Deal of the Week
Lots of deals this week, I flag more than one as they are my deals so my choice here . And two are Berkeley founded companies. What an amazing ecosystem Berkeley is!
Parakeet
Parakeet Health, where we (Canvas) led a $10M Series A. Parakeet uses AI for multi-modal communications. This is amazing, as most providers are missing out on revenue opportunities by simply not replying, replying badly, or delivering a bad experience. It is also amazing for patients, as they can get what they need when they need it. This will really transform healthcare, as a huge burden in healthcare is administration, which also sees a lot of churn. Congrats to the Berkeley dream team of Eric and Aaron.
Also, a fun side note on this: people no longer seem to be as interested in drinking at events, meaning it can be hard to hit minimums. At a Parakeet customer event, we couldn’t hit the minimum, so we were left with a gap at the end of the night. The upshot was that, to hit that number, we ‘had’ to order a bottle of Mouton Rothschild (fancy, fancy wine!) and lobster. It’s tough out there!
Beltic
Beltic, where I invested from Courtyard Ventures in the pre-seed, have just announced their $7.3M Seed, led by Norwest.
Over two years ago, Isha and Mike were talking to me about how they wanted to focus the whole business on Know Your Agent (KYA). This was a big swing. At the time, agents were still in the early stages of adoption, so focusing here was really a massive move for an early-stage startup.
Agents are now in the vertical lift-off phase with Muse, Instinct and Dots — KYA will become critical. Isha (ex-head of global regulatory onboarding at Coinbase) and Mike (ex-founder in banking-as-a-service) are really the best founders for this problem. It is also amazing that they literally met on Mike’s first trip to move to SF and have built such a strong founder bond.
Daptic
Honourable mention to Daptic, where we just led the Series A (sadly not a Berkeley co). But for anyone building physical products, reach out to me — Daptic can help with your compliance needs.
Hardly Strictly Bluegrass
A lot of this newsletter is about measuring the ongoing success of Berkeley founders, but what about the great deeds done once you have made it?
Well, for anyone in SF this weekend, I really hope you got to go to Hardly Strictly Bluegrass (a free music festival in Golden Gate Park). It really is one of the best weekends and a time when the whole of San Francisco comes together for a fun-filled and free few days.
So why does this matter?! Well, its founder was a Berkeley grad. Warren Hellman did his undergrad at Berkeley and was also a finance legend who founded the massive private equity firm Hellman & Friedman ($115B AUM) and the VC fund Matrix Partners (~5B AUM). Both amazing firms.
I think funding an event like Hardly Strictly is such an amazing way to give back to a city you love. Who says private equity is all bad!?
The Great AI Dispersion
Where is the opportunity in this era? Many are talking about slowing down AI development, but it seems we are really in the AI dispersion era, where the technology is now so good.
An example would be this: [Note: this is a small sample size and the task is unclear. I have not vetted it, but I think it is directionally right.] In this, Mercor got CPA-qualified accountants to do tasks versus the various models, and it clearly shows that, since around the middle of last year, the capability of AI models has become better than accountants at many tasks.
I acknowledge the below is not business but consumer but i believe this indicates how early we are. Just 2.2% of households have a paid AI subscription.
So all of this, to me if you believe that the capability of AI is already here (I do!), but the adoption is not. That gap creates a monster opportunity to front-run the tsunami of change that is coming.
I think there are four obvious ways to play it:
Deploying AI: In a previous era, Ross Perot was a salesman at IBM and realised that companies were buying IBM mainframes but did not know how to actually deploy them. So he started Electronic Data Systems. I think the same thing is happening in AI. The models are here, but there is still a huge last-mile problem around deployment and actual value creation. There is a massive opportunity (that is already getting funded) to simply help enterprises use AI. Check this post out.
Use AI faster than your competitors: The second opportunity is less about selling AI and more about using it. Companies that adopt AI faster than their competitors should be able to fundamentally improve their margin structure. I think this is going to work particularly well in healthcare and other industries with huge amounts of administrative work. I continue to believe AI is the end of busy work!
AI-enabled roll-ups: Then there is the opportunity to buy existing businesses and use AI to fundamentally change their economics. Companies like Long Lake, an AI-enabled roll-up that just bought Amex’s travel business, are looking to use AI to improve margins. OpenAI and Anthropic are also building out these so-called ‘deploycos’, partnering with private equity firms to buy and transform businesses. Interesting post on the broader roll-up strategy.
Consumer: The above is mostly about businesses, but I think the same opportunity exists in consumer. I previously mentioned that AI dramatically improves the ability to understand, target and serve individual customers. So I do (unlike many other VCs) believe this is a great time to be building in consumer.
Go out there and close the dispersion gap!
State of the Market - a16z - these guys are really investing in their chart game.
Berkeley the Opensource Leader
We have previously touched on why open source matters to many players in the ecosystem, and also explored how Berkeley has had some real hits in open source recently. Today we may have another one.
Berkeley-founded Reflection AI (backed by Nvidia and many others) has released a new open-weights model that appears to be the strongest American-made open-source model yet. See below.
The US models in the chart are Inkling, from Berkeley-founded Thinking Machines, and Nemotron Ultra, from Nvidia. The rest are Chinese open-source models.
What is interesting is that Berkeley is increasingly showing up on both sides of this race: building the frontier models and helping push them into the open. As well as a theme we have touched on a lot in robotics.
Great to see Berkeley continuing to push the open-source boundaries. Congrats to Misha (Berkeley postdoc) and his many Berkeley teammates.
Quick Takes
Childish, yes. Did it make me chuckle, yes. OpenAI launched a new product called Dots, an AI personal agent. Elon Musk then reportedly spent $20M and bought the domain dot.com. That takes you to GrokBot, the xAI agent. The reality is, it is probably a worthwhile marketing move.
Summary by the #️⃣ & 💰:
4 Berkeley-founded companies funded
$31M of capital raised from the 28th September to 4th October
💡 Got any ideas or feedback on how to improve this weekly digest? Just hit reply.
Acquisitions
🎙️ Listen Labs. Acquisition $2B 🇺🇸 AI customer research platform. 💰 Salesforce
🐻 Alfred Wahlforss, Co-Founder & CEO. Year Abroad Article
Closed Rounds
🐻 Rob Kalman, Co-Founder & Chief Scientist. BA EECS Article
🦜 Parakeet Health. $10.0M Series A 🇺🇸 AI healthcare contact center. 💰 Canvas Ventures, Blank Space Ventures, StoryHouse Ventures
🐻 Aaron Lee & Eric Mao, Co-Founders. EECS Article
🛡️ Beltic. $7.3M Seed 🇺🇸 AI agent verification infrastructure. 💰 Norwest, Restive Ventures, Collide Capital
🐻 Isha Bhatnagar, Co-Founder & CEO. Product Management Article
🏗️ Quotr.ai. $4.0M Seed 🇺🇸 AI construction estimating platform. 💰 Llama Ventures
🐻 Hanyang Liu, Co-Founder & CEO. MA Architecture Article
Date Built By Berkeley Started | Companies Funded | Total Raised ($B) |
7/8/24 | 872 | 236.813 |
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