Fed on Hold
Week of March 24th, 2025
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STARTUPS
ROUNDS AND UNICORNS
The Week’s Biggest Funding Rounds: Nerdio Tops Slow Week Of Raises (Crunchbase, 5 minute read)
Nerdio (IT): Chicago-based Nerdio raised $500M in equity funding, bringing its valuation to $1.2B. It helps automate IT professionals' work and has over 15,000 customers in 50 countries
Latigo Biotherapeutics (Biotech): Latigo, based in Thousand Oaks, CA, raised $150M for nonopioid pain relief treatments. It focuses on Nav1.8 inhibitors and plans to advance its clinical development
BuildOps (Commercial Contracting): Santa Monica-based BuildOps raised $127M for its software platform that manages contracting projects in the $300B industry. It helps manage everything from scheduling to invoicing
Curevo (Biotech): Seattle-based Curevo raised $110M to advance its vaccine for shingles, a painful condition. The company focuses on preventing long-lasting nerve pain
Dataminr (Analytics): New York-based analytics company, secured $85M in funding despite a recent layoff. The company specializes in real-time event detection using AI and has nearly $200M in annual recurring revenue
INDUSTRY
The typical time between VC rounds is shrinking in SaaS and rising in fintech (Carta, 4 minute read)
The time between startup funding rounds has lengthened significantly in recent years. In Q4 2024, the median gap between a seed round and a Series A reached 774 days (2.1 years), an 84% increase from Q4 2021. The median interval between Series A and Series B grew even more, increasing 97% over the same period. Startups are raising capital less frequently due to tougher funding conditions, leading to cost-cutting and a focus on profitability
SaaS startups raise funds faster, with Series A and B gaps 15% and 26% shorter, respectively, than the median across all sectors
Fintech startups experience the longest waits, with a median of 971 days (2.7 years) between seed and Series A and 919 days (2.5 years) between Series A and B
Consumer and healthcare startups follow industry-wide trends, with median wait times of about 2.1 years for Series A and 2 years for Series B
Nvidia Continues Torrid AI Startup Investment Pace, Outstripping Microsoft And Google (Crunchbase, 4 minute read)
Nvidia has emerged as the dominant force in AI startup funding, significantly outpacing Microsoft and Google. In 2024, the chip giant participated in 26 funding rounds totaling $18.8 billion, more than quadrupling its 2023 total. This includes major investments in xAI ($6B), OpenAI ($6.6B), Wayve ($1.1B), and Scale AI ($1B)
Microsoft’s AI funding slowed, with nine deals totaling $10 billion, while Google’s corporate investment dropped significantly to just four deals worth $3.2 million
AI investment is being driven by the race for dominance in AI models, cloud computing, and semiconductor technology, with companies seeking to establish leadership
The AI industry is projected to exceed $1.8 trillion by 2030
ECONOMIC SNAPSHOT
Federal Reserve Starts 2025 By Keeping Rates Unchanged (Forbes, 4 minute read)
The Federal Reserve decided to keep the federal funds rate steady at 4.25% to 4.50%, citing solid economic growth, low unemployment, and persistent inflation. Despite this, concerns remain over slower GDP growth, inflation risks, and trade policy uncertainties. The Fed still anticipates two rate cuts in 2025, but to support the economy, it has slowed its quantitative tightening, reducing its monthly asset runoff from $25 billion to $5 billion
The central bank also revised its 2025 GDP growth forecast down to 1.7% from 2.1%, while raising its core inflation expectation to 2.8% from 2.5%
Inflation remains a concern, with core PCE inflation at 2.6% in January 2025, above the Fed’s 2% target
Investor concerns over trade and inflation have also impacted the stock market, with the S&P 500 down 3% year-to-date
With six more Fed meetings scheduled for 2025, investors currently expect the first rate cut in June, though shifting economic conditions may influence future policy decisions
Trump: 'I'd like to see the Fed lower interest rates' (Yahoo Finance, 6 minute read)
President Trump has once again urged the Federal Reserve to lower interest rates, his second request in five days, citing controlled inflation and declining grocery and energy prices. Treasury Secretary Scott Bessent echoed this sentiment, linking government layoffs to disinflation. The Fed, however, has held rates steady steady while adjusting its inflation outlook, citing uncertainty over Trump's planned tariffs. Fed Chair Jerome Powell acknowledged potential price hikes but deemed them possibly transitory
The Fed revised its inflation outlook higher and growth forecast lower, warning of trade policy uncertainties
Trump's April 2 tariffs will impact China, Canada, and Mexico; Powell expects price effects to be temporary
A new executive order expands White House oversight of independent agencies, though Powell reaffirmed Fed independence
Is Trump driving the US into a recession? – in charts (The Guardian, 6 minute read)
The US economy is showing signs of slowing after a strong performance in recent years, with concerns rising over a potential “Trumpcession.” Analysts point to declining business and consumer confidence, trade uncertainties, and inflation risks tied to Trump’s tariff policies as key factors. The Atlanta Fed estimates a 2% GDP contraction in Q1 2025, though this may be overstated due to a surge in gold imports. The US trade deficit hit $153.3B in January as businesses rushed to avoid tariffs
Despite Trump’s promise to cut costs, inflation rose unexpectedly in early 2025. The OECD increased its inflation forecast for next year from 2.1% to 2.8%, citing risks from Trump’s trade wars
The job market remains strong, with unemployment at 4.1%. Wage growth continues to outpace inflation, helping households recover lost purchasing power
Wall Street surged after Trump’s election on expectations of tax cuts but has since been volatile due to concerns over tariffs
Consumer spending dropped 0.2% in January, the biggest decline in four years, amid economic uncertainty
Economists forecast slowing US growth and increased inflation (Financial Times, 5 minute read)
The US economy is facing a slowdown amid growing uncertainty over Trump’s economic policies, with economists warning that his sweeping tariffs and institutional shake-ups could hamper growth and accelerate inflation. A survey of 49 economists forecasts that GDP growth will decline to 1.6% in 2025, down from 2.3% in December, while inflation is expected to rise to 2.8% by the end of 2025 due to Trump’s trade policies. The OECD has also cautioned that Trump’s trade war is taking a significant toll on the global economy, with growth forecasts cut for multiple G20 nations
The Fed is expected to hold interest rates steady in the near term, but analysts warn that policy uncertainty could complicate future decisions
In the tech world, Meta’s shift toward a more Trump-aligned stance, led by Republican lobbyist Joel Kaplan, is drawing scrutiny for its loosening of moderation policies and potential influence on the administration
As Trump’s policies reshape both domestic and international dynamics, the US economy faces increasing challenges that could impact growth, inflation, and geopolitical stability
Fed cuts US growth forecast as tariff fears increase (BBC, 2 minute read)
The Federal Reserve has cut its US growth forecast, warning that President Trump's tariffs are "clearly" driving up prices. While keeping interest rates unchanged at 4.3%, Fed Chair Jerome Powell acknowledged that tariffs are slowing growth and complicating efforts to stabilize inflation, which is now projected to reach 2.7% by year-end. The Fed expects GDP growth of 1.7% in 2024, down from its previous 2.1% forecast, and remains in "wait and see" mode as it monitors economic conditions
Trump has called for rate cuts, arguing that his policies will spur long-term growth despite short-term disruptions
Market uncertainty, fueled by trade tensions and regulatory shifts, has led to a 10% stock market sell-off since February
Though inflation has eased to 2.8%, concerns persist over rising consumer expectations, which could push prices higher
IMPACT & CLIMATE RESILIENCE
Were companies ever serious about DEI? (Vox, 4 minute read)
Diversity, equity, and inclusion (DEI) have evolved over the past 60 years, from civil rights-era initiatives to a widespread corporate practice, though recent political scrutiny, particularly under President Trump’s second term, has intensified debates around its role. Eric M. Ellis, CEO of Integrity Development, believes DEI efforts should focus on fostering belonging rather than blame. He notes that the perception of DEI has shifted from ensuring meritocracy to accusations of lowering standards, a misconception he challenges
Companies today respond to DEI in three ways: about one-third abandon it, another third pivot cautiously, and the remaining third stay committed
DEI must drive structural change rather than performative gestures like symbolic celebrations
As external rhetoric shifts, many companies (approximately 70%) are maintaining DEI internally while adapting their public messaging
IPO & EXITS
These Are The Fintech IPOs That Could Follow Klarna’s Debut (Crunchbase, 3 minute read)
With Klarna preparing for a public offering, attention turns to other venture-backed fintech startups that could follow suit. Among the most likely IPO candidates are Stripe and Chime, both U.S.-based companies. Stripe, the largest fintech fundraiser, has raised $6.5 billion and has a $91.5 billion valuation, but is not under pressure to go public. Chime, a digital bank, is further along the IPO path, having confidentially filed for an offering after raising $2.3 billion
Other notable fintechs on the IPO radar include crypto-related firms such as Circle, MoonPay, and Ripple
Additionally, international fintech companies like Australia’s Airwallex, and Indonesia’s Akulaku Group and Xendit, as well as the Philippines' Mynt, are also considered strong candidates for a future public offering
With Google’s $32B Bid For Wiz, Big Exits Are Finally Picking Up (Crunchbase, 3 minute read)
The sluggish pace of startup exits appears to be reversing, as recent weeks have seen a surge in high-profile acquisitions and IPO filings. The highlight is Google’s planned $32 billion acquisition of cloud security unicorn Wiz, which, if completed, would be the largest venture-backed private company acquisition in U.S. history
Google’s Wiz acquisition surpasses Meta’s $19 billion purchase of WhatsApp but faces regulatory scrutiny
Notable acquisitions include Scopely buying Niantic’s gaming business for $3.5 billion and ServiceNow acquiring Moveworks for $2.85 billion
PepsiCo announced a $1.95 billion acquisition of probiotic soda brand Poppi
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Happy reading,
AI8 Ventures’ Research & Investment Team
