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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 | 11.07.24

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This week, we take a look at why startup valuations are sneaking back up after the tough funding drought. Plus how investment firms are turning to political experts to help them navigate an increasingly unpredictable world.

Also inside:

  • Is this the end of the VC slump?

  • How the investment world is trying to navigate geopolitics

  • SoftBank's AI ambitions are getting real

  • How much revenue does an AI company need?


— Charlie and the Research & Intelligence Team

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The investment ecosystem

🚀 Is this the end of the VC slump? The last couple of years have been brutal for non-AI startups. Funding dried up, and valuations plummeted. But new funding data suggests valuations are quietly sneaking back to record highs, putting an end to several quarters of declines.


🪖 How the investment world is trying to navigate geopolitics: Investors are increasingly focused on geopolitical risks, with many firms hiring political experts and creating specialised funds to adapt to a more volatile political landscape, reports the Financial Times.


Chart of the week

U.S. leads in private sector AI investment, pouring in more than 3 times the funds than any other country since 2013.


How AI is transforming investing 


🤖 AI is keeping the VC ecosystem afloat: Nearly half of the $55.6 billion in VC funding raised last quarter went to AI-related firms, according to PitchBook data. While some past overhyped companies have struggled, overall VC interest in AI seems stronger than ever.


💰 SoftBank's AI ambitions are getting real, and expensive. The company is in talks for a massive $10 billion loan to fund energy projects needed for AI, and they're also looking to secure a ton of Nvidia's powerful AI chips.


💸 How much revenue does an AI company need to stay afloat? A Sequoia Capital analyst predicts AI companies will need a staggering $600 billion annually just to justify their infrastructure spend. Is this a recipe for a massive tech bubble?


👨🏻‍💻 Runway, already the most funded AI video generation startup, is in talks to raise $450 million at a whopping $4 billion valuation, potentially led by General Atlantic. This move could fuel even more innovation in AI-powered video creation.


🗣️ Volley, a leader in voice-enabled AI games, just raised a cool $55 million to fuel development of even more voice-controlled games for platforms like Amazon Alexa and other mobile devices.


🕵️ Two former Humane executives are leaving the troubled AI hardware company to launch Infactory, an AI-powered fact-checking search engine hoping to give a ‘breath of fresh air’ to the search world.




Noteworthy deals

  • SciRhom, a Germany-based company building therapeutic iRhom2 antibodies for autoimmune diseases has raised €63m in Series A funding led by Andera Partners, Kurma Partners, Hadean Ventures, MIG Capital and Wellington Partners.


  • Citibox, a Madrid based startup manufacturing "smart" mailboxes for large apartment blocks has raised €80m in debt funding led by Growth Credit Partners and CoVenture.

  • Kvantify, a Copenhagen-based quantum computing company has raised €10m in seed funding led by Dreamcraft, Lundbeckfonden BioCapital and 2degrees.


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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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