TheChek News Flow

SAN FRANCISCO (Reuters) - Silicon Valley venture capital firm Andreessen Horowitz is in talks to lead an outsized early stage funding round of former OpenAI chief technology officer Mira Murati's startup, according to four sources familiar with the matter.

The startup, named Thinking Machines Lab, could be valued at $10 billion in the round, sources said, making it one of the most valuable AI startups in the world, despite only launching in February. The company, which has no revenue or products yet, is the latest entrant into the crowded space of companies building generative AI models. Thinking Machines has said it wants to build artificial intelligence systems that are safer, more reliable and aimed at a broader number of applications than rivals.

Reuters couldn't learn how much Andreessen Horowitz is in talks to invest in this round. Business Insider reported earlier this week the final amount of the entire round could be close to $2 billion. Another VC heavyweight, Sequoia Capital, is also in talks to join the funding round, another source said.

Thinking Machines Lab declined to comment. Andreessen Horowitz and Sequoia did not immediately respond to requests for comment.

The reception shows that investor enthusiasm toward new startups in AI remains extremely high, despite some questions about tech industry spending. An initial round of this size is not unprecedented: In September, former OpenAI chief scientist Ilya Sutskever raised $1 billion based on his reputation in the field.

Andreessen Horowitz, known as A16z, has made big bets in AI, backing competitors to AI heavyweight OpenAI. It has participated in large funding rounds for AI model startups including Elon Musk's xAI, Sutskever's Safe Superintelligence and France-based Mistral. It is currently raising a $20 billion megafund dedicated to later-stage investments in AI companies. If successfully raised, it would be the largest fund in the firm's history.

Murati announced Thinking Machines Lab in February with a team of around 30 leading AI researchers and engineers, two-thirds of whom were former OpenAI employees, showing Murati's ability to poach her previous employer's top talent. Since then, other former prominent OpenAI employees have joined Thinking Machines as advisers, including OpenAI's former chief research officer, Bob McGrew, and the lead researcher for many of OpenAI's flagship AI models, Alec Radford.

At OpenAI, Murati spent over six years spearheading transformative projects like ChatGPT and DALL-E, and was a key figure in OpenAI's multibillion-dollar partnership with Microsoft, its largest financial backer. She frequently appeared alongside OpenAI CEO Sam Altman as the public face of the ChatGPT maker.

Her abrupt resignation in September last year was part of a slew of high-profile exits from OpenAI, and she joined a growing list of former OpenAI executives launching rival startups, such as Dario Amodei's Anthropic and Sutskever's Safe Superintelligence.

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Start-up raises $2bn, underscoring investors’ keen appetite for bankrolling AI groups despite US economic tumult

OpenAI co-founder Ilya Sutskever has raised $2bn for his artificial intelligence start-up in a deal which values the year-old company at $32bn though it currently has no product.

Sutskever, who left OpenAI last year after a failed coup against chief executive Sam Altman, launched Safe Superintelligence last June with Daniel Gross, who led Apple’s AI efforts, and Daniel Levy, an AI researcher.

The funding round underscores investors’ keen appetite for bankrolling AI start-ups led by prominent researchers or talented engineers. That appetite shows little sign of diminishing, even against the backdrop of economic tumult in the US.

Prominent venture capital firms participated in the latest fundraising, including Greenoaks — which led the round with $500mn — as well as Lightspeed Venture Partners and Andreessen Horowitz, said multiple people familiar with the matter. SSI last raised $1bn at a $5bn valuation in September.

SSI has set out to create AI models that are dramatically more powerful and more intelligent than current cutting-edge models from rivals such as OpenAI, Anthropic, and Google. It has offices in Palo Alto, California, and Tel Aviv, Israel.

The company has given few details about how it intends to beat those better-funded rivals, but Sutskever told the Financial Times last year that he and the team had “identified a new mountain to climb that’s a bit different from what I was working on previously”.

The group has been tight-lipped even with its investors, said multiple familiar people, however, three people close to the company said it was working on unique ways of developing and scaling AI models.

Currently, large language models can synthesise and regurgitate data. While they are improving their ability to provide considered answers and perform chains of tasks, they have not been able to surpass human intelligence. People close to the company said SSI is focused on this advancement.

Sutskever co-founded OpenAI and served as the San Francisco group’s chief scientist when it launched AI models and products, including chatbot ChatGPT, which kicked off the recent AI investment boom.

He left OpenAI in May and his team — which was focused on “alignment”, ensuring that AI systems that surpass human intelligence will act in the human interest — was also disbanded.

Former colleague and ex-OpenAI chief technology officer Mira Murati has also launched an artificial intelligence start-up called Thinking Machines Lab in February. The product and research organisation aims to make “AI systems more widely understood, customisable and generally capable”. It is reportedly raising a similar-sized round.

SSI declined to comment.

10-year US government bond yield rose most this week since 2001

Treasuries dropped on Friday in volatile trading, as market participants warned of growing strains in the $29tn market for US government debt.

The 10-year Treasury yield climbed as much as 0.19 percentage points to 4.58 per cent on Friday, amid a deepening slump for an asset traditionally considered the global financial system’s premier haven.

The yield later reversed some of those gains to trade at 4.48 per cent after Boston Fed President Susan Collins told the Financial Times the US central bank “would absolutely be prepared” to deploy its firepower to stabilise financial markets should conditions become disorderly.

President Donald Trump’s erratic tariff policies have shaken investors’ faith in US policymaking and the economy, sparking an exodus from American assets. The 10-year yield rose almost 0.5 percentage points this week, the biggest rise since 2001, according to Bloomberg data.

While Trump backed down from his so-called reciprocal tariffs on non-retaliating countries earlier this week — agreeing to a 90-day hiatus for most major US trading partners — he placed steeper levies on Chinese imports.

“There is real pressure across the globe to sell Treasuries and corporate bonds if you are a foreign holder,” said Peter Tchir, head of US macro strategy at Academy Securities. “There is a real global concern that they don’t know where Trump is going.”

“We are concerned because the movements you see point to something else other than a normal sell-off,” said a European bank executive in prime services, a division that facilitates leveraged trading for firms including proprietary traders and hedge funds. “They point to a complete loss of faith in the strongest bond market in the world.”

Traders said poor liquidity — the ease with which investors can buy and sell Treasuries without moving prices — was exacerbating market moves.

Analysts at JPMorgan said market depth, a measure of the market’s ability to absorb large trades without significant shifts in price, had significantly worsened this week, meaning even small trades were moving yields significantly. 

As he travelled to his Mar-a-Lago resort on Friday, Trump said: “The bond market’s going good. It had a little moment, but I solved that problem very quickly.”

When asked to what extent the bond market factored into his 90-day pause of reciprocal tariffs to non-retaliating countries, the president suggested it did not, despite saying so earlier in the week. “I want to put the country in an unbelievable economic position. Which is where we should be,” he said.

The head of Treasury trading at a major US bond manager said liquidity was “not great today” and explained that “market depth was running 80 per cent below normal averages” on Friday.

“If a stiff breeze blew through the Treasury market today, rates would move a quarter point,” added Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott.

Friday’s Treasury volatility was accompanied by a drop in the dollar.

A gauge of the currency’s strength against major peers fell as much as 1.8 per cent on Friday. Sterling, the Japanese yen and the Swiss franc all made significant gains.

Trump said of the dollar: “We’re the currency of choice. We’re always going to be . . . I think the dollar is tremendous.”

A global trade war could mean higher prices for some models on both sides of the Atlantic

Motorists looking to buy a luxury car face paying thousands more as the global tariff war drives up the cost of prestigious vehicles.

For American drivers, some of the Ferrari cars built in Maranello, Italy, have already become 10 per cent more expensive after Donald Trump imposed higher tariffs against all foreign-made cars. 

The concern for luxury-car enthusiasts in the UK and worldwide is that a Rolls-Royce or an Aston Martin could soon become far more expensive to buy if the global trade war is not brought to an end.

Scott Sherwood, an independent analyst of supercars and luxury car brands, said prices of high-end marques will rise for consumers outside of the US since car manufacturers will try to spread the financial hit across their entire market and customer base.

“For customers, it’s inevitably going to lead to higher prices. There is a very high probability of job losses on both sides of the Atlantic,” Sherwood added.

This week, the US president announced a 90-day pause on the so-called “reciprocal” tariffs against its trading partners, with the exception of China. But Trump’s 25 per cent levy on imports of all foreign cars remains in place except for a few exemptions made for Canada and Mexico, as well as for vehicles over the age of 25 years.

Britain’s car industry is heavily reliant on European exports but it is still exposed to the tariffs since around one in six of the cars shipped goes to the US — and it is the largest market for high-end brands such as Jaguar Land Rover, Bentley and McLaren. 

The impact for the luxury car segment has been immediate as JLR suspended all shipments of its cars to the US for a month, while Ferrari announced a 10 per cent increase in prices for some of its models. Aston Martin has also said it wants to pass on some of the tariff cost to consumers. 

Another UK brand, Morgan Motor, plans to pass on about half of the tariff costs to US consumers, meaning its $85,000 Plus Four model would cost 10 per cent more.

According to the Institute for Public Policy Research, more than 25,000 direct jobs in the UK car manufacturing industry could be at risk if exports to America fall.  

Luxury brands have already been taking measures ahead of the tariffs to minimise their impact but the damage will depend on how much pricing power the companies have, their cash position and the ability to cut costs. 

People close to Aston Martin said the company had invoiced all stock that landed in the US in March and minimised shipments in April to avoid suspending them. It will also seek higher margins on customisation offers in addition to cutting costs further.

To address its weak cash position, the company also announced plans to raise more than £125mn via the sale of its minority stake in the Formula 1 racing team and additional investment from its chair Lawrence Stroll.

But Aston Martin still expects as much as a £30mn hit to its gross profit as a result of the 25 per cent tariffs. Analysts had been estimating £30mn in earnings before interest and taxes for 2025.

“We anticipated some risks in the plan and built in contingencies,” Aston Martin chief executive Adrian Hallmark said in a recent interview. “This now makes it tighter to hit what we promised but we’re not fundamentally changing our guidance or forecasts as a result of the tariffs.” 

Ferrari has told investors that the pricing of Ferrari 296, SF90, and Roma families will remain the same, meaning the company and its dealers are likely to absorb the full tariff cost. But other models are likely to be hit by a 10 per cent price increase. 

Still, strong luxury brands such as Ferrari will fare better than others since their customers may be willing to pay 10 per cent more to get hold of their vehicles.

“Does anyone really want a Ferrari that isn’t built in Maranello?,” Sherwood said.

Although there were a handful of nine-figure rounds this week, funding news, in general, seemed quiet. No round topped $200 million, and even one of the large rounds was a down round. Quite the change from last week, which saw the biggest venture investment ever and 11 rounds hit $100 million or more.

1. Base Power, $200M, energy: Battery startup Base Power raised a $200 million Series B as the startup looks to expand nationally. The round was led by Addition. The Austin, Texas-based startup installs residential backup power systems — designed to charge batteries specifically when electric prices are low. Founded in 2023, the company has raised $268 million, per Crunchbase.

2. Caris Life Sciences, $168M, biotech: The intersection of AI and biotech is big right now and this week gave another example of how big. Irving, Texas-based Caris Life Sciences, which is developing medicine through molecular profiling and the application of advanced AI and machine learning algorithms, raised a $168 million growth round led by Braidwell. Founded in 2018, the company has raised $1.9 billion, per Crunchbase.

3. Merida Biosciences, $121M, biotech: Biotech startup Merida Biosciences launched this week. The Cambridge, Massachusetts-based firm, which is developing therapeutics designed to selectively eliminate the pathogenic antibody drivers of multiple autoimmune and allergic diseases, announced it also had collected $121 million in a Series A financing co-led by Bain Capital Life Sciences, Biotechnology Value Fund and Third Rock Ventures.

4. Rescale, $115M, simulation: Digital engineering platform Rescale locked up a $115 million Series D. The San Francisco-based startup provides a digital engineering platform that integrates cloud computing resources, intelligent data management tools, and applied AI to accelerate modeling and simulation. No lead investor was disclosed, but those participating include Applied Ventures and Nvidia. Founded in 2011, Rescale has raised more than $260 million, per the company.

5. Nuro, $106M, autonomous driving: Nuro, a developer of autonomous driving technology and software, raised $106 million in an ongoing Series E that values the company at $6 billion. The new deal would represent a cut from the reported $8.6 billion it was valued at in 2021 after raising a $600 million Series D led by Tiger Global Management. Since that round, the Mountain View, California-based company has faced major challenges including slashing its workforce and a change in business strategy, moving away from its delivery vehicles for packages to now licensing its autonomous driving software. Founded in 2016, Nuro has raised $2.2 billion to date, per the company.

6. Amca, $77M, aerospace: El Segundo, California-based Amca, which develops critical aerospace and defense products, launched with a $76.5 million initial funding round. No lead investor was announced, but investors include Andreessen Horowitz and Founders Fund.

7. (tied) Brinc Drones, $75M, drones: Brinc Drones, a Seattle-based manufacturer of emergency response drones, raised a $75 million round led by Index Ventures. Founded in 2017, the company has raised $157 million, per Crunchbase.

7. (tied) Rain, $75M, fintech: Santa Monica, California-based Rain, which offers early wage access and financial wellness information, locked up a $75 million Series B led by Prosus Ventures. Founded in 2019, the company has raised nearly $504 million in debt and equity, per Crunchbase.

9. Tessell, $60M, database: Tessell, offering database-as-a-service, announced a $60 million Series B led by WestBridge Capital. Founded in 2021, San Francisco-based Tessell has raised $94 million, per the company.

10. nEye Systems, $58, semiconductors: Emeryville, California-based nEye Systems, an optical switch startup, raised a $58 million Series B led by CapitalG. Founded in 2020, nEye has raised $72.5 million, per the company.

Big global deals

The biggest raise this week came from our neighbors to the north.

Canada-based cybersecurity firm Tailscale raised a $160 million Series C that values the company at $1.5 billion.