AI soon may revolutionize venture capital, but not in the way that many investors think.

• That was my takeaway from a conversation yesterday with Jon McNeill, the former Tesla president and Lyft COO who now runs a company creation platform called DVx.

The big picture: McNeill says that the investment math is changing for application startups, arguing that DVx now can get them to Series A with 80% less seed funding than it previously could.

• "So much now is just a couple founders plus a library of AI agents we provide that lets them build more efficiently," he explains. "They can begin to scale without first having hired teams of designers and project managers and engineers."

Why it matters: Venture capitalists traditionally seek at least 10% of a company at the outset, if not 20%, but founders might balk louder at such dilution if their capital requirements have dwindled.

• For early-stage VCs and their LPs, this might require new thinking about fund sizes and return projections.

Yes, but: We're not yet seeing this play out in the seed-stage or early-stage data.

• There's still a lot of what McNeill refers to as "cocktail party" thinking among founders, in which bigger checks double as bragging rights. VCs may quietly snicker, but they've got millions of reasons not to discourage the behavior.
• Also, this sort of downsizing is specific to the app layer. Not foundational models, which still require busloads of cash.

The bottom line: AI is huge. And also could make some things smaller.

Firefly Aerospace, a commercial space company backed by AE Industrial Partners, raised $868 million in an upsized IPO.

Why it's the BFD: The IPO window is open wide enough to fly a spaceship through it, with almost every significant offering pricing stronger than expected.

By the numbers: Firefly priced 19.3 million shares at $45, both of which were above initial plans.

• AE Industrial Partners didn't sell any shares and has a 41.8% post-IPO position.
• Firefly last week was awarded a $177 million NASA contract to deliver payloads to the Moon's south pole in 2029.

Flashback: Firefly co-founder Max Polyakov was forced to dump his shares in the company by the U.S. government, which suspected him of being a Russian spy, but later seemed to admit it was a mistake. His loss became AE's gain.

The bottom line: "The Texas-based space firm becomes the most recent test case of whether a launch company can maintain a sustainable business where other space companies have failed." — Bloomberg

🚑 Strand Therapeutics, an MIT spinout developing mRNA-based therapeutics, raised $153m in Series B funding. Kinnevik led, joined by Regeneron Ventures, Iconiq, Amgen Ventures, Alex Gorsky's family office, JIC-VGI, LG Technology Ventures, Gradiant Corp., and insiders FPV Ventures, Playground Global, Eli Lilly, ANRI, and Potentum.

• This comes a day after the Trump admin pulled $500m in funding to develop new mRNA vaccines.
• Strand CEO Jake Becraft tells Axios: "The biggest potential ahead of mRNA is beyond vaccines, in its ability to treat disease directly ... mRNA as a genetic medicine can be used to effectively treat cancer, and we believe a host of other diseases."

• Decart, a real-time GenAI research lab, raised $100m at a $3.1b valuation from Benchmark, Sequoia Capital, Zeev Ventures, and Aleph VC. axios.link/4m6k9T3

🚑 Chai Discovery, an SF-based AI drug discovery startup, raised $70m in Series A funding. Menlo Ventures led, joined by Yosemite, DST Global Partners, SV Angel, Avenir, DCVC, and insiders Thrive Capital, OpenAI, Dimension, Neo, Lachy Groom, and Fred Ehrsam. axios.link/4okKKNL

• Capitolis, a fintech for banks, raised $56m. Barclays, BNP Paribas, and JPMorgan led, joined by Canapi Ventures, 9Yards Capital, and Greenfield Partners. axios.link/3UgPI01

• Stavtar, a New York-based spend management platform for alt asset managers, raised $55m in Series A funding from Elephant. axios.link/4ophpS4

⚡️ DISA Technologies, a Casper, Wyo.-based developer of mineral recovery and uranium remediation tech, raised $30m in Series A extension funding. Evok Innovations led, joined by Constellation Technology Ventures, Valor Equity Partners, Veriten, and Halliburton Labs. axios.link/4mogG1C

• Kustomer, a Short Hills, N.J.-based CX platform for brands, raised $30m in Series B funding. Norwest led, joined by Battery Ventures, Redpoint Ventures, and Boldstart. axios.link/4ooeGZ1

• Tavily, a New York-based startup connecting AI agents to the web, raised $20m in Series A funding led by Insight Partners. axios.link/46G3S2f

• Docyt, a Santa Clara, Calif.-based accounting automation startup, raised $12m led by Pivot Investment Partners. axios.link/3UUDM4d

🚑 Elion, a New York-based provider of tech tools diligence for health systems, raised $9.3m in seed funding, per Axios Pro. NEA led, joined by Cedars Sinai Health Ventures, Scrub Capital, TMV, and Alumni Ventures. axios.link/46Lrd2u

• August, a New York-based paperwork automation startup for midsized law firms, raised $7m in seed funding led by NEA and Pear VC. axios.link/4ophDIU

• Lava Payments, a billing platform for AI agents, raised $5.8m in seed funding. Lerer Hippeau led, joined by Harlem Capital, Streamlined Ventures, and Westbound. axios.link/4on9aG3

• Tracelight, a U.K.-based AI tool for financial modeling, raised $3.6m in seed funding. Chalfen Ventures led, joined by Acequia Capital, Inovo and EF. axios.link/4fuyPJ2

⚡️ Hylenr, an Indian developer of industrial heat systems powered by low-energy nuclear reactions, raised $3m led by Valour Capital and Chhattisgarh Investments. axios.link/3J3RwHi

• WiseBee, a New York-based cybersecurity platform, raised $2.5m in pre-seed funding from Frontline Ventures and BrightCap Ventures. wisebee.io

🚑 HistoSonics, a Minneapolis developer of liver cancer therapies, agreed to be acquired for $2.25b by an investor group that includes K5 Global, Bezos Expeditions, and Wellington Management.

• The company previously raised over $300m in VC funding from firms like J&J, Alpha Wave Ventures, Venture Investors, Lumira Ventures, Yonjin Venture, and the State of Wisconsin Investment Board.
• Those backers got liquidity but retained some of their shares.

🚑 AVS Bio, an Arlington Capital Partners portfolio company, acquired the Dutch subsidiary of ImmunoPrecise Antibodies (Nasdaq: IPA) for $12m. axios.link/4ofNtI2

• CCMP Growth Advisors acquired Airo Mechanical, a Mooresville, N.C.-based provider of HVAC and plumbing services for multifamily and light commercial properties, from Thomas Investments and Stephens Capital Partners. airomechanical.com

• Cinven acquired a majority stake in Objectway, an Italian provider of wealth management software. axios.link/4muDa15

• Creo Capital Partners acquired Bova Fresh, a Boca Raton, Fla.-based food procurement and logistics company. bovafresh.com

☕ Freeman Spogli paid $145m to acquire Philz Coffee, which had raised over $100m from VC backers like Uncorrelated Ventures, TPG, Summit Partners, Cowboy Ventures, and Crunchfund. axios.link/4me31ec

🚑 KKR acquired DentalXChange, an Irvine, Calif.-based provider of revenue cycle management solutions for the U.S. dental market, from Bregal Sagemount. axios.link/4mu0UT5

• Poalim Equity invested in Glassbox, an Israeli provider of digital experience analytics for financial institutions. axios.link/4mpiOX2

• Rocscience, a Canadian portfolio company of TA Associates, acquired Rockfield, a U.K. provider of numerical modelling software for the energy and mining markets. axios.link/4fvKWpq

• Shamrock Capital acquired Penta Group, a Washington, D.C.-based corp comms firm, from Falfurrias Capital Partners, per Axios. axios.link/3JlQAy4

• Hall Chadwick Acquisition, a SPAC formed by Australia's Hall Chadwick, filed for a $180m IPO. axios.link/4mA06w4

🌍 Spring Valley Acquisition III, a natural resources and decarbonization SPAC, filed for a $150m IPO. axios.link/4mwK71I

• WhiteFiber, a Bit Digital (Nasdaq: BTBT) carveout that provides cloud services to data centers, raised $159m in its IPO and will list on the Nasdaq (WIFY). It sold 9.4m shares at $17, versus plans to offer 7.8m shares at $15-$17, and will set IPO terms to 7.8m shares at $15-$17, for a $619m fully diluted market cap. axios.link/45liIc6

⚡ BP Ventures has sold certain "green" investments and laid off some related staff, as it reprioritizes around technologies tied to fossil fuel production, per Axios Pro. axios.link/3UMzVX0

🚑 The FTC sued to block Edwards Lifesciences (NYSE: EW) from completing its $945m acquisition of JenaValve, an Irvine, Calif.-based maker of transcatheter aortic valve replacement systems.

• JenaValve has raised over $500m in VC funding from firms like Bain Capital Life Sciences, Rosetta Capital, Pictet, QIA, Innovatus Capital Partners, Peijia Medical, and insiders Andera Partners, Valiance Advisors, Gimv, Cormorant Asset Management, RMM, and Venture Incubator.

⚡ ConocoPhillips (NYSE: COP) said it plans to sell its Anadarko Basin assets for $1.3b. axios.link/3Ho7Q5d

• Duolingo (Nasdaq: DUOL) acquired NextBeat, a London-based music gaming startup. axios.link/4m3NNrQ

• MasterBrand (NYSE: MBC) agreed to merge with American Woodmark (Nasdaq: AMWD), creating a $3.6b cabinetry maker. axios.link/3UNxFPf

🚑 Publicis Health agreed to acquire New Jersey-based life sciences communications firm P-value Group for between $250m-$300m, per Axios Pro. axios.link/46Gw2dr

• Skydance Media today completed its $8 billion acquisition of Paramount Global.

• Upwork (Nasdaq: UPWK) acquired Dutch workforce management plaform Bubty and also agreed to buy compliance and employer-of-record solutions provider Ascen. axios.link/3HjAFQm

⚡ Western Midstream Partners (NYSE: WES) agreed to acquire Aris Water Solutions (NYSE: ARIS) for around $1.5b in cash and stock. axios.link/3UNcFYT

• Frictionless Capital, a Miami-based blockchain venture firm, is raising $60m for its third fund, per an SEC filing. frictionless.capital

Correction: TPG's Q2 earnings beat Wall Street estimates. Apologies for yesterday's error.

President Trump this morning demanded the resignation of Intel CEO Lip-Bu Tan, sending shares down in premarket trading.

• This came a day after Sen. Tom Cotton (R-Ark.) sent a letter to Intel's board raising concerns about Tan's purported ties to Chinese companies with links to the Communist Party and the Chinese military.

Catch up quick: Tan was named to the Intel post in March, after the company's late 2024 ouster of Pat Gelsinger.

• He previously led Cadence Design Systems and is a longtime venture capitalist known for focusing on cross-border investments, including via Walden International, a firm he founded in the 1980s.
• Walden was one of the earliest U.S. venture firms to make a significant number of investments in China, although none of that is new news. In April 2001, Forbes dubbed him the "pioneer of Asia VC."