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Future of Capital Allocation

Your weekly newsletter on the fast-evolving world of investing

The week's developments in investing & technology, explained | 22.02.24

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Could AI usher in an era of solo unicorn founders? According to some AI startup visionaries, the day when individuals will single-handedly create billion-dollar SaaS companies — bypassing the need for large development teams — may be closer than we think.


Elsewhere, British AI champion Graphcore is reportedly considering a sale to overseas buyers amidst challenges in securing new financing, the Telegraph reveals.


Plus, is the investment landscape changing for first-time VC managers? With limited partners scaling back on risk, newcomers to venture capital management are encountering unprecedented hurdles.


Read on to find out more — including why a top Silicon Valley investor advocates for global AI "Guardrails" and a public investment push to stop centralised AI development.


—Charlie and the Research & Intelligence Team


The investment ecosystem

💰 Is the new realism in venture capital healthy? With $4tn in "dry powder" on standby, the investment landscape is tightening, compelling both PE and VC firms to seek more grounded valuations and sustainable investing opportunities. Can this newfound realism fuel future growth for the industry? 


💼 Are first-time VC managers dropping out? Amidst a more cautious investment climate, over 37% of first-time US VC fund managers — particularly those with funds under $10 million — faced challenges securing a second fund.


🤖 Top Silicon Valley investor advocates for global AI "Guardrails".  As the race for AI dominance intensifies, Hemant Taneja — a Silicon Valley investor with stakes in tech giants like Airbnb and Snap — calls for international "guardrails" to get countries on the same page about AI.


📉 EU's big tech clampdown concerns startups: The intensifying scrutiny over Big Tech acquisitions by EU regulators has sparked concerns among European startups over diminishing exit opportunities. Could the recent regulatory actions discourage investors?


Chart of the week

VC cash flow dipped into negatives in 2022, leaving LPs more cash-sensitive than ever.


How AI is transforming investing 


🦾 SoftBank founder looks to create $100B AI chip venture. Targeting funding from the Middle East, the venture seeks to challenge Nvidia's stronghold in AI processing.The project, codenamed Izanagi, aims to bolster SoftBank's position in the AI and semiconductor industries.


🦄 AI and cybersecurity dominate 2023's unicorn rankings. Despite a challenging fundraising environment that forced many startups to cut their valuations, cybersecurity and AI emerged as the leading sectors among unicorn companies last year.

💸 Top British AI company Graphcore explores foreign sale. Amid efforts to secure new investments, the company's potential sale — exceeding $500 million — would be under the radar of national security officials due to the strategic importance of the technology.


🦄 Can AI birth a one-person Unicorn? In a bold prediction for the future, AI startups foresee a shift where advanced software could allow individuals to launch and scale up unicorn companies single-handedly — challenging the current SaaS model reliant on coding teams.


🚀 Y Combinator seeks AI-driven startups in robotics, space, and defence, as outlined in a recent blog post detailing 20 startup categories of interest. These sectors represent the “spaces that we believe will be important in the coming decades”, says managing director Dalton Caldwell.




Noteworthy deals

  • Bending Spoons, a Milan-based mobile app developer, has raised $155m in funding from investors including Durable Capital Partners, Baillie Gifford, Cox Enterprises and NB Renaissance.

  • Bob W, a Helsinki-based hospitality platform has raised €40m in Series B funding led by Evli Growth Partners.

  • Qloo, a New York-based startup using AI to predict consumer behaviours across media and entertainment, has raised $25m in a series C round led by AI Ventures.

  • Faddom, an Israel-based startup helping companies map their IT infrastructure, has raised $12m Series A funding from a group of investors including Viola Ventures and NFX.


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Disclaimer: This content is for informational and educational purposes only. It does not constitute financial, investment, legal or tax advice.

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