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Elad Gil started betting on AI before most of the world took notice. By the time investors began grasping the implications of ChatGPT, Gil had already written seed checks to startups like Perplexity, Character.AI, and Harvey. Now, as the early winners of the AI wave become clearer, the renowned “solo” VC is increasingly focused on a fresh opportunity: using AI to reinvent traditional businesses and scale them through roll-ups.

The idea is to identify opportunities to buy mature, people-intensive outfits like law firms and other professional services firms, help them scale through AI, then use the improved margins to acquire other such enterprises and repeat the process. He has been at it for three years.

“It just seems so obvious,” said Gil over a Zoom call earlier this week. “This type of generative AI is very good at understanding language, manipulating language, manipulating text, producing text. And that’s audio, that’s video, that includes coding, sales outreach, and different back-office processes.”

If you can “effectively transform some of those repetitive tasks into software,” he said, “you can increase the margins dramatically and create very different types of businesses.” The math is particularly compelling if one owns the business outright, he added.

“If you own the asset, you can [transform it] much more rapidly than if you’re just selling software as a vendor,” Gil said. “And because you take the gross margin of a company from, say, 10% to 40%, that’s a huge lift. Suddenly you can buy other companies at a higher price than anyone else because you have that increased cash flow per business; you have enormous leverage on the business on a relative basis, so you can do roll-ups in ways that others can’t.”

So far, Gil has backed two companies pursuing this strategy. According to The Information, one is a one-year-old company called Enam Co., focused on worker productivity, which has been valued at more than $300 million by its backers, including Andreessen Horowitz and OpenAI’s Startup Fund.

Though Gil says he can’t discuss specifics of the private deals, he suggests the approach represents something new. “There used to be these technology-enabled roll-ups 10 years ago, and most of them kind of ended up being not really that much of a user of technology,” he says. “It was kind of like a thin veneer painted on to increase the valuation of the company. I think in the case of AI, you can actually radically change the cost structure of these things.”

Whether the plan proves as lucrative as some of his other bets remains to be seen. Gil has famously backed a host of big brands that have produced riches for their backers, including Airbnb and Coinbase, both of which are now publicly traded, and privately held Stripe, whose valuation has bounced around but reportedly settled in the range of $91.5 billion earlier this year, when its earlier backers bought up more of its shares.

Part of the challenge with roll-ups is finding the right team composition — ideally including a strong technologist along with someone who is “very strong in PE” — and “those things don’t go hand-in-hand,” Gil noted. He said he’s met “maybe two dozen of these teams” so far and mostly looked past them, not because they “weren’t amazing” but because “they still need to sort some things out.”

Gil, who has deep relationships with firms across Silicon Valley, may also find himself competing with these frequent collaborators, as a growing number of them, like Khosla Ventures, consider whether to pursue AI roll-ups themselves.

One senses that, either way, Gil is not in it for the money at this point if he ever was. He says his ability to spot trends earlier than most comes instead from the heart. “I love technology, and I love progress, and I love just engaging — both with people who are working on important, interesting things, but also the technology itself.”

When GPT-3 launched, for example, Gil was already experimenting with its predecessor, he said. “When GPT-3 came out, it was such a big leap from GPT-2 that you could just extrapolate out the technology curve. You’re like, ‘Oh my gosh, if this keeps going and scaling’ — all the scaling laws were kind of evident — ‘then this is going to be transformative.’”

That hands-on approach continues today with the small team Gil has assembled, including “people with very deep engineering backgrounds” who “periodically play around with all the AI front-end companies. One person on my team just writes a bunch of scripts and we run them, and we look at performance, and we look at tooling, and it’s super hands-on.”

It’s because of that constant tinkering that, after years of uncertainty in the AI market, Gil sees clear winners emerging. “I used to say, even six months ago, that the more I know about AI, the less I know, because the markets were so dynamic; the technologies were so dynamic,” he said. “And I feel like in the last couple months — maybe the last two quarters — a subset of markets have really crystallized.”

In legal, “we kind of know who the one or two main winners are probably going to be. That’s true in health care. That’s true in customer success and support,” said Gil, who clearly thinks these include his own portfolio companies, which he cited in our conversation.

Among these bets is Harvey, which develops large language models for law firms and in-house legal teams and is reportedly in talks to raise new funding at a $5 billion valuation; Abridge, a healthcare AI company that aims to improve doctors’ clinical documentation workflows (and whose $250 million Series D round was co-led by Gil back in February); and Sierra AI, co-founded by famed operator Bret Taylor, which helps companies implement AI agents for customer service. (The company was valued in the billions of dollars right out of the gate.)

Still, Gil is careful not to declare the game over. “I don’t mean to paint the picture that the game is over or that things are done. I think it’s more that there were two dozen companies that all seemed kind of interesting, and maybe now there’s three or four of them [per vertical]. The map of the likely winners is solidified.”

In the meantime, it’s clear in conversation that this moment represents more than just another investment cycle to him. “I just think it’s a really fun period of time, because so much change is happening, and so there’s just a ton to do,” he said.

Being at the intersection of two transformations — not just betting on the future of AI but on the future of how AI will reshape everything else — is quite simply “exciting,” he added.

French company’s purchase of Blueprint Medicines boosts immunology pipeline

Sanofi will buy the US maker of the world’s only approved treatment for a debilitating rare blood disorder for up to $9.5bn, as it seeks to boost its immunology medicine pipeline.

The French pharmaceutical company has agreed to pay $9.1bn in cash plus potential milestone bonuses for Cambridge, Massachusetts-based Blueprint Medicines, which is seeking to develop a drug for a wide range of immunological diseases. 

The deal is one of the biggest biotech acquisitions of 2025 and comes as Sanofi seeks to boost its drug pipeline. It is heavily dependent on immunology medicine Dupixent, which accounted for almost a third of revenues in 2024 and is under patent until 2032.

The Blueprint deal was a “strategic step forward in our rare and immunology portfolios”, said Paul Hudson, Sanofi’s chief executive.

“It complements recent acquisitions of early-stage medicines that remain our main field of interest,” he added.

In 2023, Hudson outlined plans to increase spending and focus on early research and development, rather than spending on large deals.

But Sanofi’s research efforts have suffered recent setbacks, including a failed late-stage trial last week for an experimental drug for chronic obstructive pulmonary disease that led shares to fall more than 6 per cent.

Last year, Sanofi agreed to sell a 50 per cent stake in its consumer healthcare division, in a deal that valued the business at €15.5bn. The Blueprint deal would use up financial firepower, although Hudson said Sanofi still had “sizeable capacity for further acquisitions”.

Sanofi’s $129 a share cash offer for Blueprint is a premium of 27 per cent over the Nasdaq-listed company’s closing price in Friday.

Blueprint’s drug Ayvakit is approved in the US and EU and is the only such medicine for two main systemic types of the disease mastocytosis.

Systemic mastocytosis is estimated to affect about 32,000 people in the US. The disease, caused by the abnormal build-up of immune cells known as mastocytes, can trigger many allergy-like symptoms including organ damage.

In May, Blueprint reported net revenues of just under $150mn from Ayvakit for the first quarter of this year and increased its forecast for full-year sales of the drug from $700mn to $720mn. Ayvakit was “well on its way” to meeting the goal of $2bn in revenue by 2030, said Kate Haviland, Blueprint’s chief executive.

Sanofi’s expertise in rare disease and immunology would help the two companies deliver “life-changing medicines” to more patients globally, she said on Monday.

Blueprint is developing a next-generation medicine for systemic mastocytosis, called elenestinib, as well as Blu-808, which targets a range of immunological conditions.

The milestone payments agreed by Sanofi are linked to Blu-808 clearing development and regulatory hurdles.

Summary

• Funds diversify geographically to counter tariff uncertainty
• China's Baidu, DiDi Global, Temu owner feature in fund picks
• Activist Palliser reveals stake in Japan's Toyo Tire

HONG KONG, June 2 (Reuters) - Hedge funds revealed their top investment ideas, ranging from Chinese self-driving taxis, an Indian drug retailer, to a Korean nuclear plant builder, at the annual Sohn investment conference in Hong Kong.

This year’s picks are geographically more diverse compared to last year, suggesting that investors are actively seeking to spread their exposure to counter tariff uncertainties and market volatility.

San Francisco-based Flight Deck Capital sees upside potential in Chinese search engine giant Baidu (9888.HK), opens new tab, betting on its fast-growing auto-driving business.

Similar to Google's self-driving unit Waymo, Baidu's Apollo Go "is the only robo-taxi player in China that's not dependent on the capital markets to scale," Flight Deck founder and managing partner Jay Kahn said at the conference on Friday.

He expects China's taxi and ride-share industry to grow to around $237 billion by 2034, with Apollo taking a 15% market share. But that segment, together with Baidu's cloud business, is currently given zero valuation by the market, he said.