VCA#028: The AI Bubble 📬

If Sam Altman had a penny for every time someone said "AI bubble", OpenAI would still not be profitable.

💸 This Week’s Biggest Funding Rounds

Armis raised $435 M in Series C funding led by Goldman Sachs Alternatives, with participation from Insight Partners and Crosslink Capital. The round values the cybersecurity company at $6.1 billion. This raise underscores how cybersecurity continues to be a high-growth, high-investment sector in the future, and my favourite sector. If you are launching your startup in the cyber space please write me.

Braveheart Bio launched with $185 M in Series A funding, led by Highland Europe, with participation from Khosla Ventures and Sequoia Capital. The funds show interest in solving problems for aging populations and chronic health conditions.

Hippocratic AI raised $126 M in Series B financing, led by Greylock Partners, with participation from Bessemer Venture Partners and Benchmark Capital. This round reflects the immense potential of AI in transforming healthcare practices and streamlining medical services.

Reevo secured $80 M in Series A funding, led by Kleiner Perkins, with participation from Accenture Ventures and SoftBank. The company focus on AI-enterprise revenue acceleration and sales productivity.

Aily Labs raised $80 M in Series B funding, led by Sequoia Capital, with participation from Union Square Ventures and Greylock Partners. The decision intelligence platform, integrates AI agents to automate high-level business decisions.

Giga raised $61 M in Series A funding, led by Redpoint Ventures, with participation from Y Combinator and Nexus Venture Partners. The AI-driven voice support platform focus on improving customer experience and operational efficiency.

Teleskope is the most solid of this week’s startups raised $25 M in Series A funding, led by Greylock Partners, with participation from Union Square Ventures. They automate data security and privacy across your entire data footprint, from detection to remediation to prevention.

Octonomy AI raised $20 M in Series A funding, led by Insight Partners, with participation from Benchmark Capital. The company aims to scale its AI-driven platform that automates technical troubleshooting for manufacturing machinery.

Wabi raised $20 M in pre-seed funding, led by Naval Ravikant, with participation from Garry Tan and Justin Kan. The company claims to be creating the first personal software platform, with a waitlist available for those interested. They’re working on a platform designed to enable users to create and share mini-apps using AI-driven prompts. However, their vision is still evolving, and the exact functionality of these apps remains uncertain.

AUI (USA) raised $20 M in venture funding, led by SoftBank Vision Fund, with participation from Sequoia Capital. The funds will be used to scale AUI’s conversational AI platform for task-oriented workflows in the enterprise sector.

Lettuce Financial announced a $28 M funding round, led by Greylock Partners, with participation from Benchmark Capital. The round will support the expansion of its fintech solutions for one-person businesses.

---

🌱 New Venture Funds

Armilar Venture Partners achieved the first close of Fund IV (€120 million) targeting Iberian and European deep-tech and B2B digital startups at Series A. With cornerstone investors including the EIF and Spain’s Next Tech/SETT, Armilar is widely regarded as one of Europe’s leading—if not the top—deep-tech investment funds, having been operational since 2000.

CMT Digital closed Fund IV ($136 million) to back early-stage crypto and blockchain infrastructure startups across the U.S. and abroad. The vehicle extends the firm’s thesis around digital assets and decentralized finance, with participation from family offices and institutional LPs.

Lowercarbon Capital is raising its second Fusion Fund (size undisclosed) to double down on nuclear-fusion and enabling technologies, following its 2022 $250 million vehicle. The fund underscores a renewed U.S. focus on deep-tech climate bets.

DNX Ventures launched its fourth fund ($150 million) across core and seed vehicles, focusing on early-stage B2B and industrial technology startups in the U.S. and Japan. The firm continues its cross-Pacific strategy, backing enterprise SaaS, robotics, and frontier hardware founders.

United Founders Fund launched an €80 million pan-European vehicle focused on AI and deep-tech. Formed by more than 100 founders and operators—including leaders from Quantum Systems and Rohlik—the fund aims to back early-stage technical founders across the continent.

henQ debuted with €67.6 million to invest in B2B software startups from seed onward. The Amsterdam-based firm continues its execution-first strategy, emphasizing founder-market fit and early traction.

Balnord Capital announced a €70 million first close for its inaugural fund backing frontier and dual-use technologies across the Baltic Sea region, blending private-sector capital with Nordic development funds.

Rubio Impact Ventures completed a €70 million close of Fund III, investing in impact-driven climate and circular-economy companies in the Netherlands and wider EU. The firm plans to expand its sustainability portfolio across consumer and industrial verticals.

F2 Venture Capital (Tel Aviv) is raising ~$100 million for a new early-stage fund focused on Israeli deep-tech and AI founders. The fund will strengthen F2’s position as one of Israel’s leading pre-seed and seed investors, following strong exits from its prior funds.

The Yield Lab LatAm began raising its Ignition Fund (target $20 million) to support early-stage AgriFood, climate, and blue-economy startups throughout Latin America, reinforcing the region’s growing climate-tech ecosystem.

IB Ventures (Saudi Arabia) launched a $50 million biotech fund dedicated to therapeutics, diagnostics, and digital biology startups in KSA and the GCC, marking another step in the kingdom’s life-sciences push.

Ventures Platform (Africa) announced a $64 million first close for its second seed-stage fund, with backing from Nigeria’s iDICE program and regional DFIs. The fund will support African startups in fintech, climate, and infrastructure innovation.

---

💰 Who Got Rich This Week?

Exits, IPOs & Liquidity Moments

BillionToOne, Inc. (IPO: $360M raise, $2.3B valuation): Co-founders Oguzhan Atay (CEO) and David Tsao (CTO) pioneered molecular diagnostics for rare genetics, pricing at $60/share for ~6M shares to expand testing. Backed by Marc Andreessen (Andreessen Horowitz) and Ravi Mhatre (Lightspeed).

Evommune, Inc. (IPO: $256M raise, $1.2B valuation): Led by Luis Peña (CEO) and Kyle Carver (CFO), this immunology firm priced at $16/share for 16M shares, advancing autoimmune treatments. Supported by David Strohm (Greylock Partners).

Grupo Aeroméxico, S.A.B. de C.V. (IPO: $350M raise, $3.0B valuation): CEO Andrés Conesa and Chairman Javier Arrigunaga steered a post-pandemic revival, pricing at $19/share for fleet and route growth. Partners: Jacob Lundblad (Nordic Capital), Morten Thorsrud (Sampo).

Crown Reserve Acquisition Corp. I (IPO: $225M raise, $1.1B valuation): CEO Prashant Patel and Exec Chairman Eric Sherb priced at $10/share, eyeing renewable energy mergers.

Tailwind 2.0 Acquisition Corp. (IPO: $250M raise, $1.5B valuation): Director Sharo M. Atmeh, Founder Alex Marin, and Rajeev Misra (SoftBank Vision Fund) priced at $10/share to boost digital health.

Pine Labs Ltd. (IPO: ~$150M raise): Founder/CEO Amrish Rau and CFO Sameer Kamath, expanding fintech globally. Backers: Alfred Lin (Sequoia Capital), Abhishek Sharma (Nexus Venture Partners).

Paystand (Acquisition: Undisclosed): Co-founders Jeremy Almond (CEO) and Scott Campbell acquired Bitwage from Jonathan Chester, bolstering enterprise stablecoin payments.

In Memoriam: Notable Figures
We pay tribute to influential figures whose legacies endure through profound contributions.

Frederick W. Smith (Net Worth: ~$5B): FedEx founder who revolutionized global delivery, leaving his estate to 10 children— Richard W. Smith, Molly Smith, Arthur Smith, Stacey Rokas, Laurie Hooper, Kathleen Forbush, Rachel Smith, Cannon Smith, and Alden Smith—for philanthropy and business.

Junior Bridgeman (Net Worth: ~$600M): Ex-NBA player and Bridgeman Hospitality CEO who built a food empire, passing it to children Eden Bridgeman Sklenar, Justin Bridgeman, and Ryan Bridgeman (Manna Inc. CEO since 2017) with financial expertise. Junior Bridgeman.

Alan Hassenfeld (Net Worth: ~$500M): Hasbro ex-CEO and philanthropist who advanced toys and child welfare, directing inheritance to philanthropy via sister Ellen’s children Laurie Block, Michael Block, and one other, ending family Hasbro leadership without direct heirs. Alan Hassenfeld.

Goh Cheng Liang (Net Worth: $13B): Wuthelam Group and Nippon Paint founder who created a coatings empire, bypassing children Goh Hup Jin, Goh Chuen Jin, and Goh Chiat Jin to grant $1B+ stakes to six grandchildren—April Goh (~$3.4B), Charlotte Goh ($1.1B), Henrietta Goh, Victoria Goh, Martin Yuen-An Lavoo, and Johan Zhong An Lavoo—plus foundations for scholarships and welfare, with one great-grandchild. Nippon Paint Profile.

---

🔥 Trending This Week

1. Big Tech ramps up AI infrastructure with a $1.5 trillion funding push
   Major U.S. tech companies, including Meta Platforms, Amazon, Google, Microsoft and Oracle are reported to need an additional $1.5 trillion in capital to fuel their AI infrastructure ambitions.

2. Europe launches a €5 billion “Scale‑Up Fund” to back tech champions
   The European Commission is seeking a private‑sector partner to steer a new €5 billion growth fund aimed at scaling European technology companies. The move reflects increasing policy focus on home‑grown tech, as Europe attempts to close the gap with U.S. and Chinese tech ecosystems.

3. Fintech funding in focus: $1.2 billion raised across 16 deals this week
   A weekly roundup found $1.2 billion raised in fintech funding across 16 deals globally this week.

4. Biotech deal count drops but large‑stage deals dominate Latest data show that while the number of life‑sciences/biotech VC raises has declined this year, the share of late‑stage deals (Series B+) has risen to 42.1% of total biotech deal value in the first three quarters of 2025 - the highest level since data began.

---

📊 Recent Publications & Reports

Fresh VC-focused blogs & lists curated from us (VCA) and others:

• 1000 Business Angels Shaping the Future of Venture – VCA
  Comprehensive list of top early-stage angels redefining the future of venture funding, highlighting emerging syndicates and geography shifts. Read more

• Why venture capital should be consensus-averse VCs are beginning to sound more like bankers and less like pirates. This seems bad. We should figure out how to course correct from that. Read more Amazing article from Dan Gray

• What’s New in Venture Capital? Update on Q3 2025 Venture Capital Trends – National Law Review
  A breakdown of venture capital trends in Q3 2025, analyzing the shift in global investment strategies and emerging sectors. Read more

• AI Startup Founders Are Getting Younger, and They’re Attracting More Technical VCs – Business Insider
  A look at how younger AI startup founders are attracting more technical VCs, reshaping the venture landscape and accelerating innovation in the sector. Read more

• Future of Crypto Venture Capital: AI, Liquidity & Security – OneSafe
  Explores the convergence of crypto and AI in venture capital, focusing on liquidity solutions and emerging security challenges. Read more

---

🎙️ Voices in Venture

Insights from Industry Leaders

• The 20 VC – Jason & Rory: “How LP Deployment to Venture Will Change in 2025”
  Jason Lemkin and Rory O’Driscoll unpack how limited partners are recalibrating allocations and what that means for founders and VCs alike. Listen here

• The Innovators & Investors Podcast – Momentum Series: Bridging Healthcare Innovation and Investment with Joel Martin
  Host Kristian Marquez and guest Joel Martin explore the intersection of healthcare innovation and venture investing, with a focus on early‑stage opportunities in life sciences and medical tech. Listen here

• TechCrunch “Equity” Podcast – SoftBank is Back, and the AI Hype Cycle is Eating Itself
  The TechCrunch team deconstructs SoftBank Group’s renewed AI bets and what it reveals about the sustainability of the current AI investment wave. Listen here

---

📝 Our Take: Tips to Survive the AI Bubble

In November 2025, AI-related stocks shed over $820 billion in market value in a single week. Yet unlike previous tech bubbles, AI isn’t positioning itself as the next big thing—it’s embedding itself as fundamental infrastructure, much like microprocessors in the 1970s or cloud computing in the 2010s.

The Scale of the Bet

• Venture capital in AI startups: $192.7 billion this year (over 50% of all global VC investment)

• OpenAI: ~3× growth in 24 months from ~$157 B to ~$500 B.

• NVIDIA: ~3.7× growth in 24 months from ~$1.2 T → ~$4.6 T

Beneath the hype, structural problems are emerging:

The ROI Problem: 95% of enterprise AI pilot projects fail to deliver measurable returns. Companies are investing billions in technology they can’t effectively monetize.

The Economics Problem: Even OpenAI loses money despite charging premium subscription fees. If the market leader can’t turn a profit, what does that say about the business model?

The Energy Problem: AI infrastructure now consumes power equivalent to small countries—an unsustainable trajectory as models grow more complex.

The Circular Money Problem: Investment flows create a closed loop—VCs fund startups, startups buy Nvidia hardware, Nvidia invests in more AI ventures. This circular economy works until confidence wavers.

Institutions like the IMF and Bank of England are sounding alarms about overvaluation, predicting potential 40% corrections if enthusiasm cools.

What Makes This Time Different?

AI may avoid the fate of previous bubbles because it’s solving real problems. Models that handle complex mathematics, automate routine tasks, and enable faster decision-making are already proving valuable. Voice interfaces and intuitive interactions are making technology more accessible. However, AI likely won’t revolutionize productivity in visible ways. Instead, it will make existing processes incrementally more efficient—a meaningful but less spectacular transformation than the hype suggests.

The Social Reconfiguration

Beyond economics, AI is quietly reshaping how we live:

In Our Homes: Humanoid assistants and robotic cleaners promise to handle household tasks, freeing time for creative pursuits. But this convenience raises questions about employment displacement and whether we’re losing the dignity and mindfulness embedded in manual work.

In Our Relationships: Virtual companions offer unwavering empathy without human complexity. While appealing, these simulated relationships will deepening isolation rather than alleviating it.

In Our Identity: The integration of household robots, AI tutors, and emotional simulacra represents more than technological progress—it’s a fundamental restructuring of human bonds and communal life.

This transformation will reshape work, education, and relationships more profoundly than any previous technological revolution.

Where the Real Money Is

The smartest investors aren’t chasing flashy AI applications—they’re backing the infrastructure that makes everything else possible.

Consider the “picks and shovels” strategy: Just as gold rush fortunes were made by those selling tools to miners, today’s opportunities lie in:

• Cybersecurity: Safeguarding sensitive data in AI systems

• Data Centers: Providing the computing power AI demands

• Data Infrastructure: Efficient gathering, cleaning, and management

• Optimization: Reducing model waste and improving efficiency

• Energy Solutions: Storage innovations to mitigate environmental impact

These aren’t glamorous, but they’re where sustainable returns exist. They enable the entire ecosystem to function without collapsing under its own weight.

The Path Forward

This AI moment echoes the early internet era, when chaos gave way to empires built by those who understood the fundamentals. The opportunity exists for those who can:

1. Identify the transitions: Spot where AI moves from experimental to essential

2. Invest in practical applications: Focus on proven use cases with clear ROI

3. Sell picks and shovels: Create the pipes, not just the water

4. Prepare for future problem: Redefine purpose beyond productivity, build skills for human connections. Creative problem-solving, ethical judgment, emotional intelligence, cross-cultural negotiation, and strategic thinking

The question isn’t whether AI will transform our world—it already is. The question is who will capitalize on the money. Our next move—preparing for the societal shifts it’s unleashing.