Most venture capital dollars now go to AI startups, which has gotten lots of attention.

• Less discussed, however, is the large universe of pre-GPT startups being forced to either pivot or perish.

Why it matters: The venture industry may be looking at several rotten vintages.

• This already was a risk due to inflated valuations during ZIRP. But most of those losses were expected to be partial; real businesses that got overpriced.
• Startups that get slew-footed by AI, however, could prove worthless. Cue the clawbacks.

The big picture: Venture capital (and private equity) remains near the depths of a distribution drought, despite a bit of IPO resurgence and hyperscaler M&A.

• Some LPs already have slowed commitments, as we discussed last week with Allianz, and more will do if losses calcify.
• LP behavior operates on a lag, and it's a barge that doesn't U-turn quickly.

The bull case: AI will prove more boon than burden for pre-GPT startups. Or at least for enough of them to salvage legacy funds.

• It enables missions and improves products, helping to accelerate growth. A missing ingredient.
• Startups can be the life of a party they're late to. Facebook crushed MySpace, Google beat Yahoo, etc.
• Plus, it's possible that AI investment is getting ahead of itself.

The bear case: AI wrappers on pre-GPT products feel flimsy, and users will migrate to AI-native options.

• VCs also may not be willing to fund the pivot if they harbor doubts. Particularly when LPs are pulling back and there are so many post-GPT opportunities.

The bottom line: Tech evolution has traditionally been iterative, giving both startups and investors plenty of time to adapt.

• That's not true this time around. ChatGPT's release on Nov. 30, 2022, was a sharp inflection point, and the consequences haven't yet fully played out.

Fifth-Third Bancorp (Nasdaq: FITB) agreed to buy Dallas-based bank Comerica (NYSE: CMA) for $10.9 billion in stock.

Why it's the BFD: It would create the ninth-largest U.S. bank with around $288 billion in assets under management.

Zoom in: Fifth-Third shareholders would own around 73% of the combined company, with Comerica shareholders receiving the equivalent of $82.88 per share as of last Friday's closing price (20% premium to 10-day weighted average for Comerica stock).

• The deal is slated to close at the end of Q1 2026.

The bottom line: "The merger could be the start of a long-anticipated consolidation among the bigger regional banks. It also reflects an expectation that the Trump administration will look more favorably on such deals." — Jeffrey Cane, Axios

• Filigran, a Paris-based cybersecurity startup, raised $58m in Series C funding. Eurazeo led, joined by T.Capital, Accel, and Insight Partners. axios.link/4pU9flo

🚑 Heidi Health, a New York-based medical scribe, raised $65m in Series B funding. Point72 led, joined by Goodwater Capital, Headline, Blackbird VC, LG Technology Ventures, and Alumni Ventures. axios.link/4mTqwbT

• Harvey, an SF-based legal AI startup, raised €50m in Series E extension funding from EQT Growth. axios.link/4pVzxDV

🚑 Remedy Robotics, a developer of robotic interventions for stroke and cardiovascular care, raised $35m in seed and Series A funding, per Axios Pro. DCVC led, joined by Blackbird, KdT Ventures, and Tony Fadell's Build Collective. axios.link/4nCvLOd

🚑 Simple Life, a London-based weight loss app, raised $35m in Series B funding led by Kevin Hart's HartBeat Ventures. axios.link/4o3pieW

🚑 Oath Surgical, an SF-based outpatient surgery clinic operator, raised $24m in Series A funding, per Axios Pro. FPV Ventures led, joined by McKesson Ventures, OSE, Black Opal, Tau, and Rogue VC. axios.link/4q1Un4M

• Price.com, an LA-based shopping platform, raised $12m in seed funding. Waterbridge Capital led, joined by TRAC VC, Founders Fund, and Social Capital. axios.link/3KtDu2F

• Agio Ratings, a London-based crypto counterparty risk measurement startup, raised $6m, per Axios Pro. AlbionVC led, joined by Portage Ventures, MS&AD Ventures, and Gaingels. axios.link/3VMuBUa

• Longeye, an AI investigative tool for law enforcement, raised $5m in seed funding led by a16z. axios.link/46ESK5e

🌍 Vycarb, a New York-based ocean carbon-capture tech startup, raised $5m in seed funding, per Axios Pro. Twynam led, joined by MOL Switch, Hatch Blue, Idemitsu, SGInnovate, and Clocktower Ventures. axios.link/3VQZkj0

• MokN, a French credential theft prevention startup, raised €2.6m. Moonfare led, joined by OVNI Capital and Kima Ventures. axios.link/3IJ9GOW

⚡ Ardian agreed to acquire Irish utility Energia Group from I Squared Capital. axios.link/48RfL6l

• Boyu Capital and NJF Capital are weighing a joint bid for Swiss sports marketing firm Infront from China's Dalian Wanda Group, per Bloomberg. axios.link/3VQ23sU

• Bridgepoint acquired a minority stake in Chime Software, a U.K. provider of construction SaaS. axios.link/42srRPt

⚡ Global Infrastructure Partners and CPP Investments received Minnesota regulatory approval for their $6.2b buyout of Duluth, Minn.-based utility Allete (NYSE: ALE). axios.link/48P0oLM

• Infinity Engineered Products, a Turnspire portfolio company that provides Goodyear-branded air springs, acquired Meklas, a Turkish air spring manufacturer. axios.link/3Wo2n2d

• Lebronze Alloys, an Astorg portfolio company, acquired MEA, a French provider of copper and copper alloy profile extrusion. axios.link/47bz9K3

• Madison Dearborn Partners and Canadian portfolio company Navacord invested in Longwood, Fla.-based insurance broker Insurance Office of America. axios.link/47bQGBS

• One Equity Partners completed its purchase of a stake in Baton Rouge, La.-based industrial services firm Brown & Root from Bernhard Capital Partners. Existing backer KBR (NYSE: KBR) will continue to own a position. axios.link/4otcf7M

🚑 Qualtrics, owned by Silver Lake and other PE firms, agreed to buy health-care patient feedback firm Press Ganey Forsta for $6.75b (including debt) from Ares Management and Leonard Green & Partners, per the FT. axios.link/3VT6uDj

• Synacti acquired a majority stake in Software Spinner (dba MyExpatTaxes), a provider of tax software for Americans living abroad. axios.link/3WrRjB2

Alliance Laundry and University of Phoenix both are expected to price IPOs this week, after having managed to get registration effectiveness notes from the SEC before the government shutdown. Highly unusual for that to be requested or granted so early, and suggests they'll need to price within their planned ranges.

• AI Infrastructure Acquisition, an AI/ML SPAC led by Michael Winston (Jet Token), raised $120m in an upsized IPO. axios.link/47t35lq

• Cerebras Systems, an AI chipmaker on file for an IPO, withdrew IPO registration. Last week, it raised $1.1b in Series G funding at an $8.1b valuation led by Fidelity and Atreides.

• Range Capital Acquisition II, a SPAC focused on capital-constrained sectors, raised $200m in its IPO. axios.link/4pgxWrV

• Shawbrook, a British lender backed by BC Partners and Pollen Street Capital, said it's prepping a London IPO. axios.link/48OBL1G

• Paramount Skydance, backed by RedBird Capital Partners, agreed to acquire media startup The Free Press for up to $150m in cash and stock, and named The Free Press founder Bari Weiss as editor-in-chief of CBS.

• The Free Press raised around $20m, including last fall at a $100m valuation, from backers like Allen & Co., Annox Capital, Centre Street Partners, Marc Andreessen, David Sacks, and Howard Schultz. axios.link/4h7ikU3

• 3M (NYSE: MMM) is weighing the sale of billions of dollars of its industrials operations, per Bloomberg. axios.link/4gYQV6T

⚡ Chevron (NYSE: CVX) hired BofA to find a buyer for pipeline assets in the Denver-Julesburg shale basin for more than $2b, per Reuters. axios.link/48a1Rfs

• Firefly Aerospace (Nasdaq: FLY) agreed to buy SciTec, a Princeton, N.J.-based defense tech company whose capabilities include missile warnings, for about $855m in cash ($300m) and stock. axios.link/3KVigus

• Grupo Mexico, a listed Mexican mining and transport group, offered to buy full control of Mexican bank Banamex from Citigroup (NYSE: C), which last week agreed to sell a 25% stake in Banamex to Mexican billionaire Fernando Chico Pardo for $2.3b. axios.link/3WmdZmf

• Bain Capital raised $14b for its 14th flagship PE fund. baincapital.com

• dMission Ventures, launched by Draper Associates venture partners Tyrone Lee and Matt Harris, is raising $50m for its debut fund, per an SEC filing.

• R-Squared Ventures of Agoura Hills, Calif., is raising $50m for its third fund, per an SEC filing. r2vc.com

• Vault, a Boulder, Colo.-based VC firm, is raising $50m for its second fund, per an SEC filing. vaultfund.com

• EQT nominated Jean Eric Salata to become its next chairman, succeeding firm founder Conni Jonsson. axios.link/3VRfYik

• Amy Harsch joined BayPine as a partner and head of IR and capital formation. She previously was with American Securities. axios.link/46V98h2

• Neil Inskip joined YFM Equity Partners as head of new investments for Northern England. He previously was with BGF. axios.link/3ISU4Iv

• Signal Hill Equity Partners named Ahmed Abdel-Saheb as CEO, succeeding the retiring Jamie Johnson. axios.link/4nxIO3n

• Jeff Wright joined Bridgepoint as a managing director. He previously was with Pantheon Ventures. axios.link/48gowH5

Advanced Micro Devices shares are soaring this morning on news that OpenAI could take a 10% stake in the Silicon Valley chipmaker.

• It's part of a larger strategic agreement whereby OpenAI will deploy six gigawatts of AMD GPUs over several years and generations of hardware.

Per the announcement:

"AMD has issued OpenAI a warrant for up to 160 million shares of AMD common stock, structured to vest as specific milestones are achieved. The first tranche vests with the initial 1 gigawatt deployment, with additional tranches vesting as purchases scale up to 6 gigawatts. Vesting is further tied to AMD achieving certain share-price targets and to OpenAI achieving the technical and commercial milestones required to enable AMD deployments at scale."