AI Ignites VC Frenzy, Unpacking Shifting Founder Dreams & Investment Strategies | Aug 11, 2025

0:13Welcome everyone to the information's TITV. My name is Akash Pashrich. It is Monday August 11th and I am so excited for today's show. I gotta say, it is feeling like the dog days of summer right now, but we have got a busy, busy show planned for you today. We're gonna get to the NVIDIA and AMD news from over the weekend. We are also talking to Bain Capital Ventures' newest partners. They are both coming on the show. We're also gonna talk about one venture capitalist view that founders aren't dreaming anymore. I'm excited to get that take, but I wanna start off with a big story that we published this morning at The Information.

0:48You might think that all venture capitalists are off vacation in Europe right now, but the truth of the matter is that venture has never been busier because of the fact that AI has every investor on their toes. And I want to bring on our venture capital reporter, Natasha Mascarenas, and also John Sakota from Decibel to talk about this phenomenon. Natasha and John, welcome to TITV. It's great to have you here. Great to be here. Thanks for having me. So, Natasha, tell us about the story you wrote this morning. Yeah, listen, I've been reporting on venture capital for the better part of a decade, and it is definitely the busiest summer I've seen yet.

1:23So the story was pretty inspired by that. About a year ago, you would hear from venture capitalists, and they would tell you that it's a tale of two cities in fundraising right now. The best companies can raise and the others can't. Fast forward to this summer, there's a lot more companies that fit into that best category. And so we're seeing sort of unprecedented speed to write checks, unsolicited term sheets, and just a lot of pretty frenetic deal making in Silicon Valley. So that was my goal with this story was really to put some words to paper there. And so tell us about some of the examples you found.

1:56I mean, you know, these are stories of venture capitalists giving term sheets unsolicited to founders. I mean, tell us about some of the examples that you got to. Yeah, definitely. One example that I ran into pretty quickly was a company called Mercore. It helps companies like OpenAI and other AI startups work with contractors or find full-time employees. And I ran into an example where one of their lead investors, Felicis, preempted them with a$2 billion value term sheet about, you know, when the company was only two years old. Two billion, that's a funding round. Yes, a funding round. So the funding round valued the company at$2 billion, about 100 times its run rate, its revenue at the time.

2:39And at the same time, when I chatted with the CEO, Brendan Foody, he was saying that he's actually had to tell his investors to not send unsolicited term sheets. So even at this one example, it's a tale of two stories. They don't want it, but it does work sometimes. In other examples, you're seeing investors sort of look to court founders for six months or weeks before the company, they actually approach the company. And it all points towards a lot of investor excitement and trying to do work in stealth beside a company that's maybe ignoring your tax. So John, I mean, what happened to due diligence?

3:15What happened to that? Well, what I would say is AI is perhaps the biggest super cycle. It's a tectonic shift that we've seen. And I think it's a space that is hyper competitive. So I think you have people who are doing a lot of work up front. They're trying to research every single possible startup that's growing quickly. And then if they can find one that they think could be a category killer, they will try to preempt and get in. Because as Natasha has reported, the valuations go up incredibly quickly, incredibly fast. So if you don't get in early, it is incredibly difficult to get in at a reasonable price.

3:56John, I want to talk to you about, you know, your portfolio companies that must be going through this right now. We heard examples of, again, founders saying, just give us a second to breathe. I mean, we don't need the term sheet just yet. I mean, isn't it distracting for founders to try to build a company when you have to be so worried about, do I fundraise? Do I not fundraise? Do I, like, you know, how do I manage this? I'm really glad you're asking that question. Often when we launch a company, we might get somewhere between 50 to 100 inbound emails from investors. Now, that does not necessarily mean that you're going to get 50 to 100 term sheets.

4:30but certainly the demand is there. So if you do have a really promising company that could be a leader in this new tectonic shift, investors want to see if they can get in as quickly as possible. So it does very much feel like a frenzy. John, I want to get to the data that you guys collected in a second, but very quickly, Natasha, this idea of a preemptive deal or being preempted or getting an unsolicited offer. I mean, does that definition change depending on who you talk to definitely changes depending on who you talk to i mean there's many shades of it in some cases it's truly a classic preemption where an investor has done work on you shows up and offers you a term sheet at evaluation they think is fair in other cases it's a little sneakier than that i spoke to some investors who said that the word has lost all of its meaning the word being preemption and a lot of founders will say that they're getting preempted but in fact, they have been sliding over their financial information, doing coffee meetings, and sort of doing a fundraising without actually doing a fundraising.

5:35And so exactly like John said, 25 emails, 25 even verbal offers does not necessarily lead to 25 term sheets. So definitely digging into what the word means. So it's kind of just like, you know, you can walk on the street and say, oh, we were, it was unsolicited when really it was like, well, we actually had three coffees, you know, before we got the turkey. If you're giving your financial information away and you're taking investor meetings, you're fundraising, even if you're not saying you are. Yeah. John, your firm collects this interesting data set around dry powder. Tell us about what you found there.

6:09Yeah, for the past decade or so, in collaboration with the information, we have been tracking how much venture capital is available for startups. So as you might imagine, It's a relatively simple formula. It's the amount of capital that is raised, and that represents the dry powder. It's the amount of money that can be raised. And then obviously we deduct the investments. So dollars in minus dollars out is effectively the dry powder. In COVID, we saw a tremendous run up in dry powder. We saw record levels of fundraising. and it really peaked in 2023 on the back of what were incredibly strong fundraising years in 21 and 22.

6:51So we were at around 300 billion. Natasha and I had been studying this for many quarters now. The number hadn't really come down dramatically and we were wondering why that was the case. And anecdotally, it just didn't feel like the industry was that slow. So it just felt like at some point, the money's got to flow. And the reality is that really in the last six months and really leading up to this moment, we've seen a real unleashing now of the capital. It is at a run rate that is record-setting. I mean, the levels that we're at now are surpassing 2021 levels. On the flip side, we don't have strong fundraising.

7:33So this is one of the reasons why you see such a decline in dry powder is that you have incredibly strong levels of investment, but you have some of the weakest fundraising numbers that we've seen in a while. Why is that? Well, this has been relatively well known in the industry. We're now sitting on over a trillion dollars of illiquidity, so private assets, and the LPs have wanted to see more distribution. So we have not as much liquidity as we would like to have. Now, there's been very positive signs of this changing. So the Figma IPO is one example, the WIS acquisition by Google. These are examples of money coming back into the system, which of course, people would want to invest in AI.

8:17But until that part changes, the LPs have not had enough of their own dry powder to commit to venture capital. So on the one hand, we have the beginning of this incredible super cycle yeah but on the other hand we're on the tail end of what has been a a period of illiquidity and it just needs to catch up but natasha i mean you know we've talked on the show about right the ipo window it's not as open as some people would hope and yet you have these giant private funding rounds which are offering some kind of liquidity or at least the secondary market is getting hotter warmer you know so is that not helping at all with this it definitely is and i think it's actually you know a third factor i came across when doing this reporting was really seeing companies like google and meta and microsoft be willing to pay pretty high price tags for companies in the space and so before if you backed a small technical team that had maybe a few million dollars in revenue it would either be zero or a formal exit um now there's some downside risk protection and so that's why i think you're also seeing and i include this in my piece, investors just go earlier, not just more often, but earlier as well.

9:27So they don't have to wait for that huge exit. I mean, I know that Figma investors are super excited in this moment, but for everyone else, they're looking to a lot of different factors to get their money out of the market, even if it means, you know, not your classic headline grabbing acquisition or IPO. John, I want to come back to the pace of deal activity right now with respect to AI. Have venture firms changed their structure at all, or have they changed the way they play their game to adapt to this pace and move quicker? Well, I do think you're seeing the venture funds themselves supersize their funds in order to try to keep up with the capital-intensive nature of AI.

10:11So in some ways, we are in the beginning of a new tectonic shift, and it is one that requires quite a bit of capital. So I think there's been numbers reported. So they're raising more, right. Yeah, on average, AI tends to be a more unprofitable and more capital-intensive paradigm than other ones. So we see companies now burning maybe$5 for every dollar of revenue that they're reporting. These are numbers that were recently reported by Silicon Valley Bank. And anecdotally, a lot of companies are either at low gross margin or negative gross margin. So you see in some ways like a need to overcapitalize your company for the hope that you can get enough market share, enough volume in order to drive your margins back up.

10:56Right. I mean, more what I was trying to get at was, you know, at Decibel, for example, given that you have to move quicker to be competitive in this market. I mean, have you guys changed the structure of your firm at all insofar as, you know, maybe the associate is talking to the partner quicker or, you know, given that there's less time to do due diligence, you know, have you changed the way that you research companies? How have you adapted? Thank you for asking. Decibel specifically, in order to respond to these kinds of deal cycles, from the very beginning when we were founded, we did not actually have a hierarchical or layered system.

11:35And partially for this reason, I think in order for a firm to be able to compete at the speed of the market, it needs to be able to make decisions incredibly quickly. So in some ways, the flatter the organization, the more in sync an organization is, the easier it is to be able to meet founders where they are. I also think in some ways, specialization is a big part of that. If you are explaining to your partners everything that's going on in the market, it is incredibly difficult to keep up with the pace of the market. And so in some ways, by becoming a specialist, you can operate at a much faster speed because there's just a lot less explaining to do.

12:10Natasha, last question for you. What questions are you trying to answer now coming out of the story? Yeah, I mean, listen, I think what John said about venture capitalists sitting on less and less dry powder if this investment cadence continues for the foreseeable future is a huge storyline to prove out, right? I mean, are we going to see investors, investment firms shut down because they've overspent and they didn't have enough runway? I mean, investors all the time talk to startups about maintaining their runway and being smart about the way that they spend their money. But we're going to need to see venture capitalists do that as well.

12:46And that's what I'm watching. Great. Well, thank you, Natasha and John, both for coming on. John, thank you for sharing that data with us. It was great to have you both here. That is Natasha from The Information and John from Decibel. Okay, for our next story, before we get to our next guest, I want to talk about a big story out of NVIDIA and AMD from over the weekend. Now, you might remember last week, both companies got the green lights from the U.S. government to sell a version of their chips in China. But yesterday, the Financial Times reported that both companies will give the U.S. government a 15 % cut of their chip sales in China, which is quite the arrangement.

13:21You know, we were talking about this earlier this morning in the newsroom, and I think the most interesting part of this story is just how far NVIDIA is willing to go to make sure that developers in China don't actually move off its hardware. I mean, at this point, it's less about how much money they can make in China from those chip sales, and it's more about stopping developers from moving to use competing firms' chips. And so really, it is an unprecedented arrangement, and we look forward to seeing how that evolves. Now, for our next segment, Bain Capital Ventures has also had a busy summer.

13:52Over the past few months, they have led investments into healthcare companies, construction companies, legal tech companies, and the company also just named two new partners, Abby Myers and Ron Yasnick. They are both two rising stars in the land of venture capital, and I want to bring them on both to talk to us about what they've got planned for their new gigs. Abby and Ron, welcome to the show. Thanks for having us, Akash. Thank you so much, Akash. Great to be here. So you are the newest partners. How'd you guys celebrate? Well, I think Ron was headed to IC today, so I may have had the more fun celebration, but got together with some friends on KitKat this weekend.

14:29Okay. Ron, how was the IC? In a few hours, I'll let you know. There you go. All right. Well, look, let's talk about what you both are focused on. Abby, you have this interesting area. You are looking at AI, but you're also, you've invested largely in companies outside of AI. Tell us about what you've been working on. Yeah, I think AI is a really foundational and transformative technology, and I think it's touching everything we do. But I think I also spend a lot of time thinking through the questions of kind of what secular trends or market disruptions are happening that necessitate new technology.

15:05I think if we look at precedent kind of breakout tech companies, there's often some kind of technological advancement, but sometimes there isn't. And there is almost always some kind of market disruption, change in how we do things that requires a new technology. So I focus on Series B and beyond application software and AI investments. And I kind of try to take the lens of how our market is changing, how are secular trends impacting how we live and work, and what type of technology do we need to keep up. Right. And so what sectors specifically have you been focused on? recently i've been spending a good amount of time on technology for physical work and kind of the real world so one com yeah um maintain x is one company we recently doubled down on that i'm really excited about and what do they do their computerized maintenance management system so they put software into the hands of frontline workers that help them track work manage assets and it feeds back a lot of data to their broader organizations um i think to to the kind of point of secular trends.

16:09There is a tremendous labor shortage in the front line. Meanwhile, there's kind of supply chain pressures starting with COVID up until the reshoring, nearshoring that we're seeing right now. And I think there is kind of an unprecedented need for technology to optimize real world activities. So that area is something super exciting. Ron, you've been looking at stuff outside of AI as well, right? Yeah. So I'd say my two primary focus areas of Bain for the past couple of years have been one. I've been actually, you know, working to build out a practice in Israel. So Bain Capital has had a long history of investing in Israeli startups, starting over a decade ago with companies like Redis and Armis.

16:48And we really, you know, made a commitment to double down on that ecosystem again about a year or two ago. And it's been we've been really active out there, right? So we've now deployed 150 million plus dollars into the ecosystem over the last year focused, I'd say, mostly but not exclusively on security companies. The system in Israel has long produced incredible companies, incredible entrepreneurs with a core of security, given the kind of the military background, but also over time, not only security companies, and we invest in a handful of fintech companies, infrastructure software companies out there and are excited to double down on that ecosystem.

17:23The other team that I've been... Go ahead. I was going to ask you, You know, as it relates to the startup ecosystem in Israel, what has changed over the past year that you've noticed? I think really, I'll take it in a few different ways. One, over the past five to 10 years, we've seen Israeli founders dream bigger. I think if you look at the history of the Israeli ecosystem, it started off with a series of very technical teams solving very particular problems and then mostly getting acquired by larger American companies. And really over the past five, 10 years, Israeli entrepreneurs have become more commercial, more ambitious with the goal of building independent unicorn scale public companies in Israel.

18:03Right. And so we've started to see that secular trend over the past five, 10 years. And I think it's become more clear than ever over the past year or two. And why do you think, I mean, what do you attribute that to? Yeah, it's a good question. It's really a maturing ecosystem, right? I think, you know, at its core, one of the, at its core, Israel was, or one of the things that makes Israel strong is this military training that everyone goes through, right? Every single person in Israel, the next line item on the resume after high school is the army, right? And so Israelis from age 18 get trained in very complex, deep cybersecurity and infrastructure software problems in a very entrepreneurial, high-risk environment, right?

18:40And so a lot of these folks then go spin out from the army and go start startups. And so that's been the history of the ecosystem for a while. But as those startups started going better and better, and they're starting to become more capital in the ecosystem, Israeli entrepreneurs started to become more sophisticated in company-building methodologies, then a lot of times the second run and third run of these founders, they're ready to swing bigger, right? And so now I'd say actually the default pitch we see in Israel is we want to go aim for a big public company. So there's a lot of second and third time founders that are coming back.

19:11Exactly, exactly. And now there's second, third time founders, there's layers of angel investors and venture capital funds in the ecosystem that have been through the rounds a couple of times. There's layers of engineering management and financial management and product management in a way that is not dissimilar from Silicon Valley, right? An ecosystem that's progressed over the past couple of decades. And we're just seeing the quality be world-class. and so we're really excited to double down. Abby, I want to come back to you and I want to come back to this idea of what's interesting outside of AI right now.

19:41You had this investment in this company called WAP and I want you to tell us about what the company does and I also want to ask you about your due diligence process because I read online, one of the things you did for your due diligence was that you were talking to creators on Discord and Reddit as you were researching the company. I mean, we do that as reporters but I didn't know people do that as venture capitalists. So tell us about what that company is and how you found it. WAP is kind of like Shopify for the creator economy. The trend that we noticed was there was a new generation of digital entrepreneurs that were building online goods.

20:19So things like communities where their followers could interact, online courses, games, all of that. And they needed infrastructure to manage subscriptions and monetize their followings. And there was real demand to have infrastructure that let them monetize their following across all the ways they wanted to in one place. And so WAP kind of provides that digital commerce infrastructure to enable this new generation of creators. And so during the diligence process, I think that I realized that I just didn't fundamentally understand this kind of wave of creators, and I really wanted to. And so I thought the best way to get smart there was to put myself in the shoes of, say, a 20-year-old male day trading enthusiast and join those groups, kind of interact as one of the folks using the WAP platform.

21:13So spend a good amount of time in, call it their top 15, 20, as well as some just random picks across the platform to understand just how deeply and eagerly people were engaging. with this new type. What was the most surprising thing that you learned? I think just how active and just the communities were and just how engaged the community members were. I had no, I think, understanding of how huge this shift was. Bron, let's talk about your investments outside of AI or, I mean, adjacent to AI, I should say. You've also been paying attention to these, you know, traditional industries, stuff like insurance, homeowners association.

21:54Why have you been focused there? Yeah, I think one of the things that we're realizing more and more is that a lot of the opportunity for applying AI and a lot of enterprise value creation opportunity in AI comes from these more traditional service sectors, right? In places that traditionally Silicon Valley does not go, you know, does not hang out in as much, right? And so we're actually seeing a lot of incredible founders and surprisingly as well, technical talent be really, really interested in working on these really nichey, historically unsexy industries, right? And moving over to work on, like you're saying, homeowner associations, PEOs, property managers, insurance administration, 401k administration, all these other parts of the world, primarily because, one, there's a huge market opportunity there and there's an opportunity to put AI into these more traditional industries.

22:37But these are also really interesting technical and commercial problems. Right. You're hanging out in these other in these different in these with these people in places and areas that you don't run into in Silicon Valley. And so actually a lot of what we've seen our role as as Bain Capital is to be that bridge. One of the cool parts of being at Bain for the past couple of years is that Bain Capital actually, in many ways, primarily is a global asset manager. You're talking about Bain Capital, the Bain Capital, the asset management company, the private equity company, not Bain Capital Ventures here.

23:08Yeah, but we're all one large organization. And so at the end of the day, when you sit at Bain Capital Ventures, you are able to touch the rest of the world in a really meaningful way. And so a lot of times the insights that come from our private equity colleagues or our credit colleagues or our insurance colleagues that work at other funds at the firm inform then our investing that happens on the venture capital side. So how do you plug into that then as a venture team? So we spend a huge amount of time with our private equity teams going and assessing the AI opportunity in more traditional industries.

23:35Right. They will come to us and say, hey, we're looking at buying this big company. We're looking at assessing this new market. What do we do with AI here? right? And then we can go help them and actually introduce them to engineers to go plug into these companies. We sometimes say, hey, well, we actually think there's a market opportunity to go build a business that, you know, the businesses that we own can go buy, right? Or sometimes we look at a market end-to-end with our private equity colleagues and say, hey, actually, we think we can disrupt this, right? We think there's an opportunity to go build a net new player that's actually a more traditional service business in a more AI-needed way.

24:07And so what is AI actually doing then for these businesses? Yeah. So I guess there's a couple of things they might do. One is there's a lot of internal operational efficiency, right, that you can go, that AI can go really improve, right? And so, you know, there's many, many internal processes and operations in these companies that are, you know, historic, that are still live in, you know, 20 or 30 years ago. So like finance and stuff like that? Finance and operation, you know, many of these companies, many of these businesses at the end of the day are still running on backs, right? And so you have, you know, his text in, text out processes that are hyper legacy that that are a trivial task for an LLM.

24:47And and so I can completely transform these. But actually, in many ways, more interestingly to us, I can actually completely change the customer experience. Right. There's many of these industries, you know, whether again, TPAs, PEOs, homeowners associate, we kind of consider these like the three letter acronym industries. These kind of more more legacy service sectors where customers have gotten used to having, two-week turnaround times with 30 % inaccuracy rates and not getting a call back from their customer service rep. And so we see a huge opportunity now with AI to go completely transform not only the internal operations of these businesses, but also the customer experience and do it in a much more vertically integrated manner.

25:30To actually not only build tools and point solutions for these businesses, but also take on these markets end-to-end. Build the next generation law firm, build a next generation accounting firm, build the next and in a way that that was just not possible when you didn't have the type of automation. Yeah. Right. Well, look, Abby and Ron, it's you have two very interesting focus areas. I had never heard of WAP and I had also not really heard of AI, you know, automating some of these traditional industries, although that is something we've written about the information. And I'll link a few of those stories in the show notes.

26:01But thank you both of you for being here. Congratulations on your new appointment as partners. That is Abby and Ron, the newest partner at Bain Capital Ventures. Okay, our next guest is a friend of the show. Sam Lesson is a general partner at Slow Ventures. The company counts Robinhood, Airtable, Solana, and Postmates among its investments. He is also the husband of Jessica Lesson, our founder and editor-in-chief. Sam, welcome back to the show. Always happy to be back. So we were texting last night, okay? And one of the things that you seemed a little bit concerned about is this idea that founders aren't dreaming anymore.