The Trump Factor: Power Play, Strategy, or Showmanship? ???????????

Week of January 20th, 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: Biotech And Space Tech Bring In The Money (Crunchbase, 5 minute read)

1. Truveta ($320M, Biotech): Truveta, a medical data research company, secured $320 million from Regeneron Pharmaceuticals, Illumina, and 17 U.S. health systems. The funding will help expand its platform that aggregates and updates medical records daily to link treatments with outcomes. The company is now valued at over $1 billion
2. Stoke Space ($260M, Space): Reusable rocket startup Stoke Space raised $260 million in a Series C round to develop its fully reusable Nova launch vehicle. The funding comes from investors like Breakthrough Energy Ventures and Glade Brook Capital Partners. Founded in 2019, the company has raised over $480 million to date
3. Colossal Biosciences ($200M, Genetics): Colossal Biosciences, a de-extinction startup working on reviving the dodo bird and woolly mammoth, secured $200 million at a $10.2 billion valuation.
4. Tune Therapeutics ($175M, Biotech): Tune Therapeutics, an epigenetic programming startup, raised $175 million to further develop its epigenetic silencing drug for chronic Hepatitis B and other gene and cell therapy programs
5. Loft Orbital ($170M, Space): Loft Orbital, a space infrastructure startup, raised $170 million to build satellites that allow customers to attach various components

INDUSTRY

Despite VCs investing $75B in Q4, it’s still hard for startups to raise money, data proves (Techcrunch, 3 minute read)

In Q4 2024, U.S. startups received $74.6 billion in venture funding, a sharp increase from the $42 billion quarterly average of the previous two years. However, this surge largely benefited a few massive deals, with 43.2% of the total funding concentrated in companies like Databricks, OpenAI, xAI, Waymo, and Anthropic

• These megadeals significantly skewed the overall investment figures, suggesting that outside these select companies, broader startup funding levels remained consistent with recent years
• The trend indicates a growing disparity between heavily funded AI firms and the rest of the startup ecosystem
• Whether this pattern will continue through 2025 remains uncertain, though it's likely that much of the VC will keep flowing to top-tier AI companies

AI Accelerates Embedded Finance And Loyalty Battles Get Personal: Payments Tech Predictions For 2025 (Crunchbase, 2 minute read)

The payments industry in 2025 will experience significant shifts driven by AI, hyper-personalization, real-time payments, and regulatory changes. AI will play a pivotal role in enhancing vertical SaaS and embedded finance platforms, propelling a new era of automation and intelligence. Companies like Toast, with over 125,000 restaurant clients and a market cap exceeding $20 billion, exemplify this trend, as do platforms like Vagaro, serving 100,000+ businesses

• Hyper-personalization will redefine customer loyalty, with financial institutions leveraging data to offer tailored products, thus integrating customers deeper into their ecosystems
• Despite international advancements in real-time payments, the U.S. will lag due to its fragmented financial landscape. However, companies like TabaPay are set to drive progress
• CFPB Rule 1033 will compel banks with assets over $1 billion to enhance digital banking capabilities, prompting significant investment in unified platforms to streamline customer experiences and comply with new data accessibility requirements

???ECONOMIC SNAPSHOT

TRUMP 2.0

Former President Donald Trump is heading back to the White House today, becoming the first former president to lose re-election and return to power four years later since Grover Cleveland in 1893. Trump's second-term agenda is set to both dismantle previous policies and build new ones, revisiting and expanding upon his earlier initiatives. His focus will be on implementing sweeping changes that combine traditional conservative policies with completely new strategies, to reshape America’s economic, social, and international landscapes:

• President Donald Trump signed orders to boost fossil fuel production, exit the Paris climate agreement, and halt clean energy progress, declaring a "national energy emergency" to cut energy costs (CNN, 6 minute read)
• The U.S. will impose a 25% tariff on Mexico and Canada starting February 1, potentially raising consumer prices and prompting retaliatory tariffs. While intended to protect American workers, experts warn of inflation risks and economic damage (CNN, 6 minute read)
• Trump would eliminate the Department of Education but still use federal funding to influence K-12 policies, pushing for merit pay and the removal of diversity programs. Trump also proposes taxing large university endowments and redirecting the funds into a tuition-free, non-political online "American Academy" (PBS, 5 minute read)
• President Donald Trump revoked a 2023 executive order signed by former President Joe Biden that sought to reduce the potential risks AI poses to consumers, workers, and national security (Techcrunch, 4 minute read)
• First-day executive orders focus on tightening immigration, reinstating policies like "Remain in Mexico" and the border wall, while introducing new measures such as challenging birthright citizenship and suspending the CBP One app (AP, 4 minute read)
• Also proposes extending the 2017 tax cuts, lowering the corporate tax rate to 15%, and exempting tips and overtime wages from income taxes (PBS, 5 minute read)

Has Trump promised too much on US economy? (BBC, 6 minute read)

Donald Trump promises major economic changes, including ending inflation, imposing tariffs, cutting taxes, reducing regulations, and shrinking the government. He claims these steps will spark an economic boom and revive the American dream. However, analysts warn his policies could worsen inflation and create economic challenges

• Inflation: Trump promises to reduce inflation, currently at 3.5%, by boosting oil and gas production. However, experts warn that his tax cuts and tariffs might backfire. Tax cuts and increased government spending could raise consumer demand, overheating the economy and driving prices up
• Tariffs: He proposes a 10% tariff on all imports, with over 60% on Chinese goods, which could lead to higher consumer prices and provoke retaliation from trade partners
• Taxes and Spending: Trump’s strategy includes extending tax cuts projected to add over $4.5 trillion to the national debt over the next decade. Analysts expect increased borrowing to raise inflationary pressure, with U.S. debt already exceeding $33 trillion

As Biden exits, how will he be remembered for his handling of the U.S. economy? (CBS News, 7 minute read)

President Biden leaves behind an economic legacy shaped by the challenges of the COVID-19 pandemic. His administration focused on economic recovery, resulting in strong GDP growth of 2.6% in 2024, a jobless rate near a 50-year low at 3.7%, and legislative achievements like the $1.9 trillion American Rescue Plan Act (ARPA). Economists credit these efforts with stabilizing the economy, though some attribute the subsequent inflation, which peaked at 9.1% in mid-2022

• Despite progress, structural issues like housing affordability, with median home prices increasing by 15% from 2021 to 2024, wealth inequality, and rising costs in health care and education remain prevalent
• Biden's presidency also saw a ballooning national debt, now at a record $36.2 trillion, due to extensive federal spending on infrastructure and green energy initiatives
• As Biden departs, President Trump inherits a relatively strong economy but faces significant debt and ongoing inequality
• Trump’s proposed policies, including tariffs and tax cuts, are viewed as potentially inflationary and likely to benefit the wealthiest Americans. For instance, the extension of the 2017 Tax Cuts & Jobs Act could add $4.6 trillion to the federal deficit over the next decade

???? IMPACT & CLIMATE RESILIENCE

Female founders just took in their smallest share of VC deals in five years (Pitchbook, 5 minute read)

In 2024, venture funding for female-founded startups saw a noticeable decline, with their share of total VC deals falling to 22.7%, the lowest since 2017. Despite an increase in aggregate deal value to $45.3 billion, much of it was concentrated in a single company, Anthropic, which raised $9.2 billion. Excluding Anthropic, female-founded startups received only $36.1 billion out of a total $209 billion

• Early-stage financing for female-led startups also dropped, with just 20.5% of first financings involving female founders, down from 26.5% in 2020
• This decline raises concerns about missed market opportunities and potential biases in AI systems, as fewer diverse voices are shaping these technologies

Climate tech matured in 2024 as investors favored bigger rounds, later stages (Techcrunch, 3 minute read)

In 2024, climate tech saw a 7% decline in VC investment, totaling $12.9 billion, down from $13.9 billion in 2023. Despite fewer deals—568 compared to 782 the previous year—the sector showed signs of maturity with larger deal sizes and higher valuations. The median deal size increased to $7 million, and median pre-money valuations rose to $44.5 million from $31.5 million in 2023

• While early-stage funding dominated in the past, investors in 2024 shifted focus to later-stage companies, favoring those that had progressed beyond the seed stage
• This reflects a broader market trend where deal counts decreased, but deal values remained strong, bolstered by significant investments in AI companies
• The climate tech sector faces a more challenging fundraising environment as investors scrutinize unit economics, rewarding companies with strong fundamentals while others struggle to secure funding

???IPO & EXITS

This is what happens when startups can’t go public (Pitchbook, 5 minute read)

After three years of limited IPO activity, VCs are feeling the strain. The US recorded only $149 billion in exit value in 2023, marking a third consecutive year of sub-2018 levels, despite a rise in smaller startup exits. However, VC dealmaking showed resilience with a 29% year-over-year increase to $209 billion, driven by interest in AI startups

• The IPO drought has hindered capital returns to LPs, with more exit value realized in late 2021 than the subsequent three years combined
• While US unicorns could theoretically return $2.7 trillion to LPs, actual large exits are rare, with only 40 of 1,300 companies valued over $500 million exiting last year
• VCs are cautiously focusing more on existing portfolio companies, with insider-led rounds at a decade high of 9.4%

Forecast Digest: IPO, M&A And Venture Markets Expected To Gain In 2025 (Crunchbase, 6 minute read)

The startup ecosystem enters 2025 with renewed optimism following a modest rise in venture funding that surpassed pre-pandemic levels. Investors and entrepreneurs anticipate a revival in IPO and M&A activities. The IPO market, sluggish in 2024, is expected to accelerate, with strong stock market performance and a focus on growth fueling confidence

• Companies like ServiceTitan, which went public in 2024, are seen as trailblazers for others in sectors like fintech, cybersecurity, and AI
• The M&A market is also predicted to rebound, supported by a potentially more favorable regulatory environment under the new White House administration
• Venture investment is projected to continue its recovery, with AI leading the charge after AI startups secured a record $42 billion in Q4 2024
• The crypto sector, buoyed by supportive policies under the new administration, is expected to thrive, though concerns about tariffs, inflation, and immigration policies could pose challenges

Goldman Sachs CEO Solomon says IPO market is ‘going to pick up’ along with dealmaking (CNBC, 5 minute read)

Goldman Sachs CEO David Solomon forecasts an end to the multi-year IPO drought, expecting a surge in IPOs and mergers. Speaking at a Silicon Valley summit with Cisco CEO Chuck Robbins, Solomon noted capital markets showing life ahead of President-elect Trump’s inauguration. The tech IPO market has been mostly dormant since late 2021, affected by inflation and interest rate hikes. Solomon pointed to a shift in mood, with improved optimism for dealmaking

• The U.S. had about 13,000 public companies 25 years ago, now down to 3,800, reflecting the appeal of private capital
• Despite challenges, such as higher disclosure standards, Solomon expects renewed momentum in IPOs and M&A activities, supported by a more favorable regulatory environment

??? 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