Week of July 1st, 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: Sila And Formation Bio Headline Huge Week Of Large-Money Deals(5 minute read)

1. Sila Nanotechnologies (battery): raised $375 million in a Series G round. The funds will be used to complete construction of their plant in Moses Lake, Washington, for producing Titan Silicon anode material

2. Formation Bio (biotech): secured $372 million in a Series D round. The company uses AI to accelerate drug development and clinical trials

3. CData Software (data integration): raised $350 million in a growth round. The company provides data connectivity solutions for accessing live data from various applications

4. Creatio (customer relationship management): achieved unicorn status with a $200 million round led by Sapphire Ventures, valuing the company at $1.2 billion. The startup develops a no-code platform for automating customer relationship management and enterprise workflows

5. Foodsmart (healthcare): raised $200 million in a round led by TPG’s The Rise Fund. Foodsmart offers a telenutrition and food benefits management platform, aiding those with chronic diseases and food insecurity

INDUSTRY

Robotics Startups On The Rise In 2024 (4 minute read)

So far, 2024 has seen significant funding for robotics startups, particularly those developing workplace robots, robotic surgery technologies, and humanoid models. The robotics sector’s startups have raised over $4.2 billion in financing this year, a recovery from last year’s levels

• Bright Machines (workplace robots): raised $106 million in Series C funding and $20 million in debt, led by BlackRock

• Figure (humanoid robots): raised $675 million in Series B funding in February, with backing from Nvidia, Microsoft, and Amazon

• MMI (surgical robots): raised $110 million in February for robotic-assisted microsurgical procedures

What the new IRS guidance on crypto tax reporting means for investors (4 minute read)

The U.S. Department of the Treasury and IRS have released final tax reporting rules for digital asset brokers, with mandatory yearly reporting starting in 2026. Crypto investors need to establish a "reasonable allocation" of basis for each digital currency wallet by January 1, 2025, to avoid having their basis considered zero by the IRS, which would result in higher calculated profits

• Digital currency brokers must report gross proceeds from sales in 2025 via Form 1099-DA, and in 2027, they must include the cost basis for certain digital asset sales for 2026

• Enacted through the 2021 Inflation Reduction Act, these reporting rules are projected to raise nearly $28 billion over a decade

🏦 ECONOMIC SNAPSHOT

US Economy Shows Further Signs of Slowing Under High Rates (5 minute read)

Economic data from the first half of 2024 indicates a slowdown in US growth, influenced by the Fed Reserve's sustained high interest rates and lingering inflation. High borrowing costs have tempered demand across consumer goods, home purchases, and business equipment

• Personal spending grew by 1.5% in Q1, down from an earlier estimate of 2% and the GDP growth forecast for Q2 was lowered to 2.7% from 3% by the Atlanta Fed

• After-tax personal income, adjusted for inflation, rose only 1.5% in Q1 compared to a year earlier

• The stronger US dollar has also affected export demand, contributing to the widest merchandise trade gap in two years at $100.6 billion in May

The US economy is benefiting from the higher-pressure effect (4 minute read)

The US economy has maintained strong performance in 2024, driven by notable productivity gains and proactive policy responses during the pandemic. Policymakers' "go big, go early" strategy included substantial macroeconomic support, contributing to significant outcomes:

• A $55 billion increase in investment since 2021, representing about 6% of total fixed investment between 2021 and 2023

• The fastest jobs recovery in the postwar period, with record levels of job switching and the highest job satisfaction on record in 2023

• Budget deficits projected at 6% of GDP for the foreseeable future

U.S. Imports From China Plunging; Mexico, Near-Shoring, Not Big Winner (5 minute read)

Vietnam, not Mexico, has emerged as the primary beneficiary of reduced U.S. imports from China, "near-shoring." This shift is driven by significant declines in China's share of U.S. trade, largely due to ongoing tariffs initiated by former President Trump and maintained by President Biden

• China's U.S. imports decreased by 19.78% since April 2018, amounting to $31.88 billion

• Vietnam has notably increased its market share in various categories, including cell phones (from 0.15% in 2015 to 10.49% in 2024), computers (from 0.77% to 11.96%), and digital cameras (from 2.93% to 18.60%)

• Mexico's market share has shown mixed results, with gains in some sectors like furniture and seats, but overall, it has not dominated as expected compared to Vietnam

The Countries Sending the Most Remittances Abroad (5 minute read)

The USA has been home to the world’s largest immigrant population (45 million people in 2022). As a result, countries with the largest diasporas in the U.S. –including Indian, the Philippines, and Mexico— tend to be the biggest recipients of these flows:

• The U.S. saw a significant increase from $35 billion in 2000 to $82 billion in 2022

• Top Countries Sending Money Abroad in 2022: U.S. ($82B), UAE ($40B) Saudi Arabia ($39B)

• Countries in North America and Europe continue to be the biggest senders of remittances, supporting families in developing economies in Asia and Africa

The Stocks Driving S&P 500 Returns in 2024 (5 minute read)

The S&P 500 has returned 15% year-to-date as of June 26, 2024, driven largely by a handful of key stocks in the AI and tech sectors. Nvidia leads this rally, contributing 4.94% to the S&P 500's returns

• Nvidia’s share price has surged 162% YTD due to its dominance in the AI chip market, where it controls 70% to 95%

• Microsoft follows with a 1.24% contribution, boosted by significant investments in AI, including OpenAI and Wayve, and a 17% YoY revenue growth

👨🏽🫱🏽‍🫲🏻👨🏻‍🦰 IMPACT & DIVERSITY

Fearless Fund’s founder has resigned, and it’s a sad reflection on the VC world for Black women (5 minute read)

On Monday 24th Ayana Parsons, co-founder of Fearless Fund, announced her resignation from her role as general partner and COO, but will remain as an investor. Fearless Fund focuses on providing venture capital, grants, and financial education to startups founded by Black women. In 2023, less than 1% of all VC dollars went to Black-founded startups

• Fearless Fund has invested $26 million into over 40 companies, but is currently facing a lawsuit from the American Alliance for Equal Rights, claiming it violates the Civil Rights Act of 1866

• An appeals court recently upheld a preliminary injunction preventing Fearless Fund from issuing $20,000 grants to Black women, and the fund is considering its options

• Fearless Fund has lost many partnerships, except for JPMorgan and Costco, amid a broader decline in support for DEI initiatives in the tech sector

🚀 IPO

IPO watchlist: The climate tech startups most likely to go public (5 minute read)

Climate tech startups are experiencing significant growth in 2024, boosted by regulatory support, high energy prices, and increased investment. Venture capital-backed climate tech deal value surged from $2.1 billion to $8 billion QoQ in Q1. However, the total exit value in climate tech dropped over 50% from 2022 to 2023, amounting to $9.3 billion. Here’s PitchBook’s VC Exit Predictor companies that might go public soon:

• Sila (97%): a manufacturer of supercharged silicon car batteries, just raised $375 million to fund the completion of a plant in Washington state, at a $3.3 billion valuation

• Arcadia (96%): a community solar platform, pulled in a $200 million Series E in 2022 at a $1.45 billion valuation

• Northvolt (96%): the lithium-ion batteries man for EV manufacturer raised over $10 billion in debt and equity at a $11.8 billion valuation

This year’s IPO market got off to a roaring start. Now some fear it’s out of gas (5 minute read)

IPOs are making a notable comeback in 2024. The number of IPOs this year has already exceeded 2023 by 40%, with the combined valuation more than doubling last year’s offerings. As of June 24, a total of 74 companies have gone public on U.S. exchanges, raising nearly $17 billion. Significant IPOs include:

• Astera Labs: Raised $712.8 million and saw its stock rise 72% initially, though it later decreased

• Reddit: Raised $748 million, with its stock jumping 48% on the first day but later declining

• Potential IPO candidates for the future include Databricks, SeatGeek, Klarna Bank, Shein and Momenta

US IPOs See Best Start Since ’21 as Election Shortens Window (4 minute read)

Wall Street's equity capital markets are experiencing a revival, with IPOs off to their best start since 2021, raising over $20 billion in the first half of 2024. This resurgence is accompanied by a strong market for convertible bonds and secondary share sales

• Key factors include healthy engagement from a broad investor community and more balanced valuation discussions

• The upcoming global elections, particularly in the US, UK, and France, are likely to impact IPO timing, as many firms are looking to list before the US election in November or delay plans until 2025

Fast fashion retailer Shein confidentially files for London IPO as U.S. listing stalls (4 minute read)

Shein, has filed for a public listing in London after facing obstacles in the U.S. where it initially aimed for an IPO. Concerns from American lawmakers over issues like forced labor in its supply chain and tax exemptions prompted Shein to explore alternative markets

• Despite preferring a U.S. listing, Shein's move to London underscores its global ambitions amidst regulatory challenges and geopolitical tensions

🗞️ AI8 VENTURES HIGHLIGHT

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?

Check out the full updated report with 2024 commentary

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Happy reading,

AI8’s Research & Performance Team