A few minutes into our Zoom call, Andreessen Horowitz general partner Anish Acharya says something I’ll spend the next twenty-four hours thinking about.
“If it’s weird and working, it’s exactly where we want to invest…Weird products tend to win.”
Granted, I’m the ideal audience for this idea: I love weird things—theaters with pipe organs, Terry Gilliam, and Atlas Obscura—but the sentiment, beyond being quotable, gets at something essential about how Acharya is thinking about what it means to be a consumer investor in AI.
Acharya exclusively spoke to Term Sheet in advance of a16z’s Wednesday blog post drop outlining the firm’s strategy for investing in consumer AI.
I was intrigued. We talk about enterprise AI matter-of-factly—there’s a well-defined business problem and an intended solution thanks to AI. But when it comes to AI for consumers, it feels like you’re relying on animal spirits, since getting to mass adoption is so darn tough. It’s also still early for many AI startups, and we’re coming off a frothy 2023, in which startups in (or adjacent to) AI raised nearly $50 billion, according to data from Crunchbase.
As we get into 2024, here’s what Acharya and a16z are betting on: In a world powered by AI, three things will especially flourish—creativity, productivity, and connection. It’s all rooted in the idea we’re entering an “era of abundance.” Acharya’s idea is that for consumers there will be more of all sorts of things—more opportunities for consumers to produce art (he mentions Midjourney a few times), improved workflows that may ultimately trim workweeks, and increased opportunities for connection.
“My controversial take on this is that we all know there’s a need for human connection, but I think the human part is overstated,” he told me. “Look at the companion apps, where people are building deep relationships and friendships, and it’s text on a screen. There’s no illusion it’s not an AI, and yet the depth of relationships and engagement is super high. It’s hard for me to take anything from that other than that there’s a real connection there.”
It’s a characteristically optimistic take—predictable enough from a firm known for techno-optimism and, lately, its AI bullishness, memorable even in a hype cycle. (In his 2023 “Techno-Optimist Manifesto,” Marc Andreessen even went so far as to say that “any deceleration of AI will cost lives.”) Recent AI investments by a16z include generative AI startup Luma AI in January and Mistral AI’s $415 million Series A in December, in which the firm was the lead investor.
There’s a lot of money riding on expectations that we’re at the beginning of an AI “platform shift” similar to the move from desktop PCs to mobile devices a decade ago. Does Acharya see any consistent themes in the emergence and adoption of new technology? What’s most striking this time, he says, is not what’s the same, but what’s different
“The last major platform shift was mobile, and it had a lot of impact,” Acharya says. “Incumbents underestimated it. I think you now have executives who came up in that era and have learned the lessons of paying attention to platform shifts.”
On the call, Acharya is surprisingly direct about his and a16z’s perspective. Why not just invest quietly in these ideas? He’s telling me all this, so I forward the message.
“Look, all the work that we do is oriented towards founders,” Acharya said. (Translation: founders, he’s looking for you.) “I think that’s very important, but we’d love to get an optimistic message out to as many people as are willing to hear it.”
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Screendragon, a London, U.K. and Cork, Ireland-based workflow automation platform, raised $27 million in funding from Kennet Partners and Federated Hermes Private Equity.
- Adroit Trading Technologies, a Stamford, Conn.-based solutions provider for investment managers, raised $15 million in Series A funding from Centana Growth Partners.
- Shepherd, a San Francisco-based insurance tech platform for commercial construction, raised $13.5 million in Series A funding. Costanoa Ventures led the round and was joined by Intact Ventures, Era Ventures, Greenlight Re, and Spark Capital.
- Elemind, a Cambridge, Mass.-based developer of wearable neurotechnology designed to improve the user’s health, raised $12 million in seed funding from Village Global, LDV Partners, Embark Ventures, E14 Fund, and others.
- Compa, a Newport Beach, Calif.-based provider of market data for compensation teams, raised $10 million in Series A funding. Storm Ventures led the round and was joined by Penny Jar Capital, HR Tech Investments, NJP Ventures, Base10 Partners, and Acadian Ventures.
- finally, a Miami, Fla.-based platform accounting and finance automation platform, raised $10 million in funding. PeakSpan Capital led the round and was joined by Active Capital.
- Dexa, a New York City-based AI-powered search engine designed for users to search for specific parts of podcasts and videos, raised $6 million in seed funding. Abstract Ventures and The General Partnership led the round and were joined by Maple VC and others.
- Stellar Sleep, a San Francisco-based sleep therapy app for chronic insomnia, raised $6 million in seed funding. Initialized Capital led the round and was joined by Y Combinator, Lombardstreet Ventures, Switch Ventures, Moonfire Ventures, Scrum Ventures, 8vdx, and Goodwater.
- dataroomHQ, a New York City-based AI-powered data and metrics analysis platform, raised $3.5 million in funding. Oceans and Bling Capital led the round and was joined by Garuda Ventures, Cortical Ventures, and others.
- SUMA Wealth, a Los Angeles, Calif.-based set of financial tools designed specifically for young U.S. Latinos and their families, raised $2.2 million in seed funding. Radicle Impact led the round and was joined by Vamos Ventures and others.
- docStribute, a London, U.K.-based platform for the secure transfer of financial documents, raised £820,000 ($1 million) in pre-Series A funding from angel investors.
PRIVATE EQUITY
- Haveli Investments agreed to take ZeroFox (Nasdaq: ZFOX), a Baltimore, M.D.-based external security platform, private for approximately $350 million.
- Bounteous, a Chicago, Ill.-based digital experience consultancy, merged with Accolite, a Chicago, Ill.-based digital engineering , cloud, data, and AI services provider. Both companies are backed by New Mountain Capital.
- Chartis, backed by Audax Private Equity, acquired HealthScape Advisors, a Chicago, Ill.-based health care payer consulting firm. Financial terms were not disclosed.
- Hellman & Friedman and Valeas Capital Partners acquired a majority stake in Baker Tilly, a Chicago, Ill.-based advisory CPA firm. Financial terms were not disclosed.
- Inovalon, backed by 22C Capital and Nordic Capital, acquired VigiLanz, a Minneapolis, Minn.-based provider of clinical surveillance and patient safety technology. Financial terms were not disclosed.
- Salt Creek Capital acquired Pacific Coast Feather Cushion Company, a Pico Rivera, Calif.-based manufacturer of furniture cushion inserts. Financial terms were not disclosed.
- Steel River, backed by Cub Investments, acquired WHECO, a Richland, Wash.-based provider of crane and heavy-equipment repair, restoration, and inspection. Financial terms were not disclosed.
- TowerBrook Capital Partners agreed to acquire CBTS, a Cincinnati, Ohio-based IT solutions and services provider. Financial terms were not disclosed.
EXITS
- Clean Harbors (NYSE: CLH) agreed to acquire HEPACO, a Charlotte, N.C.-based provider of emergency response, remediation, industrial, marine, and waste services, from Gryphon Investors for $400 million.
- Braemont Capital acquired Loenbro, a Westminster, Colo.-based service provider to the infrastructure, data center, industrial, and energy markets, from Tailwind Capital.
IPOS
- Kyverna Therapeutics, an Emeryville, Calif.-based biotech company developing therapies for autoimmune diseases, now plans on raising $297 million in an offering of 14.5 million shares priced between $20 and $21. Bain Capital, Gilead Sciences, Northpond Ventures, RTW Investments, Vida Ventures, and Westlake BioPartners back the company.
FUNDS + FUNDS OF FUNDS
- Trinity Hunt Partners, a Dallas, Texas-based private equity firm, raised $700 million for its seventh fund focused on business, healthcare, and consumer services companies.
PEOPLE
- FM Capital, a Boulder, Colo.-based venture capital firm, hired Jake Sigal and Massimo Baldini as technology operating partners. Formerly, they were with Tome.
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