Week of December 9th, 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: Tenstorrent And Nuvig Top List (5 minute read)

1. Tenstorrent (semiconductor): raised $693 million in a Series D round at a $2.6 billion valuation. The funding, led by Samsung Securities and AFW Partners will support open-source AI software development, hiring, and global expansion

2. Nuvig Therapeutics (biotech): secured $161 million in a Series B round co-led by Sanofi Ventures, Blue Owl Healthcare Opportunities, and Norwest Venture Partners. Focused on immunomodulatory therapies for autoimmune diseases, the startup plans Phase 2 clinical trials

3. Heirloom (carbon capture): raised $150 million in a Series B round led by Future Positive and Lowercarbon Capital. The company specializes in CO₂ capture using modified limestone, aligning with increased investment in carbon capture technologies

4. Tractian (manufacturing AI): raised $120 million in a Series C round led by Sapphire Ventures. The company develops AI-powered solutions for industrial maintenance, addressing unplanned downtime costs

5. Maze Therapeutics (biotech): completed a $115 million Series D round co-led by Deep Track Capital and Frazier Life Sciences. The South San Francisco-based biopharma focuses on treatments for renal, cardiovascular, and metabolic diseases

INDUSTRY

Global VC Funding Ticked Up In November Thanks To AI And Billion-Dollar Deals (4 minute read)

Global venture funding totaled $28 billion in November 2024, a decline from October’s $32 billion but an increase from $21 billion in November 2023. Over a third of the month’s funding came from billion-dollar-plus rounds raised by xAI, Anthropic, and Tricentis. Seed funding fell by about 33% YoY to just over $2 billion, while early-stage funding declined by over 20%

• In contrast, late-stage funding doubled YoY, driven by large raises. Billion-dollar deals accounted for 16% of all venture funding in 2024, up from 15% in 2023

• November saw AI dominate venture investment, with over $14 billion going to companies in sectors like robotics, healthcare, marketing, and chip infrastructure

• Despite the increase in total funding, deal activity at seed, Series A, and Series B stages slowed

Startups are renewing their embrace of tender offers in 2024 (5 minute read)

The market for private startup investments, particularly tender offers, is rebounding after a slump in 2022. A tender offer is a type of transaction in which a company, or a third party, offers to purchase shares from its existing shareholders at a specified price, usually above the current market price. The number of new tender offers administered by Carta dropped 74% between the end of 2021 and 2022, but has since increased in five of the last six quarters. Q3 2024 saw 26 new tender offers, the highest quarterly total since mid-2022

• Tender offers are now more evenly distributed between early-stage and late-stage companies, a shift from 2021, when over 80% of tenders were from late-stage companies

• In 2024, tender offer sizes are rising across all stages. For early-stage companies the median offer size in 2024 is higher than it was in 2021, with some offers ranging from $5 million to $10 million

• Late-stage companies saw median tender sizes fall from $40 million in 2021 to $14 million in 2023, but are increasing again in 2024

• There has also been a rise in subscription and participation rates, with both metrics climbing more than 10% in Q3 2024, and up over 20 from early 2021

Crypto VCs ‘cautiously optimistic’ on Trump’s pick for SEC chair (5 minute read)

The crypto market surged as bitcoin exceeded $100,000 and ether rose 65% YTD, with both cryptocurrencies gaining over 50% in the past month following President-elect Donald Trump’s SEC appointee announcement. Paul Atkins, a Bush-era SEC veteran, is expected to ease Gary Gensler’s stringent “regulation by enforcement” approach, potentially benefiting the industry, although his Senate confirmation faces opposition

• Gensler’s aggressive actions, such as the SEC’s lawsuit against Coinbase, had driven startups offshore. However, optimism is growing, with firms like New Form Capital anticipating a return of U.S.-based teams as regulatory clarity improves

• Infrastructure startups that profit from trading volumes and storage fees stand to gain amid bitcoin’s 130% rise this year

• Emerging opportunities in stablecoin payments, crypto-AI intersections, Web3 gaming, and decentralized finance are also drawing VC attention

Where are all the consumer AI startups—and why aren’t VCs funding them? (5 minute read)

At the recent Slush conference in Helsinki, AI dominated discussions, with a notable focus on enterprise solutions over consumer applications. Venture funding underscores this disparity, with B2B AI startups raising $16.4 billion in 2024 compared to just $7.8 billion for B2C, and B2C generative AI startups accounting for only 6.4% of B2B's total. This trend contrasts with past tech eras where consumer markets led innovation, such as during the internet and mobile revolutions. Historically, consumer exits have generated 2.3x more value than enterprise ones

• Factors influencing this shift include higher user acquisition costs, incumbents like Google and Meta controlling consumer data, and the perceived profitability and stability of enterprise-focused business models

• VCs' reluctance to back consumer AI is partly driven by a challenging macroeconomic environment, herd mentality, and the profitability focus stemming from the 2022 downturn

• While enterprise AI seems like a safer bet, consumer AI could offer significantly higher rewards, with its market size projected to reach $1.3 trillion by 2032, compared to $560 billion for enterprise AI

🏦 ECONOMIC SNAPSHOT

US economy adds 227,000 jobs in November, unemployment rate rises to 4.2% as labor market rebounds (5 minute read)

The U.S. economy added 227,000 jobs in November 2024, slightly above the 220,000 expected by economists, while the unemployment rate ticked up to 4.2% from 4.1% in October. Revised figures showed a modest 36,000 jobs added in October due to impacts from hurricanes and a Boeing strike, while September job growth was revised higher by 56,000 jobs. Wage growth rose 0.4% MoM and 4% YoY, both exceeding forecasts, signaling sustained inflation pressures. However, the labor force participation rate dipped to 62.5% from 62.6% in October

• The return of striking workers boosted employment in transportation equipment manufacturing by 32,000 jobs, and temporary help services showed modest growth after losing over 33,000 jobs in October

• Economists view the report as consistent with a "soft landing" for the economy

• The Fed is widely expected to cut interest rates by 0.25% at its upcoming December meeting, with markets pricing in an 87% chance of this outcome

Powell says a strong US economy is letting the Fed be ‘cautious’ about cutting interest rates (5 minute read)

Federal Reserve Chair Jerome Powell emphasized the U.S. economy’s resilience, stating that its strength allows the Federal Reserve to be cautious with further interest rate cuts. While a third rate cut is widely expected in December, future adjustments may pause until at least March 2025, reflecting stable inflation and lingering uncertainties

• President-elect Trump’s proposed tariffs are projected to raise consumer prices by 0.75% in 2025, reducing household purchasing power by $1,200 annually

• Economists warn that limited substitutes for affected goods may exacerbate inflationary pressures

• Concerns have arisen over the potential erosion of the Fed’s independence, with reports suggesting Trump’s team has considered giving the president greater control over monetary policy, potentially undermining market confidence

If Trump’s tariffs start a trade war, it would be an economic disaster (4 minute read)

Donald Trump’s recent announcement of tariffs—25% on Mexico and Canada, and 10% on China—has sparked widespread analysis of their purpose and potential impact. While framed as addressing issues like migration and fentanyl, these tariffs are seen by some as part of a broader strategy to solidify political dominance and maintain party loyalty. Economically, tariffs from Trump’s first term, which affected $380 billion in U.S. imports, were found to negatively impact living standards, with consumers bearing most of the cost

• Trump has also threatened 100% tariffs on BRICS nations if they pursue a new currency system

• Research shows additional tariffs could increase consumer prices by 0.65%-0.75% annually, potentially impacting household budgets

• While these policies aim to reshape global trade dynamics, they have also drawn criticism for their potential economic downsides and risks of retaliatory actions

President-Elect Donald Trump Wants to Lower the Corporate Tax Rate by 29% -- and There Couldn't Be a Clearer Winner, if Enacted (4 minute read)

Wall Street is closely watching recently elected Donald Trump’s policy proposals, especially a plan to further reduce corporate income tax rates for domestic manufacturers from 21% to 15%. This would represent a 29% cut and is intended to promote domestic production and competitiveness, but it may also cost the U.S. $200 billion in federal revenue by 2035, exacerbating the national debt

• Trump's previous corporate tax cuts under the Tax Cuts and Jobs Act spurred significant increases in share buybacks by S&P 500 companies, a trend expected to continue if the new proposal is enacted

• Buybacks benefit companies by boosting earnings per share, demonstrating confidence to investors, and encouraging long-term investments

• While not all businesses would qualify for the tax cut, publicly traded firms prioritizing buybacks are seen as clear winners

🌱🌎 IMPACT & CLIMATE RESILIENCE

Nearly Half Of US Unicorns Have Foreign-Born Founders (4 minute read)

Analysis by Stanford’s Ilya Strebulaev of 500 unicorns from 1997 to 2019 shows that 44% of their 1,078 founders were born outside the U.S., representing 65 countries. Indian-born founders dominate the non-U.S.-born group, with 90 individuals, followed by Israel (52), Canada (42), the UK (31), and China (27)

• Regionally, India leads Asia, while the UK tops Europe, followed by Germany (18) and France (17). Canada is the leader in the Americas, and South Africa leads Africa

• Relocating start-ups to the U.S. greatly enhances their chances of reaching unicorn status, as Indian start-ups are 6.5 times more likely to achieve this milestone after relocating

• Immigration policies under President Donald Trump, who was re-elected in 2024, aim to deport millions of undocumented immigrants and impose stricter rules for legal immigration, which may impact the flow of global entrepreneurial talent to the U.S

US VC female founders dashboard (3 minute read)

Venture capital funding for female founders has stabilized following a sharp decline from 2021 peaks. While the share of total deals involving women-founded or co-founded companies has decreased, these companies are securing a growing proportion of the capital raised. Pitchbook’s dashboard tracks 16 years of U.S. investment trends for women founders, offering insights into deal counts, capital raised by state, industry, and stage, as well as highlighting notable female-founded startups and firms

• Co-founded female companies reported $8.6 billion in capital invested and a total of 707 deals, compared to $6 billion in capital and 795 deals in Q3 2023

• In terms of deal count, only female-led companies accounted for 6.4% of the total, while female and male-led companies represented 18.5%

• Regarding capital allocation, solely female-led companies received only 2%, whereas female and male-led companies collectively received 22.4%

Ranked: The Best and Worst American Cities for Economic Mobility (4 minute read)

The American Dream of upward economic mobility remains elusive for many, especially among those from low-income families. An analysis of 50 major U.S. metropolitan areas reveals stark contrasts in generational income changes. For individuals born to low-income parents, only 12 cities experienced real wage growth, while 38 cities saw declines. Interestingly, the highest income percentile saw a 5% generational increase, underscoring the disparity in economic opportunity

• Southern cities like Brownsville, Austin and Charlotte stood out as places where generational mobility persists. For example, 27-year-olds in Brownsville born in 1992 earned an average of $33,500—$2,000 more than their 1978-born counterparts

• Conversely, cities like Philadelphia, Las Vegas and San Diego saw sharp declines in incomes for the same demographic

• Nationally, the average income for this group dropped by 4%, highlighting systemic challenges in economic mobility

🚀 IPO & EXITS

IPO Readiness: What Biotech Startups And Others Need To Know (4 minute read)

The biotechnology sector, valued at $1.38 trillion in 2023, is projected to grow to $4.25 trillion by 2033, with many companies eyeing IPOs as their next growth phase. Despite challenges like geopolitical upheaval and inflation, 18 biotech IPOs have been priced through September 2024, and recent interest rate cuts could stabilize the market for 2025

• Financial scrutiny intensifies post-IPO, with companies adhering to SEC regulations, filing timely financial reports (10-Q, 10-K, and 8-K), and establishing internal controls

• Biotech companies must protect intellectual property and ensure compliance with regulations like the Sarbanes-Oxley Act

• Investors often prioritize future potential over immediate profitability, making transparency about clinical trials, drug pipelines, and regulatory timelines essential

The Trump Administration Could Open the IPO Market to Crypto Firms. These Are the Companies to Watch (3 minute read)

Big crypto firms, including stablecoin provider Circle and trading platform Kraken, are hopeful about going public in 2024 due to President-elect Donald Trump's stance on reversing President Biden's digital-asset crackdown. Under the Biden administration, IPO attempts for crypto firms were hindered by the SEC’s scrutiny, particularly regarding whether certain cryptocurrencies could be deemed securities

• Trump's SEC chair is expected to ease these concerns, paving the way for successful IPOs

• This shift, coupled with a surge in crypto market optimism post-election—Coinbase's stock rose 65% since the election—has increased investor interest

• An IPO boom could expand crypto exposure in mainstream portfolios, offering exit opportunities for crypto-focused venture firms

Dealmakers see no ‘quick return to a rosy IPO market’ in 2025 (5 minute read)

The outlook for 2025 in private markets is clouded by uncertainty surrounding the new administration's policy agenda, interest rates, and economic shifts. Many funds are delaying capital deployment until at least early 2025 due to low fund distributions, which have made LPs reluctant to meet capital calls. M&A activity is expected to remain subdued, with the nomination of Gail Slater to the Justice Department’s antitrust division signals a continued crackdown on tech giants, reducing the likelihood of a surge in deals

• Similarly, the IPO market faces barriers despite Paul Atkins’ pro-business nomination to lead the SEC, as U.S. public listing rules remain restrictive

• Inflation risks from tariffs and deportations could pressure PE portfolios and potentially force the Federal Reserve to pause or reverse rate cuts, a key factor for deal recovery

• On the brighter side, Trump’s pro-growth agenda, including deregulation and tax cuts, could stimulate dealmaking, and reduced regulatory barriers for mergers may offer relief

These Were The Winners And Losers In A Boring Year For Startup IPOs (5 minute read)

In 2024, the tech startup IPO landscape has been relatively quiet, with only a few U.S. unicorns going public and biotech offerings falling short of previous highs. Overall, of the 168 IPOs this year, 56% are above their offer price, reflecting an aggregate return of 8%. However, this still lags behind major indexes like the Nasdaq Composite, which has gained around 35% this year

• Among the top performers, Reddit’s shares surged by 332% since its March IPO, giving it a market cap of around $26 billion, while Astera Labs saw a 214% increase and is valued at $18 billion

• On the downside, Webtoon Entertainment, Gauzy, and Ibotta have all underperformed, with Webtoon losing about a third of its value, Gauzy down 50%, and Ibotta off 17% from its offer price

🗞️ AI8 VENTURES HIGHLIGHT

Trumponomics 2.0

Following President-elect Donald J. Trump’s victory over Kamala Harris, the financial world witnessed an immediate response. In just one week, the S&P 500’s value surged by $1.9 trillion, pushing stocks to record highs. The U.S. dollar strengthened globally and Bitcoin achieved unprecedented highs.

Wall Street is preparing for more government spending, lighter regulation, bigger deficits, and accelerating growth under a Trump administration and a Republican-led Congress.

Biden’s Economic Legacy

The Biden era was marked by headlines of massive layoffs and a cost of living crisis. The average worker faced double-digit increases in food, energy, housing, and other essential expenses that impacted middle-class families the most and consumed the bulk of household budgets. Despite record highs in the stock market, nearly half of Americans believed the nation was in a recession. Is this Biden’s fault? No. Global supply chain disruptions, stimulus checks, the aftermath of COVID-19 lockdowns, and the ripple effects of geopolitical tensions all contributed to soaring prices. Did Americans blame Biden? Election results suggest they did. Two-thirds of voters believed the economy was on the wrong track.

Hence, Trumponomics 2.0.

Trump’s campaign capitalized on promises of economic revival, pledging to deliver low taxes, low regulations, low energy costs, low interest rates, and low inflation -Trumponomics.

Alpha Insights on Trump and AI in Mexico City

Last week, we hosted our first Alpha Insights event in Mexico City, where we brought together industry experts, investors, and entrepreneurs to discuss the evolving landscape under the new U.S. administration. We dove into how the election of Donald Trump, "Trumponomics," and the transformative role of AI are shaping the future of investments, regulations, markets, taxes, and cross-border opportunities.

Missed the event? We’ve curated the key insights in our Alpha Insights Special Edition: Trumponomics Report. Understand everything VC-related that happened in 2024 and how profit will shift under Trump 2.0

(Trumponomics 2.0 Special Edition starts on page 22)

Alpha Insights: 2024 Venture Capital Report

Alpha Impact 8 Ventures is thrilled to share our latest insights into the dynamic world of investments with our 2024 Venture Capital Report.

Last year, 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. Nothing happened.

This year, Warren Buffett’s cash reserves reached a record $276.9 billion as Berkshire Hathaway trimmed its stock holdings in Apple. Some view it as a routine adjustment, while others speculate that Buffett perceives an overheated, overvalued market.

Everyone talks about a soft landing, but warning signs are flashing and the world seems to be teetering on a delicate balance. Is there something we’re missing? Is there an unseen factor at play?

Check Beyond Survival: Opportunities in Climate Change

It all started in 2010 after a great conference with Mr. Al Gore. I was in Mexico City attending an event where Mr. Gore presented what the climate would look like if we did not act quickly and reduce our carbon emissions. That day, Mr. Gore’s team made his “models” available for everyone to study and play with. He told me that the largest desert in the world would be what used to be Mexico, California, Nevada, Arizona, New Mexico, and Texas, all the way to the State of Mexico. He didn’t know if Mexico City would be a part of it because of its altitude. That day, we walked several miles to our dinner because of the bad news.

Alpha Impact 8 Ventures is disrupting the industry, generating wealth, creating technology, providing access, leveling the play field, reducing systemic barriers, and building a resilient world.

Become part of the our revolution.

Happy reading,

AI8 Ventures’ Research & Investment Team