO Garry Tan is in D.C. this week, meeting with lawmakers to advocate for policies promoting competition, open source platforms, and interoperability requirements on large incumbent organizations in the AI sector.
- The accelerator argues startups are a massive innovative force in AI, warranting a regulatory voice.
- Last week, Andreessen Horowitz (a16z) published an op-ed in the Wall Street Journal, accusing major AI firms of unduly influencing policymakers, including the new Homeland Security AI safety panel.
- The VC firm is meeting Congressional leaders across both chambers to represent "little tech" startups' perspectives.
- A16z has expressed disappointment with the Senate's bipartisan AI roadmap, pointing out its lack of focus on enabling open-source AI models.
- The firm is not currently pushing for specific legislation but hopes that the new regulations will create a level playing field.
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| 2 | | U.S. startups closed 115 mega rounds of more than $100M from the start of the year to mid-May, per Crunchbase. 
What the numbers say: The number of mega rounds has increased by 58% compared to the 73 such deals in the same period last year. However, the number remains a long way off the nearly 280 mega rounds closed in the same period in 2021 and 2022. While still off 2021-2022's record megadeal levels, the 2024 spike in mega checks indicates investors are regaining their appetite for big bets on startups with immense potential and scalability. Relevance: The surge in mega rounds comes amidst a stagnation in the overall venture funding, which suggests that VCs are investing heavily albeit in fewer promising startups. Healthcare and biotech sector startups landed the most number of mega deals, closing 42 such rounds so far this year. AI-driven drug discovery firm Xaira Therapeutics emerged from stealth with a $1B funding round led by Arch Venture Partners and Foresite Capital. Other sectors closing the most mega rounds included AI (11 deals), cybersecurity (10), energy (6), and fintech ($) sectors. | | | |
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| 3 | | Andreessen Horowitz (a16z) is launching the American Dynamism Engineering Fellows Program, a new 12-month fellowship for engineers and technologists looking to enter the venture capital industry. A16z's American Dynamism division launched the new initiative in a bid to scope out VC talent from less obvious sources. More: - The program will provide hands-on training and an opportunity to work alongside the firm's partners in evaluating potential investments in hard tech sectors like manufacturing, robotics, and aerospace.
- After the year-long fellowship, participants could potentially join a16z's investment team.
- The initiative is part of a16z's $600M American Dynamism fund, which is focused on backing companies building critical industrial capabilities in the national interest.
- A16z American Dynamism fund was part of its latest fundraising haul of $7.2B across five funds, which closed in April 2024.
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| 4 | | AI-focused investment firm Alpha Intelligence Capital (AIC) has already secured commitments worth $160M from prominent limited partners towards its second fund, which has a target of $250M. The firm expects to close the fund in September. More: - The Luxembourg-based firm is known for making early investments into ChatGPT maker OpenAI, computing architecture startup FlexAI, and Chinese AI developer SenseTime Group Inc.
- AIC believes that global AI adoption will accelerate as AI-powered tools disrupt industries and solve major technological challenges.
- The new vehicle has secured investment from several government-owned entities, including French investment bank Bpifrance, Taiwan's CDIB Capital, and Singapore's sovereign wealth fund Temasek.
- Beyond consumer AI like ChatGPT, the fund will also target startups developing AI hardware and applications for cybersecurity, gaming, and enterprises.
- AIC plans to invest globally, except China.
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| 5 | | European VC firm ETF Partners secured €285M ($310M) towards its fourth fund. The fund was oversubscribed, closing higher than its initial target of €250M ($M). ETF plans to back technology startups that are addressing the global challenges arising due to climate change. The firm plans to invest in startups across its five core verticals, including energy, transportation, connectivity, consumer and food, and agriculture. More: - ETF has already invested in food demand planning software developer AIPERIA, AI-powered energy grid balancing solutions firm Dexter, and fashion supply chain visibility and impact measurement SaaS startup Fairly Made from the fourth fund.
- The latest fund attracted prominent backers like the European Investment Fund and British Patient Capital.
- Founded in 2006, ETF Partners focuses on scaling commercial-stage startups with proven technology.
- Managing partner Patrick Sheehan believes in making a rapid impact within a fund's 10-year lifecycle through scalable companies rather than making bets on unproven moonshots like carbon capture.
- Deepsea, a portfolio company backed by Fund III, is using AI-powered maritime optimization software to reduce fuel use by 10% to 15%.
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| 6 | | Today's Funding: AI - AI data labeling, training, and evaluation startup Scale AI doubled its valuation to $13.8B while raising a $1B Series F funding round led by existing backer Accel. Investors participating in the round include Amazon.com, Meta Platforms, Nvidia, Y Combinator, Index Ventures, Founders Fund, Coatue, Thrive Capital, Spark Capital, Tiger Global, AMD Ventures, Intel Capital, Cisco Investments, and Wellington Management. The San Francisco, Calif.-based startup was last valued at $7.3B when it raised a $235M Series E round in April 2021.
- French AI foundation model startup H, formerly known as Holistic AI, raised a seed funding of $220M from Accel, UiPath Inc., Bpifrance, Amazon, Elaia Partners, Eurazeo, Creandum, Motier Ventures, Samsung, and other investors.
Biotech - AltruBio Inc., a biotech startup developing novel therapeutics for the treatment of immunological diseases, bagged $225M in Series B funding. BVF Partners led the round, with additional backing from existing investor aMoon Fund and new investors RA Capital Management, Cormorant Asset Management, and Soleus Capital. The startup will use the proceeds from the latest round to advance the clinical development of its novel immune checkpoint enhancer and conduct Phase 2 clinical trials on its impact in treating ulcerative colitis.
Edtech - Language learning app Pratika raised $35.5M in Series A funding. Blossom Capital led the round, which the firm plans to use to improve the app experience, add new languages, and establish new development hubs in Eastern Europe and the UAE.
Supply chain - Growth equity investor Summit Partners invested $72M into cloud-native end-to-end retail order fulfillment and visibility platform maker OneStock. The French startup will use the fresh funding to fuel its international expansion, particularly in the U.S.
Web3 - Decentralized Web3 social media platform developer Farcaster secured $150M through a Series A funding round led by Paradigm. A16z Crypto, Haun Ventures, USV, Variant, and Standard Crypto participated in the funding round.
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| 7 | | Quick Hits: - Thinking about growing your business? We'll work as hard as it takes to make Ohio your competitive advantage.*
- Life and annuity reinsurance company Martello Re is looking to raise $800M in equity funding. The Bermuda-based startup has reportedly already received commitments from new and existing investors.
- New Form Capital is in talks with investors to raise a $100M fund to invest in cryptocurrency and blockchain startups, especially the ones looking to reshape traditional finance, including trading markets and payment systems.
- Boston-based VC firm Pillar hired Liz Kettler as its new chief financial officer. Kettler joins from Openview, where she held a similar position towards the end of her eight-year tenure with the firm.
- The Virginia Innovation Partnership Corp. (VIPC) partnered with seven VC firms with an aim to invest $100M in 100 Virginia-based startups over the next three to five years. VIPC will allocate $40M to the seven VC funds from the capital it received under the U.S. Treasury Department's State Small Business Credit Initiative. The VC firms committed $60M of their own capital towards the initiative.
*This is sponsored content | | | |
 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Karan Chafekar | |
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