The following three things are true:

1. Venture capitalists are pouring huge money into AI startups, with a dollar weighting toward those building foundational models.
2. Many of those models are being built, in part, on data that is under U.S. copyright protection. Several of the copyright holders, including major music companies, have filed suit.
3. Venture capitalists involved in No. 1 don't care much about No. 2.

Why it matters: The VC market may be making its biggest binary bet ever, without quite realizing it.

The risk: If some of these lawsuits are successful, they could eviscerate the cost structures of companies that have raised billions of dollars.

• Such startups already are dealing with massive compute expenses, but also would need to pay rights fees before data even reaches the center. Camels crushed by countless straws.
• "This copying to storage for use in AI training is a likely clear-cut case of infringement, and the courts will put a stop to it," Jason Peterson, CEO of IP right management and claims firm GoDigital Media Group, told Axios last week.

The response: I reached out to several VCs who are invested in some of the top LLM developers, and none sounded even the least bit concerned. Then again, no one wanted to go on the record, instead preferring to reply on background.

• Several cited legal arguments about fair use, at least in regard to data on which the models had already been trained.
• "AI training in most cases is not analogous to copying or plagiarism," one VC said. "These models for the most part do not plagiarize or copy data they were trained on, and they are not databases with lookup tables. As a result, they are not equivalent to the precedent set by Napster and others in the music piracy era."
• Another VC added: "The models rarely regurgitate the exact thing that they trained on. They train on a lot of different things, and then they generate based on probabilistic models. Arguably, this is exactly what humans do.  So, then would you could sue every creative work that a human creates as well.
• One seemed comforted by Big Tech's investment involvement. "I suspect they will have researched this with their in-house lawyers before writing a billion dollar (or multi-billion dollar) check."

The bottom line: AI is tech's next great platform shift, following web, mobile and cloud. And being on the ground floor of a platform shift can absolutely be an investment goldmine.

• But right now it feels like everyone is enamored by the gold without recognizing the inherent risks of mines. Or that bigger wins could come from those who already own their own data (e.g., Meta), those that focus on foreign data (looser copyright laws), or on smaller, enterprise-focused data with more manageable licensing fees.
• If things do come crashing down, it will look obvious in retrospect.

Chevron (NYSE: CVX) has agreed to buy Hess (NYSE: HES) for $53 billion in stock.

Why it's the BFD: This is the month's second megamerger between U.S. oil producers, following ExxonMobil's $60 billion deal for Pioneer Resources, but is more about international exploration than domestic. Specifically in Guyana, where both Hess and Exxon have major presences.

Details: The deal values Hess at $171 per share, which is a 10% premium to its 20-day average closing price, and the overall deal size rises to around $60 billion once assumed debt is included. No word yet on how Chevron valued Hess' toy trucks business.

The bottom line: "The real prize in the portfolio is Guyana, where in less than a decade, the country has vaulted into one of the most important growth areas for non-OPEC oil production. Guyana is on track to have more than 1 million barrels per day of production capacity by 2026 .... At that point, Guyana would likely exceed neighboring Venezuela for oil production." — Third Bridge analyst Peter McNally

• Island, a Dallas-based maker of an enterprise internet browser, raised $100m co-led by Prysm Capital and Canapi Ventures at a $1.5b valuation. Other backers include Insight Partners, Stripes, Sequoia Capital, Cyberstarts and Georgian. https://axios.link/3Q5Zyzu

• Nomad Homes,a Dubai-based home buying platform, raised $20m in Series A extension funding. Acrew Capital led, and was joined by 01 Advisors, HighSage Ventures, Abstract Ventures, Partech, Precursor Ventures, Potluck Ventures and Knollwood. https://axios.link/497Ux1O

🚑 Signos, a Burlingame, Calif.-based metabolic health platform, raised $20m in Series B funding. Cheyenne Ventures and GV co-led, and were joined by Dexcom Ventures and Samsung Next. www.signos.com

• Harmonic Security, a startup that helps enterprises monitor their AI service usage, raised $7m in seed funding. Ten Eleven Ventures led, and was joined by Storm Ventures. www.harmonic.security

• Hiive, a Canadian marketplace for startup shares, raised US$4.2m from Uncorrelated Ventures, Splash Capital, Harmony Partners, Hack VC, Agmen Capital, and Renaud Laplanche. https://axios.link/3M51ln5

🚑 iQure, a Princeton, N.J.-based developer of epilepsy and pain management therapeutics, raised $1.2m co-led by Ventura BioMed Investors and OKG Capital. www.iqurepharma.com

• Blackstone and Permira are reevaluating their nonbinding takeover offer for Adevinta (Oslo: ADE), a European classifieds business with a market cap above $9.7b, per Bloomberg. Adevinta bought eBay's classifieds business in 2021 for $9.2b, beating out Blackstone and Permira. But Permira later got a minority stake via a side purchase from eBay (which had retained a position).

• Blue Owl Capital is considering a takeover bid for Hayfin, a London-based private credit firm with around €30b in AUM, per Bloomberg. Prior Bloomberg reports listed Antares Capital and British Columbia Investment Management Corp. as possible Hayfin suitors. https://axios.link/3tRIBkw

• Charlesbank Capital Partners agreed to acquire a majority stake in Petra, a fund administrator for private investment firms. https://axios.link/3SbCC4n

• General Atlantic agreed to buy a minority stake in Indian travel distribution platform TBO from Affirma Capital (which retains an ownership position). www.tbo.com

• Latticework Capital Management invested in Institutes of Health, a San Diego-based multi-disciplinary workers' compensation treatment provider. www.institutesofhealth.org

• Mod Op, a Miami, Fla.-based digital marketing agency owned by Alterna Equity Partners and Spell Capital Partners, acquired PR firm Crenshaw Communications, per Axios Pro. https://axios.link/3tGGcct

• RRJ Capital is considering around a €5b takeover offer for Vodafone's (LSE: VOS) Spanish business, per Bloomberg. https://axios.link/40elA7F

🚑 Stonepeak agreed to buy Akumin (Nasdaq: AKU), an outsourced provider of diagnostic imaging services, via a prepackaged Chapter 11 bankruptcy process. https://axios.link/4704SuZ

• Stonepeak agreed to buy container lessor Textainer (NYSE: TGH) for around $2.1b, or $50 per share (46.4% premium to Friday's closing price). Including debt, the enterprise value rises to around $7.4b. https://axios.link/45Q8rDa

• Vista Equity Partners agreed to buy EngageSmart (NYSE: ESMT), a Braintree, Mass.-based provider of customer engagement and payments software, for around $4b, or $23 per share. https://axios.link/3Q9SWQj

🚑 Abivax, a French developer of therapies for chronic inflammatory diseases, raised $326m in its Nasdaq float. The company, which also trades on the Euronext Paris (ABVX) priced at $11.60 per share. https://axios.link/495iAhP

🚑 Cargo Therapeutics, a San Mateo, Calif.-based developer of CAR T-cell therapies for cancer, filed for a $100m IPO. The Phase 2 biotech plans to list on the Nasdaq (CRGX), and raised around $225m in VC funding from firms like Samsara BioCapital, Red Tree VC, Perceptive Advisors, Third Rock Ventures, Nextech, Janus Henderson, RTW Investments, T. Rowe Price, Wellington, Ally Bridge Group, Emerson Collective and Cormorant Asset Management. https://axios.link/46FWAss

• Daojia, a Chinese network of home services like maternity nursing and housekeeping, withdrew IPO registration it filed in July 2021. Backers include 58.com and Taobao. https://axios.link/46Ys1xY

🚑 Invea Therapeutics, a Guilford, Conn.-based biotech focused on inflammatory diseases, filed for a $75m IPO. The pre-revenue company plans to list on the Nasdaq (INAI), while backers include Connecticut Innovations. https://axios.link/3SaIviq

🚑 Nupco, a Saudi medical procurement fund backed by Saudi PIF, is talking with banks about an early 2024 IPO, per Bloomberg. https://axios.link/4096xfj

• Prada (HK: 1913), the Italian fashion house, said it's considering a dual listing in Milan. https://axios.link/46Zdy4B

• Flybondi, an Argentinian budget airline, agreed to go public at an implied valuation via Integral Acquisition Corp. 1(Nasdaq: INTE). https://axios.link/3MaBV7D

• Databricks, valued by VCs at $43.5b, paid more than $100m to acquire Arcion, a San Mateo, Calif.-based database platform that had raised around $18m from firms like Bessemer Venture Partners and Databricks. https://axios.link/4965Pnh

• G/O Media, a portfolio company of Great Hill Partners, is seeking a buyer for feminist blogging site Jezebel, per Axios. https://axios.link/473hnWw

• One Equity Partners agreed to sell Walki, a Finnish provider of sustainable packaging and engineered materials, to Japanese paper company Oji Group. www.walki.com

• Heidelberg Materials of Germany has offered to buy the North American arm of Colombian cement maker Cementos Argos, which already agreed to sell the business to Denver-based Summit Materials (NYSE: SUM) for $3.2b, per Bloomberg. https://axios.link/3tGv9QC

• Reliance Industries is nearing a deal to buy a control stake in Walt Disney Co.'s (NYSE: DIS) Indian operations, per Bloomberg. https://axios.link/473BHab

🚑 Roche (Swiss: ROG) agreed to pay $7.1b upfront to Roivant (Nasdaq: ROIV) and Pfizer (NYSE: PFE) for the rights to a new inflammatory bowel disease drug. https://axios.link/3QsT2UN

• UniCredit (Milan: UCG) offered to buy the Greek government's 9% stake in Athens-based Alpha Bank, and to buy Alpha's Romanian unit. https://axios.link/492uOb8

🚑 1315 Capital, a Philadelphia-based private equity firm focused on health care services companies, raised over $500m combined for its third flagship fund and first "emerging growth buyout" fund. www.1315capital.com

• Permira is moving two portfolio companies — British wealth manager Evelyn Partners and South African data center operator Teraco — into a continuation fund, per Reuters. https://axios.link/3tL5Kp1

• Ron Kalifa, former CEO of Worldpay, joined Brookfield Asset Management as vice chair and head of financial infrastructure investments. www.brookfield.com

Chevron stock fell by just over 2% at today's open, based on the Hess news. Exxon's shares were mostly flat.