Week of November 4th, 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: Seaport Therapeutics And Zip Top Big Money Week (5 minute read)

1. Seaport Therapeutics (biotech): The Boston-based biotech company raised a $225 million Series B led by General Atlantic. Seaport, focuses on medicines for neuropsychiatric disorders like depression and anxiety

2. Zip (procurement): The San Francisco startup raised a $190 million Series D led by Bond, boosting its valuation by 47% to $2.2 billion. Zip streamlines software and hardware procurement

3. AvenCell Therapeutics (biotech): The startup secured $112 million in a Series B round led by Novo Holdings. AvenCell, founded in 2021, develops cell therapies targeting hematologic malignancies and autoimmune diseases

4. Nimble Robotics (robotics): Nimble raised a $106 million Series C led by Cedar Pine and FedEx, valuing it at $1 billion. The AI-driven robotics company, which supports FedEx’s fulfillment service, focuses on autonomous e-commerce fulfillment

5. Redaptive (energy): The Denver-based energy company raised $100 million in equity from CPP Investments. Redaptive manages and funds energy efficiency projects, handling everything from development to monitoring

INDUSTRY

The US Presidential Election Will Affect Venture Investing. How Much Is The Question (5 minute read)

As the U.S. presidential election nears, venture and startup sectors are watching for impacts on issues like M&A, taxes, and crypto regulation. M&A and antitrust regulation are top concerns; regulatory scrutiny has slowed M&A, with investors blaming the FTC and DOJ for stifling liquidity by making smaller deals too costly or difficult. The industry seeks federal guidance on autonomous driving laws, and Trump’s proposal to reduce Federal Reserve independence could have sweeping economic implications

• Crypto regulation is also high on the agenda: crypto companies have invested over $119 million into election campaigns. Trump has embraced the sector, while Harris's stance is less clear, though her campaign has received substantial crypto backing

• Tax policies are also pivotal, with VCs hoping for a renewal of the 2017 provision allowing immediate R&D deductions, which is vital for startups that spend years in development

• Overall, the venture sector hopes for minimal federal interference to avoid complicating the already high-risk nature of venture investments

Evolving Economics of 10-Year VC Funds (20 minute read)

The standard term length for VC funds has been set at 10 years, providing a framework for aligning the interests of general partners and limited partners while facilitating capital management. However, as market dynamics shift there is growing pressure to reconsider this duration. Although there have been slight adjustments in PE fund terms, with some firms extending to 12 or 15 years, VC funds have largely maintained the 10-year model

• This is significant given the evolving venture lifecycle, particularly regarding unicorns, which hold about two-thirds of the US market value of VC-backed companies

• Approximately 40% of these unicorns have been in VC portfolios for over nine years, creating a need to hold investments beyond the traditional term to achieve desired returns

• Overall, while the 10-year framework remains a navigational tool, the complexities of the current market necessitate flexible strategies and potential adaptations to better align interests and optimize fund performance

🏦 ECONOMIC SNAPSHOT

Everything you need to know about the 2024 US presidential election (5 minute read)

The 60th U.S. presidential election on November 5, 2024, will decide the 47th president and 50th vice president. The election includes all 435 House seats, 34 Senate seats, 13 governorships, and numerous local elections, with 41 states considering 159 ballot initiatives. Early voting has become prominent, with tens of millions opting for mail-in or in-person ballots

• The race is highly competitive, with Harris (Democrat) and Trump (Republican) tied at 48% in national polls

• Key battleground states include Pennsylvania (carrying 19 electoral votes), Arizona, and Georgia, with each candidate targeting specific demographics. Major issues include abortion rights, democracy, the economy, and immigration, shaping voter sentiment

• Once the election concludes, the president-elect will form a transition team and receive national security briefings, with the inauguration set for January 20, 2025

Election Impact Report: Immigration Policies and Business Implications (10-minute read)

The 2024 presidential candidates, Kamala Harris and Donald Trump, have contrasting immigration policies, especially concerning employment-based visas like the H-1B. Harris aims to expand visa availability, streamline processes, and support sectors reliant on global talent by reducing administrative burdens and delays. In contrast, Trump proposes to limit visas, increase enforcement, and raise compliance checks, potentially causing talent shortages and longer processing times

• Harris's approach is designed to enhance U.S. competitiveness in the global talent market, while Trump’s restrictive policies may push skilled workers to other countries with friendlier immigration systems

• Harris aims to expand H-1B and employment-based visas by raising caps, benefiting sectors like technology and healthcare, while Trump proposes to lower visa caps and tighten regulations, continuing his previous "Buy American, Hire American" policy

Final jobs report before Election Day shows US economy added 12,000 positions amid strikes and storms (7 minute read)

The October U.S. jobs report revealed a weak gain of only 12,000 jobs, a stark drop from September's revised 223,000 and far below the anticipated 112,500. This unusual number is attributed to temporary shocks, including hurricanes and major strikes, which disrupted data collection. The report shows stable unemployment at 4.1%, suggesting that while the labor market is softening, it's not in severe decline

• Health care and government added jobs, while temporary help services, professional services, and manufacturing saw declines, with strikes notably impacting manufacturing

• Wages rose 0.4% in October, with an annual increase of 4%, reflecting a slowdown in wage growth since March 2022

• Despite mixed signals, economists expect a cautious Fed rate cut due to the labor market’s resilience and easing wage inflation

US economy growing despite voter angst (5 minute read)

The U.S. economy expanded at a solid 2.8% annual rate in Q3 2024, slightly down from 3% in Q2, driven largely by consumer spending. This strong economic performance places the U.S. among the top-performing major economies, but persistent inflation worries —prices have surged by 21% over four years— continue to overshadow positive data for many Americans

• Although job growth and consumer confidence indicators improved, a recent poll found that 62% of Americans view the economy negatively, with concerns about high living costs persisting across party lines

• Economic perceptions have become highly partisan, with only 13% of Republicans versus 61% of Democrats rating the economy as "good"

• Falling gas prices, stable grocery costs, and wage growth outpacing inflation have contributed to rising consumer confidence, alongside a Fed rate cut and positive employment data

🌱🌎 Impact & Climate Resilience

More Risk-Averse, Higher Returns, and More ESG-Oriented: How Women Invest (4 minute read)

Women are a rising force in wealth management, now holding about one-third of global wealth, with nearly half of this in the U.S. By 2030, U.S. baby boomers will invest $30 trillion in financial assets, further boosting women’s influence as they increasingly control family wealth. Wealth among women is also expanding in Western Europe and Asia, with Asia’s growth outpacing other regions

• Women generally invest with lower risk, yielding higher returns due to fewer transactions and resilience during downturns

• They also prioritize social and environmental goals, with 71% considering sustainability in investments

• However, the asset management industry remains male-dominated, with only about 12.5% of U.S. fund managers being women

🚀 IPO & Exits

Roadmap For Exits: How AI Startups Can Break Through (5 minute read)

Venture capital investment in AI has surged to $332 billion since 2019, yet exits for U.S. AI startups are declining, with M&A at just $47 billion in 2024 compared to $148 billion in 2021, and IPOs nearly halted. This disparity highlights the need for AI startups to strategize for strong exits, underscoring that VCs must be discerning in choosing investments

• Startups need a large addressable market, a solution to significant pain points, and an immediate ROI to attract sustained buyer interest

• Founders should focus on essential business fundamentals and avoid excessively high valuations, which may hinder growth

• Raising “right-sized” funding at reasonable valuations can prevent demotivating down rounds and support long-term value creation, offering a more predictable route to successful exits amidst fluctuating AI market multiples

🗞️ AI8 VENTURES HIGHLIGHT

Alpha Showcase 2024: Thank you Mexico City!

What an incredible experience at the NAA International Symposium and Startup Pitching Competition!

On September 25th, we hosted the Startup Pitching Competition for the NAA’s first-ever International Symposium in Mexico City. The event featured four exceptional early-stage startups, each selected through a rigorous process, showcasing their energy and innovative ideas to an audience of over 100 allocators and industry leaders.

A huge shoutout to Yoel Gavlovski and the entire Quash team, congratulations on your well-deserved victory! The competition was fierce, and every participant truly brought their A-game to the pitches. Thank you all for making this such a memorable event!

About the NAA: Founded in 1999, the New America Alliance is dedicated to advancing the economic development of the American Latino community. We believe that Latino business leaders have a special responsibility to lead the way in building the forms of capital crucial to Latino progress – economic, political, human, and philanthropic. Through coordinated philanthropy and strategic public and private collaboration, we aim to drive investment in our community.

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.

Introducing: Climate Resilience Technology

Alpha Impact 8 Ventures is pleased to announce that we are adding a third investment vertical to our thesis: Climate Resilience Technology.

Climate Resilience Technology encompasses digital solutions designed to help communities, businesses, and ecosystems adapt to and recover from the impacts of climate change. We're looking for scalable technologies addressing existing problems caused by climate change.

Our focus areas include:

• AgFinancing: Integrating advanced technologies and tailored financing solutions to improve access to capital for agricultural growth and trade, enhance food security, boost productivity, predict disruptions, and optimize logistics.

• Water Management Systems: Utilizing advanced technologies and financing solutions to address water scarcity and inefficient water use exacerbated by climate change.

• Energy Management and Optimization: Implementing advanced technologies and financing solutions to tackle increased energy demand and grid instability due to extreme weather conditions. This includes smart grids, microgrids, energy management software, and demand response systems that optimize energy use, integrate renewable energy sources, and enhance grid resilience.

• Data, Analytics, and Predictions: Companies that utilize data and advanced analytics to predict and mitigate disruptions and climate-related events. These solutions provide crucial insights and foresight, helping communities and businesses to prepare and respond effectively to climate challenges. Advanced technologies and artificial Intelligence to enhance supply chain visibility, predict disruptions, and optimize logistics ensure continuity and efficiency.

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