Lightspeed's $9 Billion AI Investment

0:00This is Jana Kramer from Wind Down with Jana Kramer. Hey, quick question for the parents listening right now. When's the last time your kid asked for something and you actually felt good saying yes? Because lately, a lot of families have been hearing the same thing. Can I have Lingo Kids, please? And here's the thing. Lingo Kids is the number one entertainment platform for young kids with more than 4 ,000 interactive games, songs, and shows, astronauts, wild animals, superheroes, dinosaurs. It's literally everything kids love all in one place. So when they ask for it, you can actually feel good saying yes.

0:33Download Lingo Kids for free and start exploring today. Or unlock even more amazing content with Lingo Kids Plus. And if you go with the yearly plan, you can save up to 60%. Search Lingo Kids in the App Store or Google Play. Lingo Kids. Everything kids love. What's going on, everyone? It's Bluff here. And we're driving through the States in the Bluffmobile. And the best thing that we can do is play our favorite casino-style games on SpinQuest. They have over a thousand games, including live dealer blackjack and craps with tons of slots and unlimited options. You can get a$30 coin pack for just$10 for new users.

1:09Sign up today. Go to SpinQuest.com right now. SpinQuest is a free to play social casino. Void where prohibited. Visit SpinQuest.com for more details. Lightspeed has just raised a record of$9 billion in fresh capital. So they are a VC company who invests in AI. And so they have just raised a staggering amount of money. Today, we're going to talk about what that means. Is there an AI bubble? It doesn't look like it yet anyways. And then what that means just for the future with AI. So before we end all that, Jayden, why don't you tell them about our school community? Yeah, every single week, Jamie and I record a video.

1:47We don't post anywhere else. It's only on our AI Hustle school community. And the idea is we share tutorials on how to grow and scale your business using AI tools. And we're basically showing what we're personally doing. We share, like we break down the numbers of how much money we're charging as AI consultants, how much revenue we're making from different AI side hustles, how much our main businesses are making from AI, what the costs are associated with it. Like it's all the stuff we don't post publicly. It's on the school community. We have over 60 videos and we make a new one every single week.

2:17this week we just recorded an amazing one about um a really cool ai tool so if you want to go check it out it's linked in the description it's 19 a month so we have a christmas special right now uh in the future we'll raise the price and so right now it is discounted to 19 a month if you get that price it will be locked in and it will never be raised on you so you go check it out in the description all right let's talk about what light speed is doing so this is absolutely insane um nine billion dollars this is the most money that light speed has ever been able to raise in a round. And I think it's especially incredible considering in 2021, when all of these VC funds were raising their last record breaking rounds, they put them into a ton of different companies and the market sort of crashed, right?

3:01Like the valuations were way too high. The market was way too frothy. It was kind of the peak ZERP era. There was no interest rates. They were able to get really cheap money. They gave money to startups at huge valuations. And then those valuations never panned out. The market got a lot tougher. A lot of those companies, most of them, a ton of them went bankrupt. And so all of these investors, well, you know, these big VC firms invested in a ton of those companies lost a lot of money. And Lightspeed was one of them, right? Like Lightspeed among everybody else put a lot of money in and saw the market really, really go through a hard phase there.

3:33So what's amazing is that they've been able to raise this$9 billion. And basically their saving grace, what pulled them out of the 2021 death spiral was of course, the AI boom, everything that is happening with AI. Something that's interesting is a few of the companies that they invested in have IPO'd. So Rubrik, Netscope, and Navon, all three of those companies that they have invested in, IPO'd, which gave them fresh capital, also gave them the ability to go back to their LPs, GPs, right? They're investors who give them money and say, look, we invested in these companies, they IPO'd, we made a ton of money off of those.

4:06They could show those returns. And then they're like, look, we're just going to invest in all the hottest AI startups if you want in, come through us. And so this that we have the situation today where, yeah, they've been able to raise all this money. It's crazy. Yeah. So they have claimed to have backed 165 different AI native companies, including Anthropic, XAI, Databricks, Mistral, Glean, Abridge and Skilled AI. So they already are pretty heavily invested in AI. And it seems like they're positioning themselves in the future to continue to be an AI predominant company. So I think that's smart on their part.

4:44And then what about this whole AI bubble everyone's talking about? To me, this doesn't support that idea, but maybe it does. What are your thoughts on that, Jayden? I mean, it could still be an AI bubble where everyone's just dumping$9 billion in and they're going to put the money in. But one thing I will say that's interesting about a lot of these investment, these VC funds, is that they're typically over five to 10 years, the investments that they want them to play out. So if they were able to raise$9 billion today, they invest in those companies, and they're not expected to give the capital back to their investors for five to 10 years.

5:19Meaning, like, yes, it's maybe a quote unquote, AI bubble, but they're going to have that money for the next, I mean, they got to get it kind of in in the next four to five years. So it's Probably they'll get a lot of it done sooner than later. But basically, money is going to be moving for quite a while. And that funding should help companies for quite a while. So it basically delays the whole AI bubble is bursting tomorrow because a lot of this money gets deployed. And these companies then have funds for years to go and build out their products, theoretically. Or if they're really crazy, they might spend all their money in 12 months and try to raise another round.

5:55So these aggressive companies, I mean, you look at Anthropic, and sometimes they're raising around every three months, it feels like. So it depends. One thing that I do want to say that is interesting about this whole story, though, is that they've announced like their headline companies like, wow, we invested in some companies in the IPO. These are companies that I don't think are household names. I don't know if most people have ever heard of Rubric or if they've ever heard of, you know, Netscope or if they've ever heard of Navon. All of those have, you know, IPO and they're kind of like doing things.

6:29I think Navon, their IPO went down 20 % after they had a really sneaky kind of SEC shutdown workaround in order to get their stock listed out there in October. And I hope their company does great in the future. But just getting onto the public markets offered a lot of liquidity for their early investors. But I don't know if a lot of people have heard of those companies. And so the thing that I think is funny is that Lightspeed, they're like, look, we invested in 165 companies. a lot of them you probably haven't ever heard of most of you probably haven't heard of but i like how they highlight including anthropic xai databricks mistral glean and the funny thing about that is what you typically see is um companies like anthropic they do like tons of rounds right like like i mentioned as a joke it feels like they're they're raising every three months what happens with a lot of these firms i feel like is uh they'll invest in a lot of like early stage bets that they hope are going to be like these they're basically like the the moon shot bets, like Rubrik, Netscope, and Navon, where they hope the IPO and they're going to make an insane amount of money someday.

7:32But they also know that no one's ever heard of them. And so if they go to like LPs and GPs and are like, hey, we invested in these random companies you've never heard of and they did pretty well. So it seems like less alluring than when they're like, we invested in Anthropic. So what's funny is they actually typically what I see is they are investing in later rounds of Anthropic. They're investing in like, Anthropic's already successful and maybe they're going to do this massive, you know, multi-billion dollar round today. They're just going to go get like a little piece of the multi-billion dollar round now.

8:00I swear they do it just like and throw the logo on their website. Like we invested in Anthropic and like, yes, Anthropic is a stable company. It keeps growing, but you don't see Anthropic like 100Xing their valuation every year. Like, yeah, it's growing fast. Yeah, it's a big player, but you're going to get the 100X from one of these smaller companies. Anyways, it's just a funny strategy. I swear they're just trying to collect logos on their homepage with those investments. No, I mean, that's a smart play. I never considered that, but I think you're spot on. I think that's really interesting. So back to the AI bubble, you're basically saying if there continues to be investment in AI, the AI companies won't run out of money, and then the bubble will just continue to grow.

8:41So at this point, if there's like a$9 billion, if that's getting invested, it's going to prevent that bubble from bursting anytime soon. Is that kind of what you're saying in theory? Yeah. And I mean, like, yes, some of this money is going to like huge companies that gobble it up very fast. For example, Lightspeed wrote a$1 billion check to Anthropic. They co-led its$13 billion round in September. But guys, like September, do you guys know what Anthropic's valuation is? It's astronomical. So putting a billion dollars in a couple of months ago feels like Lightspeed was collecting a logo. I mean, that's just me.

9:18I don't know. Some people will say I'm crazy or whatever. But one thing that I will say is really interesting and very smart. Part of this$9 billion they've raised, so they're spreading this across six different funds. One of those is$3.3 billion that they've dedicated to follow on investment. So basically, the companies that they have invested in, they're their fastest growing companies. To basically ensure that those companies are winners and to double down on them, they've allocated$3.3 billion to do additional follow-on investments. Actually, this is a smart strategy for a couple different reasons.

9:49Number one, because they've obviously invested in the company before, so they want it to keep going. It's a winner. They know they picked a winner, so they've validated it. They'll keep it going. But also, in order to keep the company growing, if they're allocating a large amount of money to follow-on rounds, that makes it really easy for other companies to come in and invest. They're like, look, Lightspeed has invested in that company. It's growing really well. Lightspeed has allocated a ton of money to keep investing in that company. Theoretically, yeah, we'll jump in and put some money into it because we know most likely this one's going to keep growing.

10:21So I think it's a good strategy to keep your current investments growing. And yeah, I think they're doing good. I will say they're not the only company or the only VC firm that has raised some massive rounds. Founder Fund earlier this year did a$4.6 billion growth fund. General Catalyst did an$8 billion one. Andresen Horowitz did a$7.2 billion one. But General Catalyst and Andresen Horowitz, both of those were last year, 2024. So I think this is really exciting. We're seeing growth. And it's kind of interesting, though. It feels like the biggest VC funds are raising these big, huge rounds. And the biggest AI companies like Anthropic are doing these$13 billion valuation rounds.

11:01And it feels like some of the smaller companies are struggling and some of the smaller VC firms are also struggling to get money. So it's like people just want to put their money into the biggest VC funds and the biggest AI companies, you're going to see smaller returns doing that. So maybe people are less interested in taking moonshots. They're worried the market's too competitive and it's hard to compete with the big players. This is kind of what we're seeing on the ground right now. Cool. Thanks. Thanks for the breakdown, Jen. Hey, if you got any value out of this episode, we would really appreciate a rating or review wherever you're listening.

11:32Those really help our podcast reach more people. And then be sure to check out AI Hustle if you want to learn how to make money on the side or grow your business using AI. We'd really love to have you. Thanks for listening and we'll see you next time. This is Jana Kramer from Wind Down with Jana Kramer. Hey, quick question for the parents listening right now. When's the last time your kid asked for something and you actually felt good saying yes? Because lately a lot of families have been hearing the same thing. Can I have lingo kids, please? And here's the thing. Lingo Kids is the number one entertainment platform for young kids with more than 4 ,000 interactive games, songs, and shows, astronauts, wild animals, superheroes, dinosaurs.

12:11It's literally everything kids love all in one place. So when they ask for it, you can actually feel good saying yes. Download Lingo Kids for free and start exploring today or unlock even more amazing content with Lingo Kids Plus. And if you go with the yearly plan, you can save up to 60%. Search Lingo Kids in the App Store or Google Play. Lingo Kids, everything kids love. Whether it's slots or live dealers, SpinQuest.com has the fun and action you're looking for with SpinQuest exclusives, blackjack, roulette, baccarat, and even live dice with craps and bubble craps. The games never stop, so you don't have to.

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