Foundation Capital

OpenAI just hit a $157B valuation. But the companies that will define AI's future aren't yet built, according to General Partner Ashu Garg. In his latest B2BaCEO Newsletter, Ashu breaks down: → Why OpenAI's core economics don't work like traditional software → The challenges of being a research lab, platform, enterprise solution, and consumer product simultaneously → Where the most valuable AI companies (which don't exist yet) will emerge 📑 Read why startups targeting specific, costly problems in engineering, healthcare, legal, and sales will create more value than foundation model companies: https://lnkd.in/eKnSQvCE

Software is undergoing its most profound transformation yet—evolving from a tool that helps humans complete tasks to an autonomous worker that handles complex services. General Partner Joanne Chen and Partner Jaya Gupta explain how AI is ushering in a new System of Agents that mirrors human teams, with specialized agents collaborating, competing, and continuously learning from each other. They map out: → The three phases of software's evolution → How builders can tap into the $4.6T service-as-software opportunity → The top 50 startups making progress in this space 📑 Read more about why multiple agents working together achieve better results than one, and how this shift will fundamentally change enterprise software: https://lnkd.in/eKgawCrt

Cal Students and Alumni—Applications are now open for our 3rd cohort of Cal Build! Our goal is to help more Cal students and alumni start, build, and scale companies. If you're a current Cal student or Cal grad who has started an Enterprise company in the last 6 months or is thinking of starting a company in the next 3 months, please apply! 🗓️ Applications are due by November 29. Each cohort has 8 Cal builders. We have intimate in-person & virtual events, access to me and the rest of the Foundation Capital investment team, free office space, demo days with our broader VC & angel network, AWS/Azure/Open AI/Anthropic free credits, and a lot more. Learn more and apply here: https://lnkd.in/guyAagiu

Banks have struggled with two realities that seem at odds: low customer satisfaction and high service costs. Despite massive tech investments, these challenges persist. We're excited to share a new series by General Partner Charles Moldow and Partner Nico Stainfeld exploring how generative AI can reshape banking, starting with customer acquisition and onboarding: Part 1: Banking Reimagined An overview of how generative AI plugs into every phase of the consumer banking lifecycle—from acquisition through collections—and the strategic opportunities for both incumbents and startups. https://lnkd.in/ec_aH34T Part 2: Winning the First Impression A deep dive into how generative AI transforms those crucial first interactions between banks and customers, reducing costs and increasing conversion while fundamentally reimagining how financial relationships begin. https://lnkd.in/edDMN6zb Key findings:  → 80% of banking data is unstructured and largely untapped → 68% of customers abandon financial applications due to poor onboarding → Only 30% of bank customers receive personalized financial advice Stay tuned for more insights as we explore customer engagement and collections in the coming weeks.

While traditional AI has been valuable for banks in areas like credit scoring, fraud detection, and risk management—it struggles handling unstructured and less predictable scenarios. Essentially, the human elements of banking. Generative AI has the potential to make banking more efficient, more personalized, and ultimately, more human. It can process unstructured data, engage with customers in real time, and deliver personalized experiences that traditional AI cannot. Having invested in fintech for almost two decades, it’s easy to see the technological moment we’re in. Seizing it is far more difficult. Based on our research and conversations with 20 banking executives across business, compliance, product and AI research, we’re writing a series of essays that examines how generative AI can plug into every phase of the customer journey. Today, we’re releasing the high-level overview: https://lnkd.in/gMhU-nRv Soon, we’ll be analyzing everything from customer acquisition to onboarding, engagement, and collections. Stay tuned for more.

Last night we welcomed 150+ fintech leaders to our Fintech Funhouse at Money20/20. Between the magic tricks and fortune telling, our future’s looking bright (our fortune teller confirmed) 🔮 Thanks to all who joined us!

Silicon Valley Bank just released its latest edition of the Future of Fintech report, with a focus on how generative AI is creating huge opportunities for fintechs. Partner Nico Stainfeld is no stranger to AI’s impact on fintech. As featured in the report, he contributes the idea that technology isn’t a moat—defensibility has to come in more traditional ways like SWOT analysis, the ground game of selling, and sales cycles. Link to the report in the comments:

Late 2022: tech stocks had plunged 50%, layoffs were widespread, and the industry seemed lost. Then Stable Diffusion and ChatGPT launched, sparking widespread AI fervor. For Darius Lam this wasn't just another market cycle. "The opportunity isn't about turning $4B companies into $20B ones," he realized. "It's about building the next $100B companies." In our latest "AI in the Real World" episode, Darius unpacks this insight and shares his journey from leading computer vision at Cerebras to founding NEX, where he and his team are developing SOTA multimodal foundation models. He breaks down: * Why NEX is building their own models from scratch * The secret sauce behind NEX's approach to model development * Why vertical integration matters for AI products * Hard-won lessons every AI founder should know Our full conversation here: https://lnkd.in/gn3YzUKE

Congratulations to portfolio company Tennr on their $37 million Series B round 🎉 General Partner Joanne Chen was the lead investor in Tennr's Seed round just 17 months ago, and Foundation Capital is excited to double down. We’re also thrilled to welcome new investor Alex Kayyal and the Lightspeed team. Foundation Capital invests in exceptional early-stage founders solving tricky technical problems, and Trey Holterman, Diego Baugh, and Tyler Johnson are quintessential examples of this. We look forward to continuing our work with them during this next phase of growth.

The $10 billion lesson in startup focus 👇