February 21th Newsletter

Before we unpack this week’s actions, click here for our deck highlighting the financials from selected public companies.

The week after a long weekend always goes by fast! This week, DOGE began to review IRS operations, sparking concerns over staff cuts, refund delays, and data access amidst the wider federal layoffs. Trump ordered federal agencies to study reciprocal tariffs. In Tech, Broadcom and TSMC may split Intel, but U.S. security concerns could block foreign control of its factories. Meta's 50,000 km Waterworth Project will be the world's longest undersea cable, enhancing global AI infrastructure. Additionally, Microsoft unveiled Majorana 1, its first quantum chip using a new topological state of matter, aiming for scalable quantum computing. Arm plans to launch the first chip that it made in-house, challenging Nvidia and Qualcomm in the semiconductor industry with Meta as an early customer. Lastly, Apple unveiled the iPhone 16e, the first phone with an Apple C1 cellular modem.

Monthly AI Financing Report: Since January, we started sharing a monthly report of the top AI financing activity gathered from public and proprietary sources. See the latest report here.

Top 5 AI Highlights

[1] ⚙️ Elon Musk’s xAI launched Grok 3, its latest AI model. Trained on 200,000 GPUs, it boasts deep research, image generation, and a “Big Brain” mode for thinking harder. Grok-3 surpasses rivals like OpenAI’s GPT-4o and Google’s Gemini in multiple benchmarks. Premium+ users on X get early access, while the $30/month SuperGrok plan unlocks advanced features. xAI plans to open-source Grok 2 once Grok 3 stabilizes. Meanwhile, Dell nears a $5 billion deal to supply xAI with AI-optimized servers featuring Nvidia’s GB200 chips, strengthening xAI’s Memphis supercomputer project. Musk is also looking to raise $10 billion, valuing xAI at $75 billion.  Watch the launch on X, and more from Bloomberg.

[2] 🧠 Mira Murati, former OpenAI CTO, has launched Thinking Machines Lab, an AI startup aiming to make AI more understandable, customizable, and capable. The company plans to open-source its technologies. Murati, a key figure in OpenAI’s leadership, departed after internal conflicts following Sam Altman’s brief ouster and reinstatement in 2023. Her move aligns with a broader trend of ex-OpenAI executives founding new AI ventures, such as former OpenAI chief scientist Ilya Sutskever’s Safe Superintelligence. Also, OpenAI Co-founder John Shulman left Anthropic earlier this month to join Thinking Machines. More from NYT.

[3] 🤖 AI-powered humanoid robots are rapidly advancing. Figure AI is raising $1.5B at a $39.5B valuation with BMW as a customer. Their new release with Helix allows two Figures to work together in putting away groceries. Elsewhere in the robotics sector, Apptronik secured $350M for its Apollo robot. Alphabet, Meta, Unitree, and Apple are also expanding their humanoid robotics efforts. Elon Musk predicts these robots will create "quasi-infinite products and services". Goldman Sachs estimates that the market will reach $38B by 2035. Meanwhile, Amazon is already deploying humanoid robots in warehouses with plans to cut $10B in costs by 2030. Read more from BBG, CB, YF, and watch a video of two Figures with Helix AI in Action along with a Dance by Unitree’s G1.

[4] 🔬 Perplexity AI launched "Deep Research," a freemium tool for citation-backed reports. Competing with OpenAI and Google, it delivers faster results—under three minutes. While OpenAI offers deeper enterprise analysis, Perplexity prioritizes speed and accessibility, with free users getting limited queries and subscribers unlimited access. The tool iteratively refines research, mimicking human behavior. Perplexity also launched R1 1776, an open-sourced model with post-training on Deepseek’s R1, providing an uncensored version. More from Perplexity and X.

[5] 🤝 Anthropic has signed an MOU with the UK government to explore AI’s role in transforming public services. The collaboration focuses on using Claude to enhance digital government interactions, secure AI infrastructure, and support innovation. Anthropic will work with the UK AI Security Institute to develop safeguards while leveraging its Economic Index to analyze AI’s impact on labor markets. Other governments already use Claude for tasks like document accessibility and intelligence analysis, highlighting AI’s growing role in public sector efficiency. More from Anthropic. 

Founder’s Corner

More Time between Rounds but Bigger Rounds

What We Read and Listened to This Week

• Fiverr's new platform lets freelancers train AI models on text, image, and sound, enabling them to sell AI-generated work and scale projects efficiently. (X)

• Sequoia’s Podcast with Palo Alto Networks CEO Nikesh Arora. Arora urges stronger AI security controls and a shift to real-time threat detection to keep pace with evolving AI-powered attacks. (YT)

• Microsoft CEO Satya Nadella says AI won’t be a “winner take all situation”, and discusses AGI safety as well as Microsoft's quantum breakthrough. (YT)

• Google's Career Dreamer uses AI to help users identify skills, explore career options, and gain confidence in their professional potential based on job market data. (Google)

• The NYT adopts AI for content while enforcing strict guidelines amid its OpenAI lawsuit. (Semafor)

• Walgreens Boots Alliance shares rose on Tuesday from reports that Sycamore Partners may still take the company private, reviving a previously stalled deal. (YF)

• Walmart exceeded analyst expectations for Q4 earnings but missed on guidance, stock dropped 7%. (CNBC)

AI M&A and Fundraising news (Feb 14 — Feb 20)

• Abridge: AI platform for clinical documentation, raised a $250M Series D.

• Atomwise: AI-driven biotech for drug discovery, raised a $45M Series C.

• Augury: AI-powered machine health monitoring platform, raised a $75M Series F.

• Baseten: Machine learning model deployment infrastructure, raised a $75M Series A.

• BEKHealth: Clinical research software platform, raised a $4M Series A.

• BYTES (Automotive): AI-powered ADAS for road safety, raised $10M.

• Camb.ai: AI video content localization platform, raised $4M.

• ClustroAI: Edge AI enabling local device processing, raised a $12M Series A.

• CloudZero: Cloud cost intelligence platform, raised a $54M Series A.

• DiligentIQ: AI-driven platform for diligence automation, raised $12M.

• Dream: Cybersecurity platform against cyberattacks and AI threats, raised a $100M Series B.

• EnCharge AI: Analog memory chips for AI applications, raised a $100M Series B.

• Everstar: AI scheduling and automation platform, raised a $6M Seed.

• fal: AI-driven generative media platform for video content, raised a $49M Series B.

• Floyd: AI-driven robotics testing platform, raised $9.35M.

• Frontera: AI-driven healthcare company for behavioral health, raised $10M.

• Frontera Health: AI-powered autism diagnostic and treatment tools, raised a $32M Seed.

• Guidde: AI-powered video documentation company, raised a $26.6M Series A.

• Hightouch: AI marketing, sales, and customer service tools, raised an $80M Series C.

• HP will acquire assets from Humane Inc., maker of a wearable AI pin, for $116M.

• i2k: Generative AI platform for digital transformation, raised a $5M Series A.

• Jump (Business/Productivity Software): AI-powered note-taking tool for financial advisors, raised a $24.57M Series A.

• Lambda: Cloud computing platform for AI training and inference, raised a $450M Series D.

• Luminance: AI legal tech for contract management, raised a $75M Series C.

• Minerva: AI platform for consumer behavior modeling, raised a $8.16M Seed.

• Nodes & Links: AI-powered risk and forecasting reporting platform, raised a $13.68M Series B.

• Onsights: Customer-centric retail analytics platform, raised $23.48M.

• OpenEvidence: AI-powered medical information platform, raised a $75M Series A.

• Ori: AI-driven cloud orchestration platform, raised $140M.

• Saronic Technologies: Unmanned surface vehicles for maritime security, raised a $600M Series C.

• Singular AI: Enterprise AI governance and security platform, raised a $10M Seed.

• Spore.Bio: Bacterial detection technology developer, raised a $23M Series A.

• Spyne: AI-powered visual content enhancement platform, raised a $16M Series A.

• Stacks: AI-powered accounting automation platform, raised $10M Seed.

• Together AI: End-to-end platform for the full generative AI lifecycle, raised a $305M Series B.

• Tofu: AI-driven B2B marketing platform, raised a $12M Series A.

• Verkada: AI-powered cloud-based physical security platform, raised a $200M Series E.