From Marhard where Innovation of Money and Power colle in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed lud Love.
Live from New York and San Francisco. This is Bloomberg Technology. Coming up, open.
AI's historic funding round. We discussed one of the largest ever private investments and its new loan agreement securing ten billion dollars in total liquidity.
And AI dominates VC deals.
We have the latest data for venture funding in the third quarter and in.
Video insiders cash in on the AI height, selling one point eight billion dollars of shares this year alone. That and so much more coming uphead.
Yeah, straight to our top story.
Open ai said it has completed a deal to raise six point six billion dollars in new giving the AI company a one hundred and fifty seven billion dollar valuation and bolstering its efforts to build the world's leading generative AI technology. In the last hour, the startups also announced a four billion dollar credit line from banks around the world, giving access to a more than ten billion dollar war chest.
Blion both Rachel Metz joins us on set in San Francisco, and we've been tracking this for weeks and months and it's finally done. But the important point is they need the money because the cutting edge model requires the money to train and build.
Yes, they are in a very expensive business. If you want to build a cutting edge large language model, any kind of cutting edge AI model, at this point, you're looking at potentially spending up to hundreds of millions of dollars. So if you think about multiplying that out over a couple of billion dollars, I mean it's like, well, you can train a couple models there, and what if you train one and you're like, you know what, I'm not
that happy with this. I mean a lot of money. Also, they need you know, chips, they have staff, they have all kinds of expenses there. They are bringing in revenue of course, but it's still costs quite a bit to do what they're doing.
It is the future revenue growth, the future profitability. That means standout names from VC like Thrive Capital, like Coast a Ventures back the round, but numerous big substantial banks back the credit facility. We're looking at Goldman, Sachs, JP Morgan santunder Wells Fargo to name but a few. What is the future growth model that they're all building one hundred and fifty seven billion dollar valuation on.
Rachel, I mean they're looking at businesses using their products going forward. They're hoping that businesses will increasingly do things like fine tune the models. They recently made it so that businesses can do that and use them in different parts of their workflow and find it useful enough that they will keep paying for it, and they are starting to see uptake. They have quite a number of both
individual and business users at this point. They recently passed the one million business user mark for business users of chat GBT in particular, But they still have a long ways to go if they want to get to this level that this valuation is showing them going to at some point.
There's two points I want to make really quick with my sort of finance coverage on this is a pre EBITDAR private company or a pre positive EBITDAR private company, so that it could go to banks and get four billion dollars in credit is remarkable. And also the eagle eyed audience will say some of those banks are in Europe.
That is also remarkable, Rachel.
When they announced the closing of the equity round, they also gave us data on how they're doing not necessarily financial metrics, but like how many people are using open Ai. Do we know anything about like the scale of this company in the real world.
Yes, we do.
We know that there are I think it's two hundred and fifty million weekly users of Chat GBT as we previously reported. They also recently passed more than one million business users for chat GPT, and that spans a couple of different products related both to an educational product, they have a smaller business product like for smaller companies, and
then also like a larger, more enterprise y product. So they're definitely trying to hit out a lot of different people in a lot of different areas, and they are doing it. They are they are certainly bringing in revenue, and they are seeing users. Uh. I think what remains to be seen is how well this will all work over time? What kind of you know, investors have to be willing to wait. They have to be very patient.
Right.
This is not like your.
Average startup where it's like, well, y, you know, you might get a short term return and then maybe you'll get a long term return. This is like, well, you're gonna have to wait and see what we.
Come up with. Over time. Rachel Metz, we thank you so much.
Meanwhile, Coast and Adventures participated in the Open AI round. As we mentioned, tune in tomorrow our interview with Vinode Coast and on this and of course AI's future impact. Now we tend to another key story. US prosecutors are broadening a probe of potential price fixing by German software maker SAP and tech reseller Carasoft, seeking to examine the company's work with almost one hundred government agencies.
It's according to a new court record. Imers Jake Bleiberg is here with more.
You've been sifting through these court documents, remind us what is being investigated, if not accused quite yet.
Absolutely, the investigation is looking at the companies you mentioned, SAP, Kerosoft, and then some other companies, the identities of which we don't all know, for a potential scheme. And I should stress that it's potential, not proven, to fix the prices, to inflate the prices in sales of SAP technology to the US government.
Jake, you joined us the other day to discuss your original reporting. What I'm trying to do is understand what's new here. One hundred agencies is more than the agencies you outline the other day. That's new, But is there an expansion in the scope of what they're looking at. Have they discovered more information that prompted more agencies to say we better get on board with this.
Absolutely, it's difficult to say what the prosecutors have discovered at this point.
And something we do.
Know is that they say they've been having difficulty getting information from the company. Sort of at the heart of this Kerasoft. But as you point to, what has happened is they went from an investigation primarily focused on sales to the Department of Defense and then just as of July, broaden this out pretty dramatically to look at sales to ninety four or as many as ninety four civilian government agencies as well.
We're looking now at the statements coming from the company's SAP saying it follows the rules around disclosing legal risks are based on the current circumstances. There was still no requirement to report on the individual cases. Karasoft also gave us a statement. But ultimately, how are they going to be interacting with these hundreds of agencies?
What role do they now play in this?
It's a great question.
The sort of historic role that both of these companies have played is by putting out a product. SAP makes all sorts of workforce software, time cards, HR software, and the complicated process of selling that sort of software to the US government is sort of handled by Carasoft, which stands in the middle and does a lot of the difficult work of helping the software manufacturer navigate.
These regulatory hurdles.
So what those relationships will look like going forward in the middle of this investigation is a big open question.
Bloomberg's Jake Blybag, who broke the original story and continues across the developing story, Thank you very much. Now coming up here on this show, is job displacement caused by AI something to brace for or is this just all hype? We discussed with MIT economist Darren Smoglu, who gives us his more skeptical view on what's really happening with AI in the jobs market.
This is Bloomberg Technology.
Softbag founder Asoshi's son has sketched out one of the most aggressive timelines for the adoption of AI yet, envisioning a near future where the technology would run entire households from monitoring the health of family members to grocery shopping now. In a speech add an annual forum for enterprise clients earlier today, Sun said that artificial general intelligence or AGI would.
Arrive within the next two to three years.
ED, but not everyone is so bullish on AI, at least not when it comes to jobs. Darren Asmoglu, a renowned professor at MIT, says that by his calculation, only a small percent of all jobs round five percent is right to be taken over at least heavily aided by AI over the next decade. Darren Asamogli joins us now and welcome to the program. This was one of the most read stories on Bloomberg in the last twenty four hours.
There's no surprise about that. It has all of the facets of a story that would you know, just engage our audience on Bloomberg technology. Let's get specifics why only five percent of jobs and which sectors in industries are you basing your thesis on.
Well, thanks, Ed, It's great to be on the program. I think right now there is a lot of potential excitement, perhaps hyper about AI, but if you look at its current capabilities, you know we are very far from AI, either general to AI or other types of AI performing any of the tasks that involve a heavy level of interaction with the physical world construction work, manufacturing work, carpentry.
Those perhaps one day will be much more feasible, for example, if AI becomes so much more advanced, so much more reliable, and can be integrated with so much better robots, for instance, But it's not something that's going to happen in the next five or ten years now. There's a lot of other potential for future AI, perhaps to perform some social tasks, but those are not going to be possible right now either.
You know you're not going to go to an AI psychiatrist anytime soon, So if you stip out all of these, you're not going to be left with much more than five percent of the economy.
Professor may I jump in and push back with a point raised by our audience when I said you were coming on, which is that AI technology is exponential, much in the way that the invention of electricity with time led to all sorts of breakthroughs. Right now, you're saying five percent of jobs, But in two years or five years from now, would you need to rethink your thesis or redo your calculations.
I should have prefaced this by saying there's a huge amount of uncertainty in any forecast about AI, and apologies that I didn't do that. I tried to do that all the time. I was very excited. I just jumped into it. There's a huge amount of uncertainty, and one source of uncertainty is exactly what's gonna happen with AI
in the next several years. I don't think that the most optimistic views in the industry, which sometimes people refer to as scaling laws, actually will hold water when you look at it within the next five years or ten years, which say, you know, just double the amount of data, double the amount of computer power, and then you're gonna get double the amount of capabilities. Because to do that
we would actual need higher quality data. So if you want AI to do the job of a carpenter, you really need a completely different kettle of fish when it comes to the kinds of data, and something like that might be feasible with a different architecture of AI, but right now all of the money is going into the sort of the basic dominant architecture, which has its limitations both in terms of reliability in terms of high level reasoning.
So that's the basis of my belief that, of course generative AI and other types of AI will improve, but we're not going to see a qualitative jump within the next five to ten years.
So as like your belief, what is exactly based on what data, what historical norms are you looking back on to drive and push forward on this five percent take?
Yeah, I think this is why there is so much uncertainty. There's nothing that's identical to generative AI in the past, and that's part of the reason why people can hold
very different beliefs. But what I'm basing that on is, first of all, other waves of digital technologies that promised a lot of automation, sometimes a lot of productivity improvements, sometimes a lot of changes in the way that we would organize our offices and things like that, and at the end, all of those changes have been very gradual.
And also what we have seen over the last two and a half years, where you know, there have been advances, but the advances haven't really been sort of qualitative in nature. They haven't really exceeded the sort of the basic capabilities of GPT three point five or three point GPT four. So there will be advances, but I don't think any of those advances will very quickly change the way that
we do various tasks in the economy. So, for example, I do not believe that in five years time, when we look at the labor market, we're going to see certain occupations that will have completely disappeared.
Think you would say that they would be augmented.
The idea is, perhaps the optimist view is we will not lose lots of people from the labor force, but their productivity will be scaled.
Where you think that's a yes, I think that's a very very interesting and important point. I am not an AI denier or an AI pessimist. I actually believe AI has a lot of potential, And in fact, the real potential is exactly what you said, Caroline, which is that AI becomes a tool for workers to boost their productivity. And again we're seeing some of that happening. You know, Microsoft has a lot of co pilots. You know, some
of them work and they give some productivity improvements. There are a few areas where we're seeing really phenomenal improvements, like, for example, if you want to write simple subroutines in one of the common programming languages. You know, GPT four is great. Before then getthub copilot was pretty good. So there are some things in which that sort of help
to decision makers as possible. But again, when you look at the whole economy, that means helping carpenters, electricians, plumbers, blue collar workers, construction workers, transport workers, people who are doing teaching, people who are doing journalism. Those are things that could be achieved perhaps at some point, but the reliability and the reasoning of the models is not up to the task yet.
Do you see specific job creation in specific industries from AI.
Well, there is one class of jobs where AI is leading a big boost, which is people who have AI fluency, either people who are AI programmers, AI integrators, or other AI related service activities. But in my research, albeit from a previous wave of AI in the late twenty tens, we didn't see any other job category get a boost in terms of hiring. And there are some other jobs
that I think there will be some retrenchment. So if you're in IT security and you're doing so routine end of IT security, there will be declines and job vacancies in that area because some of these AI tools can actually perform that quite well.
When you see the headline that open ai is worth one hundred and fifty seven billion dollars, when you see that in Video is now worth almost three trillion, what do you make of that in terms of how truly the capital markets are analyzing the growth here.
Well, I think there's a difference between Nvidia and open Ai. Nvidia is riding a wave which is based on the belief that those chips are going to become more valuable because generative AI and other types of AI are going to continue to boom, but they are generating revenues. Open ai, on the other hand, I think does hasn't found a revenue model that could justify the types of valuations we
are seeing at the moment now. It may well be that in the future suddenly their API is going to be so valuable and other firms are going to start building on it, but it doesn't seem like there are the kinds of applications that can have deep impact on the productivity of workers or the automation of firms that are going to be sold within the next five years
ten years. So I'm a little bit skeptical. But on the other hand, open ai is also emerging as the market leader, and the current ecosystem in the digital world is right firms that take over the market and they can use all of the data. They can you know, interact with the consumers or the programmers directly. Those have become very valuable because of venture capital or other deep pocketed funders.
Can't wait to see the response to this interview. I'm sure someone has some thoughts. It economics professor drown Asmlgloo. We appreciate your time, Aura. It's just world a new flagship device with the Ring four of dating its popular smart rings with new sensors, but a battery life and about an algorithm. This is competition is really heating up. Samsung of course, debuting its own Galaxy Ring for more or a CEO Tom Hale joins us, So, how does this make me distinct from the crowd.
Well, the thing about the or Ring four is that it's slimmer, sleeker, thinner, better, of course, and the feel of the ring is what matters to many people because there's a lot of technology packed in here.
You want it to be small and compact.
Maybe more importantly, we've taken a big leap forward in sensing with something we call smart sensing, and smart sensing adjusts dynamically to your body because not everyone's the same. Your anatomy is not the same, your physiology is not the same, your skin color is not the same, and we adjust dynamically even as you rotate the ring a little bit, we actually are able to keep the most accurate signal.
Tom, who do you consider it to be the composition for this ring? Is it other rings or is it other form fact? As a device, I think a lot about watches it the moment, particularly having just been at Apples event in recent weeks.
What's interesting to me is that amongst our users, almost two thirds wear a second wearable, usually a smart watch. On the smart watch great for daytime notifications, you're getting alerts all the time, but has an achilles heel, which is battery life.
And the ring is.
Something that doesn't ask for your attention, doesn't send you notifications. It's just in the background, seamlessly fitting into your life, capturing your physiology so that you don't have to pay.
A ton of attention to it.
And as a result, you have an eight day battery life with the or four ring. And so what that's really interesting to think about is that you just don't have to worry about your health as much, and then therefore the watch in the ring can be compatible. So in many ways we find these things to be two devices that can work together on one person's body.
And what's interesting is you've been working with other companies that make other devices. We understand from Mark German's reporting that you've been working alongside Meta's Raband team, for example. Well, how do you see integration with other businesses going.
Well, we've got so many great partners that we work with. We haven't announced anything formally with Meta, but you can imagine this world where you have this cloud of devices
on your body that you're using in different contexts. Maybe it's headphones, maybe it's glasses with an AI assistant, And how does your busiological state and something that you've got on your body all the time work, maybe as a controller, maybe as a way to guide, maybe as a way to provide input, maybe as a way to give you your other wearables a sense of whether you're stressed or
whether you're well rested, whether you're ready. There's a lot of really interesting opportunities to explore when you think about a permanently worn device that's oriented around your health that's on your body. Twenty four to seven.
Tom, we've just shown your latest financials and the trajectory of this company. Your focus this point has been technology and innovation. But where do you see this company going from here? The direction for the business.
Yeah, I mean, I think there's a lot of headroom for us to grow just simply in the ring category. Rings are new. People are just learning about the benefits of long term health tracking, learning about the benefits of getting sleep, learning about the understanding of their body. So you know, the way the ring works is it can tell you when you're getting sick, it can tell you when you're doing well.
It gives you.
Lots of information and lots of insights, even an AI coach that helps you make behavior changes. And I think there's a lot of headroom just in that category. But as you look beyond that, not only is it interaction with other devices, but it might be potentially other devices that you might see, Like we've seen prototypes for a locket that sits on your chest. We've seen prototypes for
things that look more like designer rings. We introduced a product with Gucci a couple of years back where we have something that looks much more like jewelry and much more like you know, much less like a piece of technology, and it really fits into your life. So I think the future is very bright for Rings. Lots of headroom for us to grow this business. But more importantly, I think people being aware of their health and understanding how to manage their health is just a really big opportunity.
Everybody on the planet should have one of these things.
Tom Hale or a CEO, good to catch up, Thank you.
Welcome back to read Technology.
I'm Caroline Hid in New York and Amed Lovelow in San Francisco. If you're just joining us this fine Thursday morning, or waking up to financial markets as a technology investor, this is what it looks like Now's that one hundred is kind of flat. There's a modest outperformance in semiconductors, with the modest gain on the socks. Bitcoins have been
under pressure throughout the US morning session. If you're an investor, it's been about weighing an escalating conflict in the Middle East, with some economic data, a lot of hype around AI, but no strong movement in either direction apart from a few single names.
One of them is in Nvidia.
In an interview last night, Jensen Wang, the CEO, saying that demand for Blackwell the latest GPU is insane. No direct correlation, but the at one point trading its highest level since August. Then ev go on track for its biggest jump since twenty twenty one, trading its highest level I think since May of twenty twenty three.
It secured a one point.
One billion dollar loan from the Department of Energy. Those are two kind of movers. A lot going on, but in video in particular, on a daily basis, it's still the name that people are talking about character.
Because it's worth more than three trillion dollars when you're looking at its market capitalization and look insiders, they've been cashing in.
On what is a huge valuation jump.
They've actually sold one is worth more than one point eight billion dollars in shares so far this year. The selling is it expected. Jess Menton is here to put this into context. We often see insiders sell shares and feels a lot when the market caps up so much.
That's right, and this is in focus, and this is a really the great story from Jeron Wodenstein and Crimin Renicky on our equities team that put this together. And whenever this happens, people want to question a company whether or not there's growth concerns and things like that. But Jensen, of course the CEO, this was pre planned and he actually went through and did this from mid June until
mid of last month. That actually correlated with obviously the drawdown that we saw with the stock because there was such a huge run up. I mean, it's still up close to like one hundred and fifty percent year to date, but of course it's still down from that June peak around nine percent, and still the S and P five hundred has been able to rally even without one of the biggest wings, but at a certain point it actually
eclipsed Microsoft and Apple and that market capitalization. But moving forward, there's actually supposed to be additional sales, so in Vidia's director is still supposed to sell about three million additional shares.
So that's kind of a question mark of whether or not, well we still continue to see the stock held back a little bit, even though we've seen it rally and come back from some of those lows that we saw earlier this summer, or will keep those gains in check, but of course I was talking to you all about this yesterday. But evercre actually made a call for chip makers and is more optimistic that we would see a rebound in the fourth quarter of this year.
Suggests for so many people watching Bloombog technology, it will be a familiar story. It is a classic in Silicon Valley wealth creation from stock compensation. You sell shares over time you get more money than you could ever have dreamed of. But there is a paragraph in the story that raises the question of whether or not the sales inspire confidence in the stock.
Do they inspire confidence or not?
Well, there's someone too that when it comes to portfolio managers that the reporters were speaking with, and Kim Mahoney was actually one of them at for Mahony Asset Management, and he was talking about sometimes you shouldn't read too much into it, say, for instance, Jensen was already pre planned. But a lot of times it's not just because of reasons of growth concerns about the company. Obviously, you were just mentioning earlier ed about how the CEO is talking
about this insane demand for the Blackwell chips. Of course, there was a lot of scrutiny in recent weeks because obviously the investors want the valuation of the company to justify those future earnings and the growth. But still those executive directors in the company, they sold about eleven million shares so far in twenty twenty four, and so to put that into context, that's the most since twenty twenty when you are excluding, of course different stock splits like
earlier this year and in twenty twenty one. But you do have some portfolio managers arguing it's not just because of growth concerns.
Ed Bloombergs just meant it brilliant as always, Thank you very much. Now it's launched ay for the Roundhill China Dragons ETF. It tracks an equal weighted basket of Chinese tech companies under the ticker drag Bloombergs. Isabel A had a story that hit the wire in the website in the last couple of hours.
What's the idea behind the CTF.
So this tracks a basket that Roundhill made. So it's five to ten Chinese companies that they can they qualified as those that impress, those that exhibit great economies of scale, competitive advantages, and really basically companies that they believe in. So they're five to ten stocks and for another are nine. These includes pdd Ali, Baba, may Twan, buid net Ease. And what sets this apart from the other ets out there that track Chinese linked stocks is that it's more targeted.
We have the biggest I shares one attracts some thirty. We have k Webcrane shares attracts some thirty or fifty. So this is just five to ten and that's what they say. You don't want those little companies diluting you're trying to exposure.
These are megacap tech names, in particular Isabelle. And the timing is kind of beautiful. It comes in line with everyone getting over excited in a fomo feel around Chinese stocks.
Was it always plans to come out. Now, that's the thing with ETFs.
You file for they filed earlier this year, you don't really know when it will come out. So they said that the timing couldn't have been better. But then they said they also really just make products when they see investor demand. And that actually is what caught my attention, because even if we all hear these kind of negative rhetoric around China, there are still investors who want China. Remember, there are two ways to look at China. It's too cheap, so let's buy it, or it's too cheap so let's
kind of stay away. And it's proving that the former is still kind of that their echo calls are kind of loud because for Roundhill to launch and ETF like this just really showcases the demand of clients. But for now it's trading today and it's really interesting. It's also cheaper than some of its peers. It's only at fifty nine basis points.
I guess it's also for us like an interesting data set here on the show, we often look at the NASA Golden Dragon Index as like a barometer sentiment towards China tech. How unique is this ets in the kind of landscape of products where they first are there more to come?
It's unique in the sense that it's round here. Round Hill's selection for now, they're only nine. They're only going to limit it to five to ten, and they can drop stocks that they think doesn't show economies of scale or solid fundamentals or competitive advantages. So that is kind of very interesting because if you look at the Bloomberg Magnificent seven Index, it only really tracks those magnificent seven stocks and a's that one hundred tracks all the big
tech stocks. So to an extent, some investors really just want those targeted focus You don't want this broad based index. You just want this little slice of the market.
Being backs as well. LEI, thanks for bringing it to us. Coming up, where is the bench money going? Funnily enough if you'll probably guess given the open AI News got the latest state to the pitch book analyst Carl Stamford, and we also dig into it all with the VC Dinis Shiker.
This is Bloomberg.
Poolside is a startup building AI software for programmers, who just raised five hundred million dollars from investors ahead of the company's plans to release an initial product.
And the round was led by Bane.
Capital Ventures and includes funds from DST Globals, Stepstone Groups, City Ventures, and HSBC Ventures, Poolside said in a statement yesterday. Now, as Bloomberg reported last month, the new financing gives a startup foundation of three billion dollars.
Venture deal making hobbled along at a slightly better pace than a year ago in dollar terms, but investors are getting more selective and cash went to just a handful of companies. Open AI's latest funded raising bodes more of the same to come for the current quarter and beyond. Let's bring in Carl Stanford from Pitchbook, who's been crunched that data, and I point out from the offset that the data to date does not include that open Ai round.
We can get to it, but summarize the pitch book data as of third quarter.
Right it does not include that open aideal. But what we've seen is that venture still continues to be a really slow market. When you look at exits and you look at fundraising, you can really see why that is. There's nothing coming out of the market right now. And some of the US during Q three there's about thirty seven and a half billion invested, which is lower than the quarter before, but that had a few large deals.
But there's nothing really exciting happening outside of AI in terms of investments being made.
Right now, Where is the excitement happening in AI?
From a geographical perspective.
Club right, it's happening in San Francisco, It's happening here in the US.
Right.
If you look at open AI, I think the deal that just close shows two things. One, it shows the incredible amount of capital that AI needs and the cost that these companies are incurring, and also shows the excitement
around own AI in the technology. Right, if you look at who is in that Nvidia, Microsoft, They Thrive Capital, soft Bank, you know, all of these all these investors are looking at this deal and this company has something that's going to be able to provide them huge returns moving down down the road, right, And that's how you know, many of these investors have looked at AI, you know, up and down the venture life cycle, and so that has definitely been the interest area of interest for investors,
you know, in the USN and globally up to this point.
So if we got on the basis that the data we're showing on the screen as of September thirtieth does not include the open AI round, how does it change the trajectory for twenty twenty four against prior years when we do take that round into account.
Yeah, right, I mean I think we can look at it and say, yeah, and obviously it is going to make twenty twenty four look much better. But if it's only one deal, it's not really capital available for the entire marketing. And I think something that something we've been saying with past quarters rounds of core Weave, Toropic, these are very exciting, interesting, you know, scaling companies, But that's not what the rest of the market is seeing.
Right.
Valuations in AI are forty percent higher than in other verticals, deal sizes are much larger. Obviously, six point six billion dollars is not a typical deal that many of these companies should expect anytime soon or ever. And so when you talk about the trajectory of the dollar value dollars going into the US world, the global venture market, I think that really needs to be taken into account.
What unplugs for the rest.
If you're not AI native, but you're AI adopting and you've got a decent run rate in terms of revenue, do we need more exits to be able to see the money come back in?
Yeah?
Right, I mean exits are still the kind of dam of the of vanter activity. When we look at distributions that are coming out of the market, we know that there has been very very little for the past two years. Even the IPOs of Q one and Q two did not We're not able to sustain the venture market. And so we take how large the AUM has grown for VC in the past few years. Then just consider that all of that is stuck private and LPs have no way to use that cash for more investments or to
recycle it back into venture. You can really start to see why there's such a slow market over the past few quarters and something we should expect for the coming quarters as well.
Kyle Stanfa Pitchfoot, lead VC research on list.
Me, thank you.
Let's got some more analysis from the horse's mouth. Someone who's in VC. Lux Capital general partner Diana Shacker, joins us. Now, Dina does not feel what you're seeing a tone of two hobs.
Why now you know it has in many ways a tale of two cities. But I don't think I would agree with the sentence that there's nothing exciting outside of AI, and at Lux we love to invest in the intersections. In fact, we just had our AI summit here in New York on Tuesday, and what you see is a lot of AI, but AI intersecting intersecting with life sciences, intersecting with physical intelligence, intersecting with health tech, even with
medic Caid care deliveries. So while I do think AI is very exciting, it's an area we've been investing in for quite some time. It's not necessarily the only area that we're seeing exciting investments these days.
That was the point when you launched a new fund, right, I remember all the things that I get excited about robotics, dare I say life sciences? But has it been an easy environment to cut checks in because you sometimes have to find willing partners who have the same level of excitement that you do in those fields.
Yes, these are all areas we are still excited in. And I think one way in which it's a tale of two cities is that you're seeing these these seasoned operators who are on their second or third company, who maybe building an AI or outside of AI, that are getting these very large megarounds, and then other companies that are struggling to raise those early dollars.
That being said, we.
Have companies across different stages and sectors that are continuing to raise. I think the big question, which Kyle pointed out, is really what the exit market looks like. And as we you know, we sat here two years ago Caroline talking about twenty twenty three being the year.
Twenty twenty four should be the year.
I think we're all looking to twenty twenty five to be the year where we start to see more of those exits and distributions.
Do you get that question and that pressure.
From the LPs for there to be exit opportunities?
You know, we are a deep tech fund, so we've always had long life cycles. We invest what we like to invest in the impossible and turn it into the inevitable. And so we have patient LPs who know that these companies take time, and we look for the generational large companies that turn into into very big outcomes.
Did any of those LPs want you to be in the open AI round?
Well, we'll see.
Well what's interesting is some of the nuances around that round A people are sitting up and seeing who's leading it, but they're also sitting up and saying, oh, they're not allowed to invest in competitors.
Is that usual?
Actually, when you invest in like a runway which you're in, would ultimately you not go out and reallocate to a competitor in that space?
I would say that is normal, but not every fund approach is that the same way. From our perspective, we certainly don't intentionally invest in competitive companies. We like to put our resources, our connections our network behind our investments. Oftentimes companies will evolve over time and eventually end up intersecting, and that can certainly happen, but we do try to be careful to put our eggs in a basket and really double down on our winners.
The something you mentioned a moment ago, Dina, that I think is probably true of whether you're in deep tech or in AI, in industrials or otherwise, which is the type of investor coming in is different. You see the very large mutual funds being a player or Nvidia comes in as like a strategic you're a sizeable venture firm, But is it difficult for you to get in on some rounds because of those new types of player?
You know, our current fund is over a billion.
We're investing in everything from incubation through pre ipo, and so we have ability to construct a portfolio across different stages. The job of any good VC, of course is to buy low and sell high, and so we're able to do that across the spectrum of these companies where we believe there's still a massive outcome, even investing.
At a later stage. We will do that and we have the ability to do that.
And we also have the ability to start companies ourselves. Companies in our portfolio like Evolutionary Scale, which is applying AI to life sciences that we were early into, or a life health which we were the first institutional capital in applying AI to the fertility space.
What about the companies that on as we say AI natives, you say, there's a lot of excitement in the areas of intersection, But how are some of the other companies in the older portfolios able to cope with this current environment?
Are they steering well?
Are they managing to ensure that they're cutting costs and dotting in on revenue growth?
Absolutely, And it's those two things, well three things, I would say. One, AI is a way of doing things. It's not AI for AI's sake, So hopefully it's enabling efficiency, it's enabling better accuracy, it's enabling.
Better profit margins.
And so every company needs to have an answer to that, not because it's what they need for fundraising, although it likely is, but also because it's what they need to survive in the world. This is a huge paradigm shift,
it's a seismic shift. So all of our companies are doing that, and some of the most exciting applications I've seen are actually in companies that are very much still human oriented companies like Waymark in our portfolio, which is leveraging community health workers to deliver healthcare and medicaid communities, but are using AI to help predict emergency room admissions and to help streamline the operations of healthcare providers.
Dina, you've been busy.
You're always a busy person, but you've also become an author. Lina Moe CEO, very quickly tell me about it.
Yes, Linamo's CEO brand new book just released last week. It's a story about a young girl who builds a robot to help shovel snow outside of our house, goes through the process of building a team raising money, and was inspired by my own journey as a parent trying to explain venture cap to a bunch of preschoolers, which, as it turns out, is just as hard as explaining to fully grown adults.
You know, founders are getting younger, but that young I don't know. Lux Capital General Partner Dina Shaiker, thank you very much.
Today's big take how global supply chains are the latest concern in the Ukraine Russia war. As US designed chips are finding their way inside Russia made missiles. For more Bloomberg Stephanie Baker, who joins US now. She's also the author of a new book, Punishing Putin, Inside the Global economic war to bring down Russia. Stephanie, you always tell stories with such depth and humanity. It's a difficult story
to read, to be honest. But what we bring to our audience now is the intricacies of what chips made by who are finding their way into certain Russian missiles.
Right.
So, if you remember, after the invasion, the US joined with its European allies and imposed sweeping export controls on Russia to deny the Russian military access to Western semiconductors and other technology. And they tighten those restrictions again starting last year, and there'd been various reports about citing trade data about components getting through, semiconductors getting through to Russia.
What we wanted to do was really drill down and go do a deep dive on one missile attack where Ukrainian investors had documented Western components by specific companies, as well as examining.
Their entire database.
And what we came up with was that there's one company whose components keep getting found and more. Our most frequently found on the battlefield, and that is analog devices. And we wanted to sort of put a human face on what was a sort of trade data story to show that actually Russia's very dependent on Western technology to guide its missiles missile attacks on Ukraine.
Stephanie, what was the response from Analog and also I suppose from the United States to the reporting.
Right, Well, Analog says they regard this as an illicit diversion of their products and they do not condone any of this trade. And what we tried to get into and the story was explaining the complex supply chain for semiconductors, that there's a lot of production happening in Southeast Asia. There are a lot of middlemen acting particularly through Hong Kong, using shell companies to do this trade. So it's been
very hard to crack down. This is not Analog selling directly to Russia, and the US has tried to enforce these export controls through the Commerce Department. That has proven difficult just because of the global nature of the supply chain and the many layers that semiconductors get traded through before actually reaching Russia.
Bloomberg Phony Baker who's in London. And as a reminder, the big take is titled Russian Missiles American Chips. Find it on the Bloomberg Terminal, find it on Bloomberg dot com.
It is a must read with detailed reporting, Caroline, it is.
Meanwhile, it's been detailed throughout. That does it for this edition of Bloomberg Technology. A lot of news when it comes to the private markets, the tech markets, the public markets.
As well ed.
Yeah, probably a historic day. We'll find out on that big Open AI round recap all the reporting on the podcast. You know where to find it on the Bloomberg Terminal as well as online on Apple, Spotify, and iHeart big shout out to the team in New York City and everyone here in San Francisco.
This is Bloomberg Technology.