In AI, we’re seeing some startups snag incredibly high valuations. It’s an obvious thing to say by now, but bears repeating as the examples keep piling up. Just two cases in point: Cognition is valued at $2 billion at six months old, while Lightspeed-backed Foundry last month came out of stealth with a $350 million valuation. 

Valuation is interesting both for its imprecision, and its knock-on effects: A high valuation garners media attention, and it’s really something to live up to for a startup, especially one that’s young. Theoretically, a high valuation is also unequivocally good news when it comes to attracting talent. 

Not so fast. My colleague Sharon Goldman and I published a story untangling an emerging phenomenon: that a high valuation can sometimes be a detriment, rather than an asset, when it comes to recruiting key AI talent. As Lightning AI CEO William Falcon said: 

“I don’t want to be in a situation where it’s hard to hire people,” he told Fortune, explaining that he wants to make sure the company’s revenue lines up with a potential valuation, thereby limiting the risk of an eventual “down round,” where employee equity shares could end up underwater. Today’s job candidates are smart about asking questions about a company’s financial future, he emphasized: “Every single hire asks me ‘What’s your valuation?’ ‘How much money do you make today?’ ‘How many customers do you have?’ ‘What’s your revenue plan?’” 

That’s not to say that a low valuation is the answer either, since that triggers different recruiting problems: “When the valuation is low…it may be tougher to convince a prospective employee that the value actually will go up in the future,” said Jeff Fluhr, Craft Ventures cofounder and partner via email.

“Valuations are promises, not just a number,” said Katelin Holloway, Seven Seven Six founding partner. 

This tension highlights the fevered search for a sweet spot, where everyone (prospective employees included) feels comfortable with the startup’s room-to-run. 

But, in the end, even the extent of a company’s potential comes down to a matter of perspective.

Because like beauty, valuation is in the eye of the beholder. 

Read the whole story here. 

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

- Enlaza Therapeutics, a La Jolla, Calif.-based developer of biological medicines designed for improved efficacy and safety in treating cancer and other diseases, raised $100 million in Series A funding. The Life Sciences group of J.P. Morgan Asset Management’s Private Capital division led the round and was joined by existing investors Frazier Life Sciences, Avalon Ventures, Lightspeed Venture Partners, Samsara BioCapital, and others.  

- AiDash, a San Jose, Calif.-based developer of software designed to make critical infrastructure processes more sustainable and climate resilient, raised $58.5 million in Series C funding. Lightsmith Group led the round and was joined by Duke Energy, Sabanci Ventures, Marubeni Corporation, SE Ventures, and others. 

- Elisity, a San Jose, Calif.-based developer of identity-based microsegmentation technology designed for defense against cyber threats, raised $37 million in Series B funding from Insight Partners. 

- Safebase, a San Francisco-based platform for cybersecurity reviews, raised $33 million in Series B funding. Touring Capital led the round and was joined by Zoom Ventures, NEA (New Enterprise Associates), Y Combinator, Comcast Ventures, Cerca Partners, Jim Alkove, chief trust officer at Salesforce, and others.

- Thintronics, a Berkeley, Calif.-based supplier of electronic machinery for datacenter, networking, and other applications, raised $23 million in Series A funding from Maverick Capital and Translink Capital.

- Vitestro, a Utrecht, The Netherlands-based developer of autonomous blood drawing technology, raised $22 million in funding. Sonder Capital and NYBC Ventures led the round and were joined by Invest-NL, the European Innovation Council Fund, and existing investors. 

- Urban Jungle, a London, U.K.-based home insurance provider to renters and homeowners, raised $14.4 million in funding from Sony Innovation Fund and other existing investors.

- Screenverse, a New York City-based network of digital billboards, urban panels, and other advertisable digital screens, raised $10.5 million in funding from Volition Capital.

- Backed, a Zug, Switzerland-based provider of services designed for financial institutions to tokenize their assets, raised $9.5 million in Series A funding. Gnosis led the round and was joined by Exor Seeds, Cyber Fund, Mindset Ventures, Stake Capital Ventures, Blockchain Founders Fund, Blue Bay Capital, and Nonce Classic.

- X10, a London, U.K.-based hybrid crypto exchange, raised $6.5 million in funding from Tioga Capital, Semantic Ventures, Cherry Ventures, Starkware, and others.

- Swap, a London, U.K.-based operating system for e-commerce businesses, raised $9 million in Series A funding. QED Investors led the round and was joined by Cherry Ventures, 9900 Capital, 2100 Ventures, and Ed Hallen.

- Seam, a San Francisco-based AI-powered platform that combines sales and marketing data and uses AI to analyze it, raised $5 million in seed funding. Bessemer Venture Partners led the round and was joined by Colle Capital, F7 Ventures, Ritual Capital, Umami Capital, and others. 

PRIVATE EQUITY

- Kain Capital acquired a minority stake in Essen Health Care, a Bronx, N.Y.-based independent health care provider. Financial terms were not disclosed.

- RoadSafe Traffic Systems, backed by Trilantic North America and Investcorp, acquired the pavement marking division of DeAngelo Contracting Services, a Hazleton, Pa.-based provider of maintenance services for transportation systems. Financial terms were not disclosed. 

- Special Aerospace Solutions, backed by Godspeed Capital Management acquired Willbrook Solutions, a Huntsville, Ala.-based analytical solutions provider to the Missile Defense Agency, Defense Intelligence Agency, NASA, Department of Defense, and commercial space customers. Financial terms were not disclosed.

- The Riverside Company acquired Arbeidsmiljø og Energiteknikk, a Kongsberg, Norway-based distributor of third-party consumables and laboratory/cleaning equipment. Financial terms were not disclosed. 

- WindRose Health Investors acquired a majority stake in SubjectWell, a Austin, Texas-based platform designed to connect patients with clinical trials or treatments. Financial terms were not disclosed. 

- Your Behavioral Health, a portfolio company of Comvest Partners, acquired Insight Treatment Programs, a Pasadena and Van Nuys, Calif.-based provider of outpatient mental health and addiction treatment for teenagers. Financial terms were not disclosed. 

EXITS

- Carlin Consumer Health acquired PENETREX, a San Diego, Calif.-based brand of joint and muscle care products, from Wellbeam Consumer Health, backed by American Pacific Group. Financial terms were not disclosed. 

OTHER

- Rippl acquired Kinto, a Boston, Mass.-based platform that provides care coaching services to those taking care of family members with dementia. Financial terms were not disclosed.

- Zuora (NYSE: ZUO) agreed to acquire Togai, a Wilmington, Del. and Tamil Nadu, India-based provider of pricing. metering, and rating software. Financial terms were not disclosed. 

IPOS

- Silvaco Group, a Santa Clara, Calif.-based developer of software designed to reduce time-to-market, and development and manufacturing costs for semiconductor and photonics companies, plans to raise up to $114 million in an offering of 6 million shares priced between $17 and $19 on the Nasdaq. The company posted $54 million in revenue for the year ending December 31, 2023. SMIK Trust and Iliya Pesic back the company.

PEOPLE

- Baird Capital, a Chicago, Ill.-based private equity and venture capital firm, hired Anthony Zhu as principal and Samuel Pollard as investment associate on their private equity team. Formerly, Zhu was with Madison Dearborn Partners and Pollard was with PwC.

- Littlejohn Capital, a Savannah, Ga.-based private equity firm, promoted Carl Schlotman to principal.

- Sofinnova Partners, a Lopndon, U.K., Paris, France, and Milan, Italy-based venture capital firm, promoted Anta Gkelou and Guillaume Baxter to partners.