Timing and Risk

Author

Nicole Rojas
October 06, 2025

Week of October 6th, 2025

Welcome to 8alpha.ai’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

  • Cerebras Systems (AI hardware): known for building some of the world’s most powerful AI chips, the company raised $1.1 billion in Series G funding at an $8.1 billion valuation. The round was led by Fidelity and Atreides Management

  • Periodic Labs (AI): Periodic Labs debuted with $300 million in seed funding to develop AI models for scientific research and discovery. Based in Silicon Valley, the company’s backers include Andreessen Horowitz, Felicis, DST, NVentures, and Accel

  • Vercel (Cloud Infrastructure): Web development platform Vercel raised $300 million in Series F funding co-led by Accel and GIC, valuing the company at $9.3 billion

  • Crystalys Therapeutics (Biopharma): the San Diego biotech focused on novel gout treatments, launched with $205 million in Series A funding led by Novo Holdings, SR One, and Catalys Pacific

  • Flying Tulip (Blockchain): Flying Tulip, a developer of blockchain-based financial products, raised $200 million in private financing from CoinFund, DWF Labs, FalconX, Hypersphere, and Selini

Global venture funding surged 38% year over year in Q3 2025, reaching $97 billion, up from $70 billion in the same period last year. This marks the fourth consecutive quarter above $90 billion, driven largely by massive AI-related megarounds. Nearly one-third of all funding went to just 18 companies, led by Anthropic ($13B), xAI ($5.3B), and Mistral AI ($2B). The AI sector alone attracted $45 billion, or 46% of total global investment

  • The U.S. captured two-thirds of total global venture funding at $60 billion

  • Late-stage rounds dominated with $58 billion, up 66% year over year, while early-stage and seed funding saw modest gains of around 10% and 6%, respectively

  • Exit activity remained strong, with 16 venture-backed IPOs valued over $1 billion, including Figma, Klarna, and Netskope, totaling $90 billion in market value

OpenAI’s new $500 billion valuation now exceeds the GDPs of more than three-fourths of all countries, making it the most valuable private company in the world and a symbol of soaring startup valuations. However, analysts note that such rapid private-market appreciation suggests sky-high expectations for future performance and may not be sustainable if market sentiment shifts. The surge reflects a broader trend of high-profile private firms, especially in AI, posting rapid, record-breaking gains. At least five other U.S. venture-backed companies are valued above $100 billion:

  • SpaceX is valued at about $400 billion, up from $350 billion in late 2024

  • Anthropic recently hit $183 billion after a $13 billion Series F, nearly tripling its March valuation

  • Stripe reached $106.7 billion, up from $91.5 billion in February

  • xAI, Elon Musk’s AI venture, was last valued around $80 billion before reports of a potential $200 billion combined valuation with X

  • Databricks climbed to $100 billion after its Series K round, up from $62 billion earlier this year

The crypto AI sector’s total market capitalization surged to $32 billion on Thursday, lifted by NVIDIA’s record-setting rally above $190 per share, which pushed the chipmaker’s valuation near $4.6 trillion. As NVIDIA cements its dominance in the AI ecosystem, investors are betting on continued growth across AI-linked assets, including blockchain projects. Broader crypto markets also benefited from a rotation out of U.S. Treasuries and into risk assets amid political uncertainty from the U.S. government shutdown

  • Additionally, ADP private payroll data earlier in the week helped calm bearish sentiment, with traders now assigning a 97.8% probability of a Fed rate cut at the October 29 FOMC meeting, according to CME’s FedWatch tool

  • Analysts suggest NVIDIA’s momentum and easing monetary expectations could keep the crypto AI rally alive as investors seek exposure to the next leg of the AI-driven tech boom

ECONOMIC SNAPSHOT

The U.S. government officially shut down on Oct. 1, after Congress failed to pass a stopgap spending bill due to partisan deadlock over expiring health care subsidies. The shutdown has triggered widespread disruptions across federal agencies, halting nonessential regulatory functions. The SEC has paused IPO reviews and rulemaking, freezing pending exits and delaying initiatives around private capital access and crypto regulation. The Small Business Administration can’t issue new loans or grants, visa approvals are halted, and government contractors and startups reliant on federal funding could face revenue delays

  • Meanwhile, California set a national precedent on AI governance with the passage of SB 53, the first state law mandating transparency and safety standards for frontier AI models

  • The move contrasts with the Trump administration’s hands-off federal approach, which prioritizes AI infrastructure and competitiveness over regulation

  • In parallel, the SEC issued long-awaited guidance on crypto custody, clarifying that registered investment advisers and funds can use state-chartered trust companies as qualified custodians if proper due diligence and controls are met

Tariffs imposed under President Donald Trump’s trade policies are beginning to push up prices for a broad range of U.S. consumer goods, from cans of soup and coffee to dresses and car parts, even as overall inflation remains moderate at 2.9% in August. After initially absorbing much of the cost, companies are increasingly passing tariffs on to consumers as inventories deplete and import costs rise

  • According to Bureau of Labor Statistics data, prices jumped 14% for audio equipment, 8% for dresses, and 5% for tools and hardware in the six months to August

  • Retailers are adapting to tariffs by cutting imports and raising prices: Costco has reduced tariff-heavy goods like toys and decorations, while Ashley Furniture plans price hikes of 3.5%–12%

  • Analysts say these price hikes mark a clear sign that tariffs are filtering through to consumers. Citigroup estimates that U.S. consumers currently bear 30–40% of the tariff burden, a share expected to climb to 60% in coming months as companies seek to protect profit margins

IPOs & EXITS

Nearly 50% of planned IPOs in 2024 were postponed, reflecting how market volatility, higher interest rates, and geopolitical tensions disrupted startup exits and delayed liquidity events. The slowdown left hundreds of late-stage startups facing funding shortfalls, while venture investors extended exit timelines and employees saw stock option values decline by as much as 30%, according to industry estimates

  • Many startups are now confronting valuation pressure, with down rounds increasing more than 40% year over year, and some turning to debt financing to maintain operations

  • In response, companies are pursuing M&As, direct listings, and private equity buyouts, which together accounted for nearly $27.5 billion in Q3 2025 in reported exit value

  • Analysts say startups must focus on strong financial planning, tight cost control, and full regulatory compliance to keep investor trust and stay ready for IPOs when markets recover

The U.S. government shutdown is threatening to derail the country’s long-awaited IPO revival, putting billions of dollars in deals on hold as the Securities and Exchange Commission (SEC) remains largely closed. Companies like Navan, Andersen Group, and BitGo, which had planned to begin marketing their IPOs this week, are now in limbo, unable to get their registration statements approved

  • So far in 2025, U.S. IPOs have raised $33.4 billion, already surpassing 2024’s total

  • But if the shutdown stretches beyond mid-October, lawyers warn it could freeze the IPO pipeline through year-end, with limited windows left before the Thanksgiving and holiday breaks

  • Bankers fear that a prolonged shutdown could also undermine market confidence, halting the record-setting rally in the S&P 500, which is up more than 15% this year, and cooling strong investor demand for AI and crypto-related listings

  • Dealmakers are especially worried that delays could coincide with corporate earnings season and the Fed’s Oct. 29 meeting, diverting investor attention

AI chipmaker Cerebras Systems has withdrawn its IPO plans, just days after announcing a $1.1 billion fundraising round at an $8.1 billion valuation. In an SEC filing Friday, the company said it “does not intend to conduct a proposed offering at this time,” though it still aims to go public in the future. Cerebras, seen as a potential challenger to Nvidia, initially filed for an IPO last year as it ramped up production of AI processors used for training and inference

  • Since its filing, the company has shifted focus from selling hardware to providing cloud-based AI compute services, reflecting broader trends in the industry as demand for AI infrastructure surges

  • CEO Andrew Feldman said the decision was not tied to the ongoing U.S. government shutdown, emphasizing that the firm’s IPO paperwork had become outdated amid rapid developments in AI

  • The move comes amid a wave of massive AI infrastructure deals, including CoreWeave’s $14.2 billion contract with Meta and OpenAI’s $300 billion cloud partnership with Oracle

OpenAI has completed a $6.6 billion secondary share sale, giving current and former employees the chance to sell stock at a $500 billion valuation. The deal makes OpenAI the most valuable private, venture-backed company in the world, surpassing SpaceX, which was valued at $400 billion after its own secondary sale earlier this year. According to CNBC, OpenAI had authorized up to $10.3 billion in shares for sale, up from its original $6 billion target, though only about two-thirds were ultimately sold

  • The move follows a growing trend among major private firms using secondary offerings to reward employees and provide liquidity ahead of potential IPOs

  • Earlier examples include Stripe’s $91.5 billion employee tender offer in February and Databricks’ $10 billion raise at a $62 billion valuation last December

  • The sale also builds on OpenAI’s record-breaking $40 billion investment from SoftBank in April, which valued the company at $300 billion and set the stage for its latest milestone

M&A deals top $1tn in third quarter (Financial Times, 3 min read)

Global mergers and acquisitions surged past $1 trillion in Q3 2025, fueled by a record wave of megadeals including Electronic Arts’ $55 billion buyout, Union Pacific’s $85 billion takeover of Norfolk Southern, Anglo American’s $50 billion merger with Teck, and Palo Alto Networks’ $25 billion acquisition of CyberArk. According to LSEG data, 14 deals worth over $10 billion were announced in the quarter and 47 so far this year, the most since records began, pushing total global M&A to $3.1 trillion, up 35% year over year

  • Dealmakers say confidence has returned under President Trump’s pro-business climate despite lingering trade uncertainty, with many reviving previously shelved transactions

  • The boom has produced a near-record $95.4 billion in investment banking fees so far this year, the second-highest on record

  • Lawyers and bankers describe the market as “on fire,” with renewed corporate appetite for transformative deals reminiscent of the 2021 SPAC frenzy, a sign that the long-anticipated Trump-era M&A boom may finally be underway

WHAT A TIME TO BE ALIVE

Private-sector investment in climate resilience is emerging as a critical and fast-growing opportunity amid worsening climate disasters. In 2024 alone, the U.S. experienced 27 “billion-dollar climate events,” and global climate losses topped $162 billion in the first half of 2025. While the public sector has historically led resilience funding, private capital is now beginning to mobilize in response to rising physical and financial risks

  • Corporate behavior reflects this shift: mentions of “climate resilience” in S&P 500 and STOXX Europe 600 company reports have risen 55% since 2021

  • In 2024, only 11% of resilience capital came from private sources, less than $8 billion across 120 dedicated funds, versus $650 billion raised for decarbonization

  • McKinsey estimates that 49 mature resilience technologies could form an addressable market worth $600 billion to $1 trillion by 2030, growing 7–11% annually

  • Unlocking private capital at scale will require clearer “returns on resilience,” new financing structures, and specialized investment capabilities

President Donald Trump’s announcement of a $100,000 one-time fee per new H-1B visa petition has sparked major debate across the U.S. tech and startup ecosystem. The H-1B program is facing what some industry leaders call an “immediate crisis” for early-stage companies and immigrant founders. Some experts describe the fee as an “insurmountable founder tax,” arguing it could block the next generation of innovators from starting companies in the U.S. Others, however, view the change as a potential modernization opportunity, arguing the move could push founders toward alternative immigration pathways, such as the O-1 visa, that better fit startup realities

  • Supporters see it as aligning with Trump’s broader “America First” agenda by encouraging companies to invest more in domestic talent

  • The administration also announced a new “Gold Card” visa pathway, granting expedited immigration to those who make large financial contributions to the U.S. Department of Commerce

  • Research from Stanford’s Venture Capital Initiative and the American Immigration Council underscores the stakes: nearly half of U.S. billion-dollar startups were founded by immigrants, and higher H-1B participation correlates with greater wages, patents, and job creation

AI8 VENTURES HIGHLIGHT

State of VC Report: The AI Power Law

“Every technological revolution has two halves: the bubble and the golden age that follows.”

Carlota Perez, economist and author of Technological Revolutions and Financial Capital (2002)

The stock market is at all-time highs, but inflation remains sticky and the job market is weakening. Ask around and you’ll hear the same refrain: the labor market feels tougher than ever. At the same time, the first wave of AI agents is “joining the workforce”. Imagine a software engineering agent capable of performing most tasks of a mid-level developer. Now imagine thousands. Extend that across every knowledge field, and the implications for productivity, and potential displacement, are profound.

What happens when the next round of layoffs hits? Add tariffs on top, and ask what happens if consumption weakens. Even the Federal Reserve admits it is unsure of what comes next.

Against this backdrop, venture capital in 2025 is not in recovery but in recalibration. The illusion of recovery is powered almost entirely by AI. Capital is flowing, but to fewer companies than ever. Outside AI, down rounds are rising, and nearly half the unicorn population hasn’t raised since 2022.

We are living in an AI bubble. Just four megacaps, Nvidia, Meta, Microsoft, and Broadcom, accounted for 60% of the S&P 500’s gains, with Nvidia alone responsible for more than a quarter. It’s a paradox. Yes, we’re in a bubble, but it’s also the future. We are witnessing what may be the most important technological shift in a generation. It’s hype layered on top of something undeniably real.

Uncertainty is the name of the game; not one single path forward, but divergent scenarios. Alpha will be earned through selectivity, by navigating volatility rather than avoiding it.

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Happy reading,

8alpha.ai’s Research & Investment Team