July 18, 2023

Did you miss me? Either way, please send me all your best scoops by replying to this newsletter (or on Twitter @imkialikethecar).

Top of the morning

Photo illustration: Shoshana Gordon/Axios. Photo: Andrew Harrer/Bloomberg via Getty Images

Regulators are rushing to get ahead of whatever dangers they believe artificial intelligence may unleash — and the Securities and Exchanges Commission is no exception.

Driving the news: In a speech Monday at the National Press Club, SEC chair Gary Gensler discussed the potential challenges to markets that AI could cause

  • He noted that he’s already direct the commission's staff to "make recommendations for rule proposals ... regarding how best to address such potential conflicts across the range of investor interactions."

Zooming in: Namely, Gensler called out the spread of misinformation, corporate statements about AI, a small number of machine learning platforms dominating the field.

  • Gensler pointed out how the recent false rumor of his resignation originated from AI-generated text on a website, reminding his audience that "fraud is fraud" regardless of the tools used.
  • On the subject of dominant AI platforms, he suggested that investors using the same models could increase herding in the markets.

Between the lines: Though Gensler's speech was rather sprawling, it's not hard to see that AI's potential to distort markets through deception and other influences over investor behavior is the key concern.

  • The rise of the internet more than two decades ago gave the finance world an early taste of how novel ways of information and data spreading can impact markets.

Yes, but: While Gensler declares that the SEC is "technology neutral" and is focused on fulfilling its regulatory mandate, the crypto crowd would largely beg to differ.

  • So depending on what the agency does to blunt the wave of technological change, it may come under fire from the tech industry as being anti-AI, rather than trying to protect investors from illicit activity.
  • To his credit, he notes that the SEC could benefit from the staff using AI more in their work.

The BFD

Illustration: Gabriella Turrisi/Axios

Redwood Materials, the battery-recycling company started by Tesla co-founder J.B. Straubel, is in talks to raise $700 million at a $5 billion valuation, according to the Financial Times.

Why it matters: Redwood Materials has been on a roll in 2023, receiving $2 billion U.S. Department of Energy loan and planning two new factories.

The bottom line: "Straubel established Redwood Materials in 2017 to reshape the supply chain for electric vehicles by recycling the materials in batteries and reducing the need to mine for more of the minerals the industry needs." — Patrick McGee, Ivan Levingston, FT

Venture Capital Deals

Lambda Labs, a San Francisco-based cloud infrastructure provider, is raising $300m in new funding from investors including Nvidia, according to The Information. https://axios.link/3XTQDVb

Netcraft, a U.K.-based cybersecurity company, raised more than $100m from Spectrum Equity. www.netcraft.com

Tractable, a U.K.-based car and home assessment startup using computer vision, raised $65m in Series E funding led by SoftBank Vision Fund 2, with Insight Partners and Georgian also participating. https://axios.link/3rxwxnx

⛽️ Sylvera, a U.K.-based carbon data provider, raised $57m in Series B funding led by Balderton Capital, with Index Ventures, Insight Partners, Bain & Company, Salesforce Ventures, Speedinvest, Seedcamp, and LocalGlobe, Fidelity Strategic Ventures, and 9Yards Capital also participating. www.sylvera.com

Futureverse, a Los Angeles-based AI and metaverse technology and content startup, raised $54m in Series A funding led by 10T Holdings, with Ripple also participating. www.futureverse.com

Runway, a San Francisco startup financial planning tools maker, raised $27.5m in Series A funding led by Initialized Capital, with Elad Gil and Jason Tan also participating. https://axios.link/3DoIzlH

⛽️ Isometric, a U.K.-based carbon removal registry and science company, raised $25m in seed funding led by Lowercarbon Capital and Plural. www.isometric.com

Wing Cloud, a New York-based open source software company, raised $20m in seed funding led by Battery Ventures, Grove Ventures, and StageOne Ventures, with Secret Chord Ventures, Cerca Partners, Operator Partners, and angel investors also participating. www.wing.cloud

Anduin, a San Francisco-based maker of tools for private market transactions, raised $15.6m in Series B funding led by 8VC, with GC1 Ventures and existing investors also participating. www.anduintransact.com

Leverage, a New York-based supply chain visibility startup, raised $7m in funding led by Chicago Ventures, with Las Olas Venture Capital, Remarkable Ventures, Tensility and Florida Funders also participating. https://axios.link/3rzKUbb

Rice Robotics, a Hong Kong-based delivery robot startup, raised $7m in additional seed funding from Alibaba Entrepreneur Fund, Soul Capital, Audacy Ventures, Sun Hung Kai & Company, and Cyberport HK. https://axios.link/3OjjsqU

Bureau, a San Francisco-based ID verification startup, raised $4.5m in additional Series A funding from GMO Venture Partners and GMO Payment Gateway. It also acquired inVOID, a Y Combinator-backed identity verification startup. https://axios.link/3Df2kMN

Craftwork, a Charlotte, N.C.-based house painting startup, raised $4m in seed funding from Y Combinator, Lachy Groom, Immad Akhund, Louis Beryl, and Roger Dickey. https://axios.link/3rqCkv0

Huq Industries, a U.K.-based foot traffic data provider, raised £4m in funding led by 24 Haymarket, with ACF Investors also participating. www.huq.io

Metafold, a Canadian provider of cloud- and API-based 3D engineering tools, raised $1.78 million in seed funding led by Differential Ventures, with Active Impact Investments, Jetstream, and Standup Ventures also participating. www.metafold3d.com

Reworkd.ai, a Canadian generative AI startup, raised $1.25m in pre-seed funding led by Panache Ventures, with Y Combinator also participating.

Private Equity Deals

AirDNA, backed by Alpine Investors, acquired Arrivalist, a New York-based location data company for the travel industry. https://axios.link/3Y3IQEj

Blue Cardinal Group, backed by Percheron, acquired Standard Heating and Air Conditioning (Alabama), Climate Control Heating and Cooling (Missouri), and Midway Plumbing, Alco Air, Air Express, Houston Water Heaters, and American Air (all in Texas). www.bluecardinalhomeservices.com

🚑 Boyu Capital agreed to acquire Quasar, a Hong Kong-based medical device maker, at more than $600 million from Longreach Group, per Bloomberg. https://axios.link/3K4Sb90

BVP Forge is leading the recapitalization of Parsec Automation Corp, an Anaheim, Calif.-based manufacturing operations management software company. www.parsec-corp.com

GI Partners acquired a 65% stake in two Elk Grove Village, Ill.-based hyperscale data centers from Digital Realty Trust (NYSE: DLR). www.gipartners.com

Incline Equity Partners acquired GME Supply Co., a Columbia, Mo.-based distributor of fall protection, safety and productivity equipment. www.gmesupply.com

PestCo Holdings, backed by Thompson Street Capital Partners, acquired the assets of 5 Star Pest Solutions, an Indianapolis-based provider of commercial pest control services. www.pestcoholdings.com

Platinum Equity agreed to acquire The HC Companies, a Twinsberg, Ohio-based North American manufacturer of horticultural containers. www.hc-companies.com

Public Listings

🚑 Turnstone Biologics, a La Jolla, Calif.-based Phase 1 biotech company developing selected TIL therapies for solid tumors, plans to raise $75m by offering 5.8m shares at a price range of $12 to $14. It plans to list on the Nasdaq under the symbol TSBX. BofA Securities, Leerink Partners, and Piper Sandler are the joint bookrunners on the deal. https://axios.link/3NUi8tb

Liquidity Events

Black Knight (NYSE: BKI), a Jacksonville, Fla.-based U.S. mortgage data vendor, agreed to sell its Optimal Blue business to Constellation Software for $700 million, contingent on its sale to Intercontinental Exchange closing. https://axios.link/43BvekF

Johnson Controls (NYSE: JCI) acquired FM:Systems, a Raleigh, N.C.-based provider of digital workplace management tools, from Accel-KKR for $455 million, plus earn-outs. www.fmsystems.com

🚑 Mirum Pharmaceuticals (Nasdaq: MIRM) agreed to acquire Travere's bile acid product portfolio for up to $445m from the San Diego-based biopharma company. https://axios.link/44xJoEU

Stratasys (Nasdaq: SSYS) announced it’s rejecting Nano Dimension’s (Nasdaq: NNDM) acquisition offer and will engage with 3D Systems (NYSE: DDD) after receiving its unsolicited proposal. Stratasys is currently set to merge with Desktop Metal. https://axios.link/3NVTcBA

Fundraising

Davidson Kempner Capital Management raised $3b for its sixth opportunities fund. www.davidsonkempner.com

Georgia Tech added an undisclosed amount to Drive Capital’s existing $80m seed-stage investment program, with its funds specifically intended for Atlanta-based investments. www.drivecapital.com/seed-program

Angelo Gordon raised more than $1b for its AG Asset Based Credit Fund. www.angelogordon.com

EJF Capital raised an additional $220m in capital for its new litigation finance investment vehicles, Rocade Capital Fund IV and Rocade Capital Offshore Fund IV. www.ejfcap.com

CoinFund raised $158m for its newest crypto-focused venture fund. https://axios.link/3JZN9e0

It's Personnel

⛽️ BlackRock added Aramco CEO Amin Nasser to its board of directors, filling the gap left by Bader Alsaad, chairman of the board of the Arab Fund for Economic & Social Development, who is not standing for re-election next year. https://axios.link/43whuI9

Carlyle promoted Lúcia Soares to chief information officer and head of technology transformation. She was previously the firm’s chief information officer of global portfolio solutions. www.carlyle.com

EY has appointed Tim Tracy to head its private equity practice in the Americas. He was previously an EY global client services partners. www.ey.com

Securian Asset Management hired Wen Nannen as executive vice president and chief investment officer. She was previously at Lincoln Financial Group. https://axios.link/44xtESu

Macquarie Capital has hired Joseph Gatto as senior adviser to its global consumer and retail division.

Final Numbers

Screen shot: SPAC Research

🙏Thanks for reading Axios Pro Rata, and to editor Javier David and copy editor Bryan McBournie! Please ask your friends, colleagues and AI enthusiasts to sign up.