Week of May 5th, 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: Investors Look To The Stars And Defense (Crunchbase, 5 minute read)

1. Chaos Industries (Defense): Raised $275M in Series C at a $2B valuation, led by Accel and New Enterprise Associates. Specializes in advanced detection, monitoring, and communication solutions for defense and commercial sectors

2. True Anomaly (Space): Raised $260M in Series C at a $418M total funding, led by Accel. Develops hardware and software systems for space security and readiness, helping protect satellite assets from threats

3. Apex (Space): Secured $200M in Series C at a $322M total funding, led by 8VC and Point72 Ventures. Focuses on mass-producing spacecraft buses for satellite manufacturing

4. Persona (Cybersecurity): Raised $200M in Series D at a $2B valuation, co-led by Founders Fund and Ribbit Capital. Provides a verified identity platform for businesses to securely collect, verify, manage, and make decisions about identities

5. Cast AI (Software Development): Closed $108M in Series C at a $181M total funding, led by G2 Venture Partners and SoftBank Vision Fund 2. Helps optimize workloads, focusing on Kubernetes and AI applications

Biggest Rounds Gobble Up A Growing Share Of Startup Funding (Crunchbase, 5 minute read)

Venture capital funding trends have shifted significantly in recent years. While VCs continue to back seed and early-stage startups, the share of funding going into smaller rounds has decreased. Instead, more capital is flowing into a few already established companies, particularly in the generative AI sector. This represents nearly half of all first-quarter 2025 U.S. startup funding

• The AI sector, especially companies like OpenAI, xAI, and Anthropic, has dominated these mega-rounds

• Other industries, such as health and life sciences, have been underrepresented, with none of the top 20 largest rounds in the past two years going to health-related companies

• While the returns from early-stage investments can be huge, most startups fail, making large investments in successful companies more appealing, even if they come with a higher price tag

Global Venture Funding Slowed In April, Despite Strong AI Showing (Crunchbase, 4 minute read)

Global venture funding reached $23 billion in April 2025, remaining flat compared to last year but plunging from $68 billion in March, which was boosted by OpenAI’s record-breaking $40 billion deal. April was one of the slowest months in the past year, with the top deal going to Safe Superintelligence, which raised $2 billion at a $32 billion valuation

• Artificial intelligence led funding activity, accounting for $7 billion or 30% of global investments, followed by healthcare/biotech and financial services

• U.S. startups dominated with $14 billion (62% of global funding), while China, the UK, and India trailed behind

• Leading investors included Insight Partners, Accel, Andreessen Horowitz, and Khosla Ventures, with most funding going to late-stage rounds

ECONOMIC SNAPSHOT

U.S. economy shrank 0.3% in the first quarter as Trump policy uncertainty weighed on businesses (CNBC, 5 minute read)

The U.S. economy contracted by 0.3% on an annualized basis in the first quarter of 2025, marking the first negative growth quarter since early 2022. The decline was primarily driven by a 41.3% surge in imports—led by a 50.9% jump in goods—as businesses and consumers rushed to purchase items ahead of President Trump’s newly announced tariffs. Since imports subtract from GDP, this spike alone erased more than five percentage points from overall growth

• Consumer spending slowed significantly, rising just 1.8%, its weakest pace since mid-2023, while federal government spending declined 5.1%

• Meanwhile, private domestic investment saw a sharp 21.9% increase, largely due to a 22.5% rise in equipment purchases, likely influenced by tariff-related stockpiling

• The personal consumption expenditures (PCE) price index jumped 3.6%, and core PCE rose 3.5%, both significantly higher than in the previous quarter

US jobs market better than expected even as hiring slowed in April (The Guardian, 4 minute read)

In April 2025, the U.S. economy added 177,000 jobs, down from the revised 185,000 in March but exceeding economists' expectations of 133,000. The unemployment rate remained at 4.2%. However, the Bureau of Labor Statistics reduced its February and March job growth estimates by a combined 58,000. The strongest hiring was seen in healthcare and transportation and warehousing, while federal government employment declined by 9,000, bringing total federal job losses since January to 26,000 under the Elon Musk-led “department of government efficiency”

• U.S. GDP shrank by 0.3% in the first quarter, marking the first contraction in three years, largely due to a 41.3% surge in imports as businesses prepared for President’s policies

• Trump responded by renewing calls for interest rate cuts, but economists suggested the Federal Reserve is likely to hold rates steady, given the mixed data

• According to the ADP National Employment Report, private sector hiring in April added just 62,000 jobs, the weakest showing since July 2024

Global economy already feeling drag from Trump tariffs (Reuters, 5 minute read)

U.S. President Donald Trump’s aggressive tariff policies are disrupting global trade, creating uncertainty and economic drag across major economies. Multinational corporations and small businesses alike are revising forecasts, cutting jobs, and even exiting markets. Tariff rates as high as 145% on Chinese imports, and retaliatory 125% tariffs by China, have created a “demand shock” that’s rippling across global markets

• U.S. removal of the $800 de minimis threshold (for duty-free e-commerce imports from China) affects tens of thousands of small online sellers

• Bank of Japan, Netherlands, and MENA region have all reduced GDP forecasts; China's factory output shrank at its fastest rate in 16 months

• Apple and other firms are shifting some production to India, helping it post a 10-month high in manufacturing growth

S&P 500, Nasdaq slip after Trump's fresh tariffs at start of Fed-decision week (Reuters, 3 minute read)

U.S. stock markets dipped on Monday after President Trump's announcement of a 100% tariff on foreign-produced movies raised trade war concerns, particularly affecting media and tech stocks. Despite the uncertainty, major indexes remained above session lows as investors hoped for tariff negotiations. Declining stocks outnumbered advancers on the NYSE and Nasdaq, with the S&P 500 noting 7 new highs and 3 new lows.

• The S&P 500 was down 21.19 points (-0.37%) to 5,665.48, the Nasdaq lost 93.56 points (-0.52%) to 17,884.17, while the Dow Jones rose slightly by 26.93 points (+0.07%) to 41,344.36

• Berkshire Hathaway Class B shares dropped 4.4% after Warren Buffett confirmed he would step down as CEO

• Other notable moves included Tesla and Apple, both down over 3%, and Tyson Foods, which sank 9.2% after missing revenue expectations

• Traders now focus on the Federal Reserve’s upcoming policy decision, with markets pricing in a 25 basis point rate cut by July and a total of 80 basis points in cuts by year-end

IPO & EXITS

Tomasz Tunguz: Secondaries as the new IPO is no passing fad—it’s a VC evolution (Fortune, 5 minute read)

Venture capital has grown 5x over the last 12 years, reaching $350 billion in size. However, with exit markets stalling—only 12 IPOs in Q1 2025 and M&A generating just $22.7B across 205 deals—firms face mounting pressure to realize returns. VC firms traditionally rely on IPOs and acquisitions, but are now increasingly tapping the secondary market, where shares are sold to other investors. In the past 2–3 years, billions have been raised for this purpose, and the largest secondary VC fund now exceeds $22B

• Unlike PE, where losses are rare, VC still sees a 20% loss ratio (down from 50% in 2001), and startups often generate losses—contributing to secondaries trading at 40%–60% discounts to NAV in 2024

• With over 1,000 unicorns and traditional exits constrained, secondary VC markets are approaching parity with PE and signaling a maturing asset class

Retail trading platform eToro targets $4 billion valuation in US IPO (Yahoo Finance, 2 minute read)

eToro, the Israeli-based retail trading platform, has officially launched its long-anticipated U.S. IPO, targeting a valuation of up to $4 billion. The company and certain shareholders plan to raise up to $500 million by offering 10 million shares priced between $46 and $50 each on the Nasdaq Global Select Market, under the ticker "ETOR"

• The IPO will test investor appetite amid easing market volatility and follows a failed 2022 SPAC deal at a $10.4B valuation

• In 2023, eToro raised $250 million at a $3.5 billion valuation. BlackRock may purchase up to $100 million of the offering

Eye On AI: OpenAI’s Potential Windsurf Deal Could Be The Start Of A New M&A Trend (Crunchbase, 3 minute read)

Mergers and acquisitions in the AI space are heating up, with younger, well-funded companies like OpenAI, Anthropic, and xAI stepping into the role traditionally held by tech giants. OpenAI is reportedly in talks to acquire coding assistant startup Windsurf (formerly Codeium) for $3 billion, its largest potential acquisition yet, following a $40 billion funding boost in March

• Anthropic also made its first direct startup investment by joining Goodfire’s $50 million Series A

• Meanwhile, xAI, Elon Musk’s AI venture, acquired social platform X in a $33 billion all-stock deal and is now reportedly raising another $20 billion

WHAT A TIME TO BE ALIVE

‘DEI’ vanishing from corporate filings, mirroring business world’s retreat (The Washington Post, 10 minute read)

Corporate America's commitment to Diversity, Equity, and Inclusion (DEI) has been waning, with a significant decline in DEI mentions in S&P 500 companies' 10-K filings. In 2024, the typical S&P 500 company referenced DEI just four times, a sharp decrease from 9 mentions in 2020 and a peak of 12.5 mentions in 2022. This decline has been influenced by legal changes and political pressure, especially after the Supreme Court's 2023 ruling against affirmative action in college admissions

• While some companies have maintained DEI initiatives, many have restructured their programs to be less politically charged and more inclusive without specific emphasis on race or identity

• The decrease in DEI references aligns with a broader legal and political pushback against race-based policies, with numerous lawsuits challenging such programs across the U.S.

AI8 VENTURES HIGHLIGHT

The Illusion of Recovery - Venture Capital 2025

We are living in a world defined by rapid and accelerating change, political, economic, social, and technological. This is not a typical business cycle. We are in an era shaped by powerful megatrends, with AI transforming industries, geopolitical shifts reshaping markets, and macroeconomic forces creating new uncertainties.

Just weeks before the 2024 election, The Economist described the U.S. economy as the “envy of the world.” After Donald Trump’s victory in November, markets initially anticipated controlled inflation, deregulation, and a less restrictive monetary policy. Fast-forward a few months to April 2025, and the optimism has faded. With capital markets reacting negatively to renewed trade war fears, over $5 trillion in market value were erased in a couple of days.

2025 opened with headlines proclaiming a venture capital comeback.

On paper, VC funding rebounded, driven by an unprecedented surge in AI investment. But beneath the surface, it’s a tale of two markets: one propelled by billion-dollar mega-deals in Artificial Intelligence, and another still struggling to regain traction amid macroeconomic uncertainty, investor hesitation, and a lingering liquidity crunch.

With Trump reigniting trade wars, tariffs reshaping global supply chains, and AI advancing at breakneck speed, it’s becoming harder than ever to place clear bets.

The real question is: what are you going to bet on?

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Happy reading,

8alpha.ai’s Research & Investment Team