January 23, 2024

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Top of the Morning

Illustration: Aïda Amer/Axios

Venture capitalists are investing billions into AI companies, and even more into companies that want to leverage AI for everything from accounting to medicine.

But, but, but: Almost all of this is predicated on the dubious assumption that China won't ever invade Taiwan, the global hub for AI chip manufacturing.

  • Such an attack would be devastating, almost no matter how it plays out.
  • Pick a scenario: China succeeds, and Taiwan-made chips are subject to U.S. import controls on sensitive tech. Taiwan wins with the help of Western powers like the U.S., which feels a lot like the start of WWIII. Either way, and in the middle, lots of chip fabs are likely destroyed.

Driving the news: This is why OpenAI CEO Sam Altman has spent months — including before his brief ouster — talking to the Saudis and other deep pockets about funding the development of one or more new chipmaking centers.

  • He views the overreliance on Taiwan as an existential threat to both his business and his industry.
  • Even some Taiwanese chipmakers are hedging their bets. Taiwan Semiconductor Manufacturing Co. (TSMC) is spending $40 billion on a pair of plants in Arizona, while GlobalWafer just broke ground on a facility in Texas.

Zoom out: Even if Taiwan didn't have a China problem, the world still would have an AI chip shortage. The result has been the birth of what Axios' Ryan Health refers to as the "AI industrial complex."

  • Heath writes: "Tech giants and chipmakers are being pushed into shotgun alliances with governments to boost output and free up chokepoints."
  • At an Axios event in Davos last week, Altman said: "None of the pieces are ready" for delivering AI infrastructure "at the scale that people want it."

The bottom line: AI is a platform shift, unless its geopolitical foundation shifts too much.

The BFD

Photo illustration: Axios Visuals. Photo courtesy of Andreessen Horowitz

Connie Chan today will announce that she's stepping down as a general partner with Andreessen Horowitz.

Why it's the BFD: This reflects how U.S. venture capital firms are decoupling from China, even if they don't invest directly in the country.

  • Chan's based in the Bay Area, but is best known for her deep knowledge of China's consumer tech market.
  • In short, the fit no longer fit quite as well.

Backstory: Chan joined Andreessen Horowitz in 2011 from HP, where she led webOS in China, and in 2018 became the VC firm's first general partner to get promoted from within. She'll remain on her Andreessen Horowitz portfolio company board seats.

The bottom line: "There comes a point after 12 years where you either double down or figure something else out. I have an adventurous streak in me so after a lot of thought, I've landed on the latter." — Connie Chan

Venture Capital Deals

Silverfort, an Israeli identity protection company, raised $116m in Series D funding. Brighton Park Capital led, and was joined by insiders Acrew Capital, Greenfield Partners, Citi Ventures, General Motors Ventures, Maor Investments, Vintage Investment Partners, and Singtel Innov8. www.silverfort.com

TravelPerk, a Barcelona-based business travel management platform, raised $104m. SoftBank led, and was joined by insiders Kinnevik and Felix Capital. https://axios.link/496wYWC

Instagrid, a German developer of portable battery systems, raised $95m in Series C funding. Ontario Teachers' led, and was joined by Morgan Stanley Investment Management and insiders Energy Impact Partners, SET Ventures, blueworld.group, and Hightech Gründerfond. https://axios.link/3vPT8y0

🚑 Accent Therapeutics, a Lexington, Mass.-based developer of precision cancer therapies, raised $75m in Series C funding. Mirae Asset Capital Life Science led, and was joined by Bristol Myers Squibb, J&J Innovation, and insiders The Column Group, Atlas Venture, Droia Ventures, GV, EcoR1 Capital, AbbVie Ventures, The Mark Foundation for Cancer Research, and Timefolio Capital. https://axios.link/3S1P8BO

Welligence, a Houston-based energy data and intelligence firm, raised $41m. Elephant led, and was joined by Veriten and EDG Group. www.welligence.com

Bluewhite, an Israeli developer of tractor-driving robots, raised $39m in Series C funding. Insight Partners led, and was joined by Alumni Ventures, LIP Ventures, and insiders Entrée Capital, Jesselson, and Peregrine Ventures. https://axios.link/3vIeRrj

Albedo, a Broomfield, Colo.-based maker of satellite constellations for thermal imaging, raised $35m. Standard Investments led, and was joined by Booz Allen Ventures, Cubit Capital, Bill Perkins and insiders Breakthrough Energy Ventures, Shield Capital, YC, Initialized Capital, Giant Step Capital, and Republic Capital. https://axios.link/428gtXI

🚑 Turquoise Health, a San Diego-based health care pricing platform, raised $30m in Series B funding, per Axios Pro. Adams Street Partners led, and was joined by Yosemite and insiders a16z and BoxGroup. https://axios.link/4b9DDRk

Qdrant, a German open source vector database, raised $28m in Series A funding. Spark Capital led, and was joined by Unusual Ventures and 42cap. https://axios.link/42bDskC

🚑 GenEdit, a South SF-based genetic medicines developer focused on tissue-selective delivery, raised $24m in Series A1 finding from KDB Silicon Valley, Mirae, ACVC, Pathway Partners, LoftyRock Investment, Terra VC, K2 Investment, Dong-A ST, KIMCO and Huons, and insiders Eli Lilly, Sequoia Capital, Korea Investment Partners, Woori Venture Partners, Dayli Partners, KB Investment, IMM Investment, and Timefolio Asset Management.

  • It also signed a strategic deal with Roche unit Genentech, which includes $15m upfront and up to $629m in milestone payments.

Ansel, a New York-based health insuretech, raised $20m. Portage led, and was joined by Two Sigma Ventures, Brewer Lane Ventures, SixThirty Ventures, Plug and Play Ventures, Digitalis Ventures, Symphony AI, Operator Partners, and Morgan Creek Capital Management. www.joinansel.com

ModernFi, a New York-based bank deposit management platform, raised $18.7m in Series A funding. Canapi Ventures led, and was joined by a16z, Remarkable Ventures, Huntington National Bank, First Horizon, and Regions. https://axios.link/48HfL61

Better Stack, a Czech observability stack startup, raised $10m led by insider KAYA. www.betterstack.com

XGS Energy, a Palo Alto, Calif.-based developer of geotherman energy tech, raised $9.7m. Constellation Technology Ventures led, and was joined by BlueScopeX and Thin Line Capital. www.xgsenergy.com

Reel, a Copenhagen-based renewable energy supplier, raised €5m. Transition led, and was joined by UVC Partners and the Footprint Firm. https://axios.link/3vIPsOv

Bulk Exchange, a San Rafael, Calif.-based materials marketplace for the construction industry, raised $4.5m in seed funding. https://axios.link/3vF0Iv2

🌎 Concrete4Change, a British developer of in-concrete carbon capture tech, raised £2.5m in seed funding. Zacua Ventures led, and was joined by Counteract and Goldbeck. https://axios.link/491LhLS

🚑 You Are Accountable, a New York-based substance use disorder treatment startup, raised $2m from GEHA Ventures. www.youareaccountable.com

Eddy Grid, a Dutch energy storage and management startup, raised €1.5m. Graduate Entrepreneur led, and was joined by Rockstart and Volve Capital. https://axios.link/426gxXK

Coana, a Danish developer of a software composition analysis tool, raised $1.6m. Sequoia Capital led, and was joined by Essence VC. https://axios.link/3S7FgX7

Private Equity Deals

Angeles Equity Partners acquired Acieta, a Waukesha, Wis.-based robotics manufacturer, from Mitsui & Co. www.acieta.com

Apollo Global Management is considering making an offer for Paramount Global (Nasdaq: PARA) parent company National Amusements, per Bloomberg. https://axios.link/42eAAUc

Bridgepoint acquired anti-aging skin care brand RoC from Gryphon Investors for around $500m, per Reuters. https://axios.link/48KtSaK

Eurazeo acquired a minority stake in French fragrance brand Ex Nihilo for €25m. https://axios.link/3U32osy

H.I.G. Capital acquired CHA Consulting, an Albany, N.Y.-based infrastructure project consultancy, from First Reserve. www.chasolutions.com

Monomoy Capital Partners acquired EnviroTech Services, a Greeley, Colo.-based provider of winter road surface products and maintenance services. www.envirotechservices.com

Recurrent Energy, a solar and energy storage unit of Canadian Solar Nasdaq: CSIQ), secured a $500m preferred equity commitment from BlackRock. www.recurrentenergy.com

RoadSafe Traffic Systems, a Romeoville, Ill.-based portfolio company of Trilantic North America, acquired B.C. Cannon, a Greenville, S.C.-based provider of traffic control services to heavy highway and utility companies. www.roadsafetraffic.com

TPG invested in G&A Partners, a Houston-based professional employment organization. www.gnapartners.com

TTDS, a portfolio company of Gryphon Investors, acquired Proheat, a La Grange, Ky.-based provider of heaters, sensors, and controls to manufacturers. www.proheatinc.com

Visit Group, a Swedish provider of hospital and travel SaaS, raised €100m from PSG Equity. www.visitgroup.com

Liquidity Events

Clayton Dubilier & Rice is seeking to sell its remaining 19.8m shares in Core & Main (NYSE: CNM), a St. Louis-based maker of water pipes and fire sprinklers, for upwards of $828m. https://axios.link/3Hs5Jd4

Olympus Partners hired Morgan Stanley to find a buyer for Rise Baking Co., a Minneapolis-based bakery that could fetch around $2.5b (including debt), per Reuters. https://axios.link/429Bnpc

Sunstone Partners sold Thirdera, a Broomfield, Colo.-based ServiceNow consultancy, to Cognizant (Nasdaq: CTSH). www.thirdera.com

More M&A

🚑 Sanofi (Paris: SAN) agreed to buy La Jolla, Calif.-based rare disease drugmaker Inhibrx (Nasdaq: INBX) for $1.7b. That's a below-market price, but will be followed by Sanofi spinning out all but one of Inhibrx's candidates into a new, publicly traded company. https://axios.link/3HqKgRX

Antitrust Activity

EU regulators are set to block Amazon's (Nasdaq: AMZN) proposed $1.7b takeover of Roomba maker iRobot (Nasdaq: IRBT), per the WSJ. https://axios.link/3vSILsY

EU regulators launched an investigation into Lufthansa's planned €325m deal for a 41% stake in state-owned Italian carrier ITA Airways.

Occidental Petroleum (NYSE: OXY) said the FTC has asked for more information on its proposed $12b purchase of CrownRock from Lime Rock Partners.

Six Flags (NYSE: SIX) and fellow theme park operator Cedar Fair (NYSE: FUN) received a DOJ request for more information on their planned merger.

Fundraising

AC Ventures of Jakarta raised $210m for its fifth fund. https://axios.link/47NmpGO

🌎 I Squared Capital raised $1.2b for its first climate fund. https://axios.link/3Sgdh7Y

Plural, a European VC firm, raised €400m for its second fund. https://axios.link/47QkIrY

🌎 Propeller, a VC firm focused on climate and oceans, raised $117m for its debut fund, per Axios Pro. https://axios.link/3u3EthU

It's Personnel

Michael Hommeyer joined Houlihan Lokey as a managing director in its capital markets group. He previously led private credit for Morgan Stanley. www.hl.com

Christophe Lenouvel is leaving BNP Paribas, where he was head of principal investments and chair of its Agility Capital unit. https://axios.link/3SanUsz

Final Numbers

Source: Renaissance Capital. Data through 1/22/24

Wall Street's IPO drought may finally be ending, even if the early 2024 numbers don't yet show it.

  • BrightSpring and CG Oncology each are expected to go public this week. The former expects to raise over $900 million, while the latter just raised its proposed price range by 44%.
  • Wilson tennis racket maker Amer Sports hit the road yesterday with plans to raise around $1.7 billion, while ArriVent Biopharma began pitching a $150 million offering. And last week there was a Reuters report that Reddit is targeting March for its long-awaited IPO.

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