Max Zeff, a TechCrunch reporter focusing on venture capital and AI, joins the hosts to unveil the intriguing intersection of AI and defense tech. They discuss the launch of Humba Ventures' $40 million fund dedicated to deep tech and defense, and how enterprise AI company Cohere is carving a unique niche. Additionally, they ponder the wisdom of IPOs in an election year and the increasing caution founders might need with investors tied to foreign entities. The conversation reveals the complexities reshaping the investment landscape.
The intersection of AI and defense tech is evident through Cohere's partnership with Palantir, highlighting AI firms' evolving approaches towards military applications.
Investors are increasingly wary of foreign backing, leading to a movement among venture capital firms to avoid ties to adversarial nations.
Deep dives
SoftBank's Massive Investment Announcement
SoftBank's CEO announced a staggering $100 billion investment aimed at creating 100,000 jobs in the U.S., a move reminiscent of a previous $50 billion commitment during Trump's first term. However, the exact metrics of this job creation remain unclear, raising questions about how such claims are substantiated. The conversation highlights skepticism about the effectiveness of these funding promises, particularly given past experiences with large investments. It suggests that reporters should commit to following up on these claims to ascertain their actual impact over time.
Growing Interest in Defense Tech Investments
Humba Ventures recently raised $40 million, signaling a significant increase in investment focus on defense and hard tech sectors. This new fund appears to be part of a larger trend characterized by smaller, specialized funds emerging to fill financing gaps in defense tech companies, which typically require substantial capital. The increasing geopolitical conflicts, particularly involving Ukraine and Israel, have made defense investments seem more appealing to venture capitalists. This surge is also partially driven by successful companies like Palantir and Anduril, leading to an influx of ex-employees starting their ventures.
Cohere's Secret Partnership with Palantir
Cohere, an enterprise AI company, has quietly formed a partnership with defense-oriented Palantir, marking a notable trend of AI firms collaborating with defense organizations. Despite many in the AI industry being cautious due to ethical concerns about working with the defense sector, Cohere's co-founder remains less apprehensive about the potential risks associated with AI in military applications. This partnership indicates a shift where even traditionally cautious AI firms may be recognizing the benefits of engaging with defense contracts. As various AI companies navigate the divide between public perception and private collaboration, this trend could redefine their operational frameworks.
Scrutiny on Foreign Investment in Startups
A movement has emerged among venture capital firms to avoid investments tied to foreign adversaries, particularly following the signing of a 'clean capital certification' by over 20 firms. This certification emphasizes a commitment to not engage with funding sources from countries like China, Iran, and Russia, due to fears of regulatory consequences and national security risks. The rising caution among founders reflects a broader concern within the startup ecosystem regarding foreign capital and its implications. As CFIUS (Committee on Foreign Investment in the United States) increases its scrutiny, the potential for stricter regulations could reshape how startups approach funding strategies.
This week, the Equity pod gang — which included newcomer Max Zeff, Margaux MacColl, and Kirsten Korosec — noticed an emerging trend: the worlds of AI and defense tech are colliding.
Listen to the full episode to hear about:
A new fund is in town. And surprise, surprise, Humba Ventures' $40 million fund is focused on deep tech and defense.
How enterprise AI startup Cohere is unlike all the other AI startups out there, and why they've been so quiet. Particularly in this new deal with Palantir.
Dig into the great philosophical question of 2024: is it dumb to IPO in an election year? And, perhaps more importantly, will this IPO dry spell continue in 2025?
Equity is TechCrunch’s flagship podcast, produced by Theresa Loconsolo, and posts every Wednesday and Friday. Subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. You also can follow Equity on X and Threads, at @EquityPod. For the full episode transcript, for those who prefer reading over listening, check out our full archive of episodes here.
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.
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