🏗️ From Foundation to Function: Vertical AI Comes of Age

If 2023–24 were about one-model-to-rule-them-all hype, 2025 is proving the antithesis: bespoke models tuned for narrow, high-value tasks are bagging the biggest term sheets.

Vertical AI at Escape Velocity

• Harvey – $300 M Series E at a $5 B valuation to automate legal research, drafting and e-discovery for the Am Law 100. harvey.aitechcrunch.com
  

• Shield AI – $240 M strategic F-1 round valuing the defense autonomy startup at $5.3 B, as DoD procurement tilts toward software-defined air power. shield.ai
  

• Enveda Biosciences – $55 M to marry LLMs and metabolomics, pulling novel drug candidates from natural compounds. businesswire.com
  

• Halter – $100 M Series D for “smart-collar” livestock management, turning cows into edge-AI endpoints and making NZ’s newest unicorn. reuters.com

Why Specialization Beats Scale

1. Proprietary Data Moats – Vertical players ingest domain-specific, often private datasets (case law, flight telemetry, metabolite spectra) the big foundation models can’t legally or technically touch.
   

2. Regulatory Tailwinds – Industries like defense, healthcare and finance require traceability & compliance. Purpose-built models win because they bake governance into the stack.
   

3. Instant ROI – Automating a $1,000/hour lawyer or a $50M reconnaissance drone flight yields payback in weeks, not years—so customers stomach premium SaaS or usage fees.

Exit Outlook

Big consultancies (PwC × Harvey), primes (L3Harris × Shield AI) and pharma majors (Roche × Genesis) are already partnering or buying vertical AI to bolt onto legacy workflows. Expect 2026-27 to feature “vertical-AI roll-ups” akin to the early-cloud SaaS consolidation wave.

The Takeaway

The era of “one-size-fits-all” AI is giving way to a Cambrian explosion of purpose-built models. For founders: mastering a niche beats burning cash to chase GPT-scale. For investors: diligence now means understanding domain depth, not just model benchmarks.

P.S. - follow us on X for real time updates!

The Market Pulse

Yesterday’s Capital, Today’s Tactics: A Snapshot from June 25 – July 1

Exits are still inching forward—but in stealth mode. With Q2 M&A volume surging while VC and PE tread carefully, the smartest capital is picking its spots. Here's what moved the dial this week:

• PE & M&A – Quiet Volume, Big Names: Global M&A roared back in Q2, with $1.89 trillion in deals—up 30% from H1 2024—even as volume lagged, signaling fewer but larger transactions. Highlights include Charter Communications’ $34.5 billion acquisition of Cox and a proposed privatization of Toyota Industries. Private equity mirrored the trend: more capital, fewer “trophy” hunt deals—and a preference for WS-sized plays and secondaries (Axios).

• PE Strategy – Continuation Funds Everywhere: The sale of an asset to a continuation vehicle is no longer niche—it’s a go-to. Vista Equity raised a huge $5.6 b continuation fund for Cloud Software Group, and industry estimates show sponsor-led secondaries hitting a projected $75 b this year—triple Q1's pace. This structure is rapidly becoming PE’s firewall against public exit freezes (Axios)

• VC – Selective Big Rounds, Fed by AI & Fintech: Even as public markets remain cautious, the private side isn’t shutting off the tap. Kalshi secured a $185M Series C at a $2B valuation, as investors bet on the rise of regulated prediction markets. Meanwhile, across AI, biotech, and fintech, capital continues to flow into infrastructure-heavy plays—especially those with clear commercialization paths and deep technical moats. Mega-rounds ($100M+) are still getting done; they’re just reserved for operators with traction and timing (WSJ).

• Growth Equity & Secondaries – Liquidity in the Middle: Late-stage funds are actively unlocking private stakes ahead of public listings via secondary strategies. Scenic Management’s $150M fund targeting AI, robotics, and cybersecurity reflects growing LP demand for near-term liquidity without sacrificing long-term upside. In parallel, NAV loan appetite remains strong, with minority recap structures gaining traction as sponsors search for flexibility in holding periods and return timing (WSJ).

• Sector Highlights: Kalshi’s raise also signaled fintech and crypto-adjacent tools are back on radar—especially those tackling regulatory gray zones with institutional-grade polish. Meanwhile, secondaries and continuation deals are drawing greater attention from auditors and regulators alike, with pricing transparency becoming the next battleground in private markets (Cryptopolitan).

📌 TL;DR

• Capital: Still abundant.

• Strategy: Precision over scale.

• Exits: Bumpy but building.

• Key: Tactical instruments—continuations, secondaries, NAV credit—are dominating the playbook.

• VCs Double Down on AI: Venture investors are racing to capitalize on the AI boom. Case in point – Menlo Ventures is reportedly raising about $1.5B across new funds dedicated to AI investing. This follows a trend of VC firms retooling their strategies (and stockpiling dry powder) to back generative AI startups at all stages. It’s a top conversation this week as everyone from Sand Hill Road to Wall Street is eyeing where all that AI funding will flow next (WSJ).
  

• Mega Secondaries for PE: In private equity, an eye-catching move was Vista Equity Partners’ creation of a $5.6B single-asset continuation fund to keep control of its Cloud Software Group holding. This unprecedented secondary deal – effectively a $5+B bet on one portfolio company – highlights how PE firms are innovating on exits. The news is buzzing as it underscores a broader trend: with IPOs slow, firms are turning to large secondary sales and fund extensions to unlock liquidity for investors without fully exiting prized assets (Axios).
  

• China’s $50B Chip Fund: Geopolitics met venture news as China approved a new $50B state-backed fund (dubbed “Big Fund III”) to invest in semiconductor companies. This massive war chest, launched amid ongoing US tech export curbs, aims to bolster China’s domestic chip production. It’s a widely discussed highlight this week, reflecting how national strategy and tech investing intersect – and it signals big potential capital flows into China’s chip startups and growth-stage firms (Tom’s Hardware).
  

• IPO Market Stirs to Life: After a long slumber, the IPO market saw hopeful signs that made headlines. Not only is Shein (the e-commerce giant) moving toward a blockbuster IPO in Hong Kong, but even traditional companies are testing the waters – McGraw Hill (owned by PE firm Platinum) filed for a U.S. IPO, aiming to return to public markets. While only a few deals, their size and profile have industry watchers talking about a tentative reopening. It’s a highlight that suggests late-2023/2024’s IPO drought might be ending, albeit gradually and selectively (Reuters).
  

• Big Tech’s Heavy AI Spending: A striking data point circulating this week – Meta plans to spend around $70B on AI this year, and remarkably, rivals like Alphabet/Google, Amazon, and Microsoft are each investing even more. This jaw-dropping level of spend was top-of-mind in tech circles, as it vividly illustrates the arms race among the biggest players to dominate AI. For context, these sums dwarf what was spent on previous tech revolutions. The takeaway for readers: the AI competition isn’t just about cool demos – it’s also about giant checkbooks, which could drive more acquisitions, talent poaching, and partnership deals in the weeks ahead (WSJ).

Latest Fundraises from Major Firms (PE, VC, and Institutional Investors)

🚀 Venture Capital & Growth

• Counterpart Ventures raised a $132M third fund to continue backing early-stage startups while strengthening its CVC founder network (Counterpart).

• Sentinel Global, launched by ex-GIC tech head Jeremy Kranz, secured $213M for its debut enterprise tech-focused VC fund (AInvest).

• Sorenson Capital locked down $150M for its third fund, doubling down on early-stage security and enterprise software startups (Sorenson).

• Galaxy Ventures, the early-stage arm of Galaxy Digital, raised $175M for its inaugural fund focused on building the onchain economy (Galaxy).

💼 Private Equity & Credit

• Vista Equity Partners closed a $5.6B single-asset continuation fund to retain Cloud Software Group, backed by Coller Capital and other secondaries investors (Infor Capital).

• 26North Partners, the debut fund from Apollo co-founder Josh Harris, raised over $3B en route to a $4B target (Coinlive).

• Avance Investment Management, led by former Palladium Equity execs, brought in $880M for its second fund focused on lower middle-market PE (Alt-Assets Private Equity News).

• Ambienta, a sustainability-focused investor, raised ~$645M for a new small-cap fund targeting eco-conscious businesses across Europe (ESG Today).

Top Jobs

Venture Capital roles

Analyst at Clocktower Group (NYC)

Analyst at Tower Research Ventures (NYC)

Analyst at Hitachi Ventures (Boston)

Associate at Toyota Ventures (Los Altos)

Senior Associate at Founders Future (SF)

Growth Equity Roles

Associate at TCV (NYC)

Analyst at Morgan Stanley Growth (NYC)

Investor at Stripes (NYC)

Private Equity (Buyout) Roles

Associate at Ares (Los Angeles)

Analyst at StepStone (NYC)

CoS Roles

Chief of Staff at Clarium (NYC)

Chief of Staff to CEO, Influencer (NYC)

Chief of Staff at CookUnity (NYC, Austin)

Chief of Staff at Magma (SF)

Chief of Staff at JotPsych (NYC, DC)

Business Operations Roles

Founding BizOps Lead at Paraform (SF)

Director of Operations at Retirable (NY)

Strategy & Operations Manager at Fora (NYC)

Business Operations & Data Analytics at Decagon (SF)

Business Operations and Strategy at Notion (SF)

Interesting Podcasts from the past week

Podcasts:

• Legendary Consumer VC Predicts The Future Of AI Products

• How Jack Altman Hit 100x Growth With Uncapped: AI, VC, Founders

• Vinod Khosla | Predicting the Future

Your Feedback is appreciated!

Thank you for being a reader! Let us know if there’s a topic or area that you’d like us to explore and/or investigate. To do so, simply respond to this email!

Also, feel free to follow us on X for real-time updates!