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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 | 14.03.24

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A year after Silicon Valley Bank’s dramatic collapse the venture debt market still hasn't found its new top dog. Even in the wake of the bank's implosion — which sparked widespread financial panic among founders and VCs alike — traditional institutions have not swooped in to take the crown.  


But now the competition between traditional banks and non-bank lenders is heating up — who will ultimately win the startups' hearts (and wallets)? We take a look at this below.


Elsewhere, Sam Altman officially rejoins OpenAI’s board of directors, a top investor warns of AI’s "unsustainable investment craze" and European female founders shatter new funding records in 2023.

—Charlie and the Research & Intelligence Team


The investment ecosystem

💸 What has replaced Silicon Valley Bank as start-ups’ favourite banker? Despite a surge in overall venture debt deals in the latter half of 2023, the market hasn't found a clear successor to SVB, leaving a gap that multiple players are partially filling  — but not fully dominating.


🤝🏼 Sam Altman officially rejoins OpenAI’s board of directors, following an investigation into his controversial firing in November 2023. The board unanimously backed his return alongside the appointment of three new members.


👋 Social Capital ousts two partners amidst AI Investment “situation”. The VC giant fired two senior partners and launched an investigation into an undisclosed “situation” surrounding their involvement with AI chip startup Groq.


🤖 The AI frenzy is a 'bubble within a bubble,' a top investor says. Jeremy Grantham, one of GMO's top strategists, argues the current AI craze may only temporarily mask a larger stock market bubble ready to burst.


📈 Funding for European female founders on the rise. Despite an overall decline in investment, female-founded startups in Europe secured a record high in both the number (25.8%) and value (20.5%) of funding deals in 2023


Chart of the week

Investment activity fueled by PE is off to a hot start. The first half of February has already seen $250 million in deals, exceeding the total for Q1 2023.


How AI is transforming investing 

🇬🇧 The UK government agency ARIA is allocating £42 million to AI compute startups. The initiative, sponsored by the UK's Department for Science, Innovation and Technology, will provide funding to roughly a dozen research projects.


 🇫🇷 France beefs up AI investment in defence sector. The government announced a €2 billion investment in AI technology by 2030, alongside the creation of a dedicated research centre and acquisition of a supercomputer.

💵 Abu Dhabi targets $100 billion AUM for AI Investment firm. This venture, led by sovereign wealth fund Mubadala and AI firm G42, aims to become a major player in the field of AI and semiconductors.


🇮🇹 Italy to set up AI fund of 1 billion euros, PM says. Prime Minister Giorgia Meloni announced a €1 billion government-backed investment fund to support AI projects, with the potential to grow to 3 billion euros through private sector contributions.


🔄 GenAI company Stability AI undergoes a quiet leadership change. Sifted reports that Christian Laforte has replaced Tom Mason as CTO, with former employees citing a lack of clear strategic direction under the previous leadership.


📉 Tech startups slash equity for new hires as market cools. Tech startups are offering significantly less equity to new hires as the industry faces a prolonged downturn. New hires at startups are receiving 37% less equity compared to 18 months ago.




Noteworthy deals

  • Flagstone, a London-based wealthtech platform for individual savers, has raised £108m in equity investment from Estancia Capital Partners.

  • Zama, a Paris-based company working on blockchain applications with AI has raised $73m in series A funding led by Multicoin Capital and Protocol Labs.

  • Tavus, an US-based generative AI video startup has raised $18m in series A funding led by Scale Venture Partners.

  • Bene Bono, a Paris-based startup building a platform to help organic farmers and producers sell produce rejected by major supermarkets has raised €10m in funding led by AVP (AXA Venture Partners).


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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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