China Hits Back ???????

Week of February 10th, 2025

Welcome to AI8’s weekly newsletter, your ultimate source for curated insights and updates from the dynamic world of venture capital!

We’ve scoured the vast landscape of the web to bring you a comprehensive roundup of the industry’s top news articles, all in one convenient place. We keep you ahead of the game and in the know about all things related to the vibrant world of investments

?? STARTUPS

ROUNDS AND UNICORNS

The Week’s Biggest Funding Rounds: BlinkRx, Tidal Vision Lead Another Slow week (Crunchbase, 5 minute read)

1. BlinkRx (Pharmaceutical): Raised $140M Series D led by 1789 Capital. Donald Trump Jr. joined the board. The company provides drug price transparency and delivery solutions. Total funding: $315M
2. Tidal Vision (Biotech): Secured $140M Series B from investors including Eni Next to support chitosan research and expand infrastructure in Europe, Texas, and Ohio. Total funding: $224M
3. Semgrep (Cybersecurity): Raised $100M Series D led by Menlo Ventures to enhance its autonomous code security platform. Total funding: $204M
4. Hidden Level (Defense): Secured $65M Series C led by DFJ Growth for passive radar system development used in drone detection. Contracts with multiple U.S. military branches
5. Nextworld (Enterprise Software): Closed $65M Series F led by McVaney Investment Partnership to grow strategic partnerships and enhance R&D. First publicly announced funding round since 2016

The Biggest Rounds Of January: Infinite Reality Tops Busy Month (Crunchbase, 4 minute read)

1. Infinite Reality (AR): Augmented reality firm raised $3B from a private investor at a $12.25B valuation. Previous SPAC deal canceled in 2023. Total funding: $3.4B
2. Anthropic (AI): ChatGPT rival secured $1B from Google. Previous valuation was $18.5B in 2024. Google and Amazon have collectively invested $6B
3. Retro Biosciences (Biotech): Raised $1B from Italian financier Sandro Salsano to support clinical trials targeting age-related diseases, including Alzheimer’s
4. Helion Energy (Energy): Secured $425M Series F at a $5.4B valuation to commercialize fusion technology. Recent agreements with Microsoft and Nucor
5. Truveta (Biotech): Medical data research platform raised $320M from Regeneron, Illumina, and 17 U.S. health systems. Valuation exceeds $1B

INDUSTRY

Eye On AI: After DeepSeek Hysteria, The AI World Is The Same As It Ever Was (Crunchbase, 2 minute read)

The arrival of Chinese AI app DeepSeek initially sent shockwaves through the AI industry, shaking public markets and rattling venture capitalists with its claims of creating cost-efficient, high-performance AI models rivaling those of OpenAI. However, despite the initial panic, investment in AI remains robust. Reports indicate SoftBank is planning a $15 to $25 billion investment in OpenAI, potentially valuing the company at $300 billion. Meanwhile, Blackstone continues to pour billions into AI infrastructure, including data centers and startups like CoreWeave and DDN

• Although January's $5.7 billion investment in AI startups was lower than the previous months, it still more than doubled January 2024's total of $2.6 billion
• While skepticism persists about DeepSeek's accuracy and scalability, it has undeniably captured attention
• Despite its potential, experts believe a Chinese AI app may struggle to gain traction in the U.S. due to data security concerns, particularly in the enterprise sector

US corporates continue their preference for larger VC deals (Pitchbook, 2 minute read)

In 2024, the median U.S. venture deal involving corporate venture capital (CVC) was $13 million, over three times the size of non-CVC deals and up from $9.5 million in 2023, according to PitchBook. This trend reflects CVCs’ focus on later-stage companies, though acquisitions remain rare, with fewer than 4% of CVC-backed companies being acquired by their corporate investors. Notable exceptions include Salesforce’s $1.9 billion acquisition of Own, a cloud data protection provider

• CVCs are heavily investing in AI and life sciences sectors, participating in large funding rounds and early-stage deals to maintain competitive advantages
• Of the $191.7 billion in U.S. venture investments last year, CVCs accounted for $107.6 billion
• Analysts predict potential growth in mergers and acquisitions as macroeconomic conditions improve and interest rates decline

?? ECONOMIC SNAPSHOT

China's tit-for-tat tariffs on US take effect (BBC, 4 minute read)

The trade war between the US and China escalated as China's retaliatory tariffs on American goods took effect following new US levies on Chinese imports. Beijing imposed a 15% tax on US coal and liquefied natural gas, along with a 10% tariff on crude oil, agricultural machinery, and large-engine cars. The move coincided with an anti-monopoly probe into Google and export controls on rare metals critical for electronics and military equipment

• Meanwhile, President Trump announced plans to impose a 25% tariff on steel and aluminum imports and hinted at reciprocal tariffs on other nations, although details remained unclear
• China filed a complaint with the World Trade Organization (WTO), accusing the US of discriminatory trade practices. Experts doubted a favorable ruling for China due to the WTO’s ongoing dispute panel issues
• Despite these tensions, Trump expressed no urgency for talks with President Xi Jinping
• Notably, the US temporarily suspended tariffs on small packages from China to allow for proper tariff collection systems, prompting operational disruptions at the US Postal Service before a policy reversal

US economy shows steady job growth in January amid Biden-Trump transition (The Guardian, 5 minute read)

The US economy continued steady job growth in January, adding 143,000 jobs, though below the expected 168,000. The unemployment rate remained stable at 4%, slightly down from 4.1% in December. Job growth estimates for prior months were revised higher, but overall job gains in 2023 and early 2024 were 589,000 fewer than previously reported

• Under Trump's second term, the labor market shows signs of cooling compared to its 2022 peak, with fewer job openings and less job turnover
• The Federal Reserve has reduced interest rates three times since inflation peaked at 9.1% in 2022, though rates now remain steady at 4.25% to 4.5%
• Trump acknowledged potential challenges but emphasized his belief that trade policies would ultimately benefit the country

What are tariffs and why is Trump using them? (BBC, 5 minute read)

US President Donald Trump announced plans to impose a 25% tariff on all steel and aluminum imports as part of reshaping America's trade relationships. This move may particularly affect Canada, which supplies 58% of America's crude petroleum and 22% of its refined petroleum. Financial analysts predict the newly announced tariffs could push annual inflation from 2.9% to as high as 4%

• As of February 4, the United States has imposed a 10% tariff on all Chinese imports
• In response, China enacted retaliatory tariffs on February 10, which include a 15% levy on US coal and liquefied natural gas, as well as a 10% duty on crude oil and agricultural products
• Proposed 25% tariffs on Canadian and Mexican goods were delayed for 30 days as both countries agreed to enhance border security
• Trump claims tariffs are essential for boosting US manufacturing, protecting jobs, and combating drug trafficking, particularly fentanyl

???? IMPACT & CLIMATE RESILIENCE

Share Of Startup Funding For Black Founders Hits Multiyear Low (Crunchbase, 4 minute read)

In 2024, funding for U.S. startups with Black founders hit a multiyear low, totaling around $730 million, just 0.4% of total funding, according to Crunchbase. This marks a sharp decline from previous years, with funding down by over two-thirds since 2021. Notable deals included Twelve’s $200 million Series C for CO?-to-jet-fuel technology, Zing Health's $140 million funding, and Pyka’s $40 million Series B. Despite these successes, Black founders remain severely underrepresented in venture capital, highlighting persistent biases

• Black Americans constitute 14.4% of the population and own businesses generating $141.1 billion annually, yet none of the AI startups raising $100 million or more in 2024 were Black-founded
• Political backlash against DEI efforts and legal challenges have further strained diversity-focused investments, though some private sector support remains
• Experts anticipate a potential funding rebound for Black founders in 2025, particularly due to their prominence in the healthcare sector

US VC female founders dashboard (Pitchbook, 5 minute read)

Venture capital funding for female founders has stabilized following a sharp decline from 2021 peaks. While the share of total deals involving women-founded or co-founded companies has decreased, these companies are securing a growing proportion of the capital raised. A comprehensive dashboard tracks 16 years of U.S. investment trends for women founders, offering insights into deal counts, capital raised by state, industry, and stage, as well as highlighting notable female-founded startups and firms

• In Q1 2025, co-founded female companies reported $3.9 billion in capital invested and a total of 209 deals, compared to $6 billion in capital and 795 deals in Q3 2023
• In terms of deal count, only female-led companies accounted for 5.4% of the total, while female and male-led companies together represented 19%
• Regarding capital allocation, female-led companies received only 0.9%, whereas female and male-led companies collectively received 23.1%

Pinterest lists DEI attacks as possible business risk in latest filing (TechCrunch, 4 minute read)

Pinterest has listed diversity, equity, and inclusion (DEI) efforts as a potential business risk in its latest 10-K filing, warning that if its DEI initiatives are seen as inadequate or excessive, it may struggle to attract and retain talent and could face investigations, litigation, or reputational harm. This disclosure follows a recent lawsuit against Target, where shareholders claimed the company misled them about the risks of its DEI initiatives, resulting in consumer backlash and a drop in stock prices

• Pinterest, like other tech companies, had publicly committed to supporting diversity after the Black Lives Matter protests but has now reevaluated its stance due to growing attacks on DEI, particularly under the influence of the new Trump administration
• Some companies, including Meta, Amazon, and Google, have also scaled back their DEI programs in response to conservative backlash, with Google notably omitting any mention of diversity in its latest 10-K filing, a stark contrast to its 2023 filing

?? IPO & EXITS

Will 2025 finally mark the end of the IPO drought? (CNBC, 2 minute read)

The IPO market in early 2025 has seen over 12 launches, though reactions have been tepid. Despite this, Nasdaq President Nelson Griggs remains optimistic, predicting a stronger recovery in the second half of 2025, as activity gradually increases.Griggs likened the market to a pendulum swinging between private and public investments, highlighting that three consecutive years of limited public capital raises have created a significant IPO pipeline

• However, companies like Panera Brands continue to face challenges, while Twin Peaks recently entered the market to help Fat Brands manage debt
• Many newer firms, including AI players like OpenAI, remain in the private sector due to innovations providing more liquidity without the need for an IPO
• Griggs emphasized that while private markets offer liquidity, sustained liquidity requires going public

Trump’s tariff play may derail PE exit recovery (Pitchbook, 3 minute read)

President Trump's tariff policies could delay the long-awaited recovery of private equity (PE), particularly for funds invested in industries targeted by the tariffs, such as electronics, apparel, manufacturing, agriculture, and energy. While the president delayed tariffs on Canadian and Mexican goods for 30 days, a 10% tariff on Chinese imports took effect. Many PE firms are already holding investments in these industries for longer than the typical 3-5 years, with sectors like autos, garments, electronics, and food products seeing significant investments held for over five years

• The decrease in PE exits since 2022 has slowed distributions for LPs and reduced available capital for new investments
• Though the exit drought began to ease in 2024, tariffs may disrupt the anticipated interest rate reductions needed for a rebound in PE exits and deal-making
• The tariffs could also hinder mergers and acquisitions (M&A) activity, leading to longer due diligence periods and more protective provisions in deals
• Companies with supply chains linked to Canada, Mexico, or China could face lower valuations, making it harder to sell assets and return capital to investors

??? AI8 VENTURES HIGHLIGHT

Trumponomics 2.0

Following President-elect Donald J. Trump’s victory over Kamala Harris, the financial world witnessed an immediate response. In just one week, the S&P 500’s value surged by $1.9 trillion, pushing stocks to record highs. The U.S. dollar strengthened globally and Bitcoin achieved unprecedented highs.

Wall Street is preparing for more government spending, lighter regulation, bigger deficits, and accelerating growth under a Trump administration and a Republican-led Congress.

Biden’s Economic Legacy

The Biden era was marked by headlines of massive layoffs and a cost of living crisis. The average worker faced double-digit increases in food, energy, housing, and other essential expenses that impacted middle-class families the most and consumed the bulk of household budgets. Despite record highs in the stock market, nearly half of Americans believed the nation was in a recession. Is this Biden’s fault? No. Global supply chain disruptions, stimulus checks, the aftermath of COVID-19 lockdowns, and the ripple effects of geopolitical tensions all contributed to soaring prices. Did Americans blame Biden? Election results suggest they did. Two-thirds of voters believed the economy was on the wrong track.

Hence, Trumponomics 2.0.

Trump’s campaign capitalized on promises of economic revival, pledging to deliver low taxes, low regulations, low energy costs, low interest rates, and low inflation -Trumponomics.

Alpha Insights on Trump and AI in Mexico City

What an incredible experience at the NAA International Symposium and Startup Pitching Last week, we hosted our first?Alpha Insights?event in Mexico City, where we brought together industry experts, investors, and entrepreneurs to discuss the evolving landscape under the new U.S. administration. We dove into how the election of Donald Trump, "Trumponomics," and the transformative role of AI are shaping the future of investments, regulations, markets, taxes, and cross-border opportunities.

Missed the event? We’ve curated the key insights in our Alpha Insights Special Edition: Trumponomics Report. Understand everything VC-related that happened in 2024 and how profit will shift under Trump 2.0

(Trumponomics 2.0 Special Edition starts on page 22)

Read Full Report

Alpha Impact 8 Ventures is thrilled to share our latest insights into the dynamic world of investments with our 2024 Venture Capital Report.

Last year, Michael Burry, the legendary fund manager who famously profited from shorting the US housing market in 2008, bet more than $1.6 billion on a Wall Street crash by shorting the S&P 500 and Nasdaq-100. Nothing happened.

This year, Warren Buffett’s cash reserves reached a record $276.9 billion as Berkshire Hathaway trimmed its stock holdings in Apple. Some view it as a routine adjustment, while others speculate that Buffett perceives an overheated, overvalued market.

Everyone talks about a soft landing, but warning signs are flashing and the world seems to be teetering on a delicate balance. Is there something we’re missing? Is there an unseen factor at play?

Read Full Report

If you have any comments or feedback, just shoot an email @[email protected]!

Happy reading,

AI8 Ventures’ Research & Investment Team