AI in VC Weekly Highlights: 6/10-6/16

Another exciting week in the intersection of AI and venture capital! Here are some key highlights from the past week:

Funding Rounds

CuspAI Secures $30M Seed Round to Revolutionize Material Design with AI

Cambridge-based startup CuspAI has raised $30 million in a seed round led by Hoxton Ventures, with participation from Basis Set Ventures and Lightspeed Venture Partners. The company, co-founded by Chad Edwards and Max Welling, aims to flip traditional material design methods by using generative AI to create new materials based on desired properties. CuspAI's platform functions like a search engine for materials, enabling rapid evaluation of novel structures. The funding will support the development of AI-driven solutions for challenges such as climate change, with a focus on carbon capture and storage. Geoffrey Hinton, a key advisor, emphasizes the potential of AI in addressing urgent global issues. Other investors include LocalGlobe, Northzone, and angel investors from DeepMind.

Finbourne Raises $70M Series B to Enhance Financial Data Management

London-based Finbourne has raised $70 million in a Series B round co-led by Highland Europe and AXA Venture Partners. The startup, founded by Thomas McHugh, provides a platform that helps financial services companies organize and utilize their data more effectively. The new funding will be used to expand Finbourne’s market reach beyond London’s financial district. Finbourne’s products include the LUSID Operational Data Store, portfolio management tools, and data virtualization solutions, catering to the increasing reliance on AI in financial services. The company’s client list includes Fidelity International, London Stock Exchange Group, and Northern Trust, among others. The round values Finbourne at approximately $356 million.

Strategic Partnerships

Perplexity Expands in Japan Through Strategic Partnership with SoftBank

Perplexity, the AI search engine aiming to challenge Google, is expanding its user base in Japan through a strategic partnership with SoftBank. Starting June 19, SoftBank’s mobile operators Y!mobile and LINEMO will offer free one-year subscriptions to Perplexity Pro, the search engine’s premium tier. This partnership highlights Perplexity’s international ambitions and SoftBank's strategy to leverage AI collaborations to attract more users and potentially develop new AI services. Perplexity recently raised $62.7 million, valuing the company at $1 billion, and is currently seeking additional funding. The Pro tier offers users advanced search capabilities and AI-driven features like image generation and customized search results.

Acquisitions and Mergers

Hugging Face Acquires Argilla for $10 Million Amid Surge in AI Startup Sales

Hugging Face, a leading AI software provider, has acquired Argilla, a collaborative software firm for AI professionals, for $10 million. This move comes as more AI startups seek acquisition, with Hugging Face receiving about 10 such requests weekly. The acquisition highlights Hugging Face's robust resources, having raised $235 million last year from investors like Google, Amazon, and Nvidia, valuing the company at $4.5 billion. Meanwhile, Amazon is boosting its support for generative AI startups, committing $230 million in AWS credits to provide free access to computing power and AI models, encouraging startups to build on AWS infrastructure.

Tempus Debuts on Nasdaq, Raises $411 Million in IPO

Tempus, the genomic testing and data analysis company founded by Eric Lefkofsky, made its Nasdaq debut, rising about 15% on opening day. Priced at $37 per share, the IPO raised nearly $411 million, valuing Tempus at over $6 billion, despite its last private valuation being $8.1 billion. Shares closed at $40.25, up 9% from the IPO price.

Founded in 2015, Tempus generated $531 million in revenue in 2023 but reported a net loss of $290 million. The company’s operating losses have significantly decreased from 83% in 2022 to 37% in 2023. Lefkofsky expects Tempus to be cash-flow and EBITDA positive by 2025.

Tempus aims to position itself as an AI company, despite AI revenue being only $5.5 million of its 2023 revenue. The company plans to embed AI in all its diagnostic tools.

Lefkofsky, holding 30.1% of the company and 65% of voting power, is the largest shareholder. Other major stakeholders include a firm controlled by Kimberly Keywell (10.2%) and Baillie Gifford (5.9%). Early investors include NEA, Revolution, and T. Rowe Price, with SoftBank contributing $200 million in a recent Series G5 round. This is Lefkofsky’s fourth public company, after Groupon’s IPO in 2011.

Stay tuned for more updates as we continue to track these exciting trends and their implications for the future of technology and investment.