The AI unicorns that will soar, stagnate, and fall over the next few years, according to readers April 18, 2025 |
Sooner or later, the AI industry will consolidate.
Which companies among today’s AI unicorns will survive the shakeout, which will be subsumed into larger companies, and which will perish is, of course, impossible to know. But the wide-ranging views regarding the current crop of high-flying AI startups are instructive in their own right, providing a useful gauge of industry and investor expectations.
A few weeks ago, we sent out a call for your predictions as to how the largest AI startups will fare over the next one to five years. And dozens of people got back to us, with some pretty spicy takes. Two people said CoreWeave is “doomed,” very few were expectedly bullish on Anthropic, and there was a lot of negativity about Mistral. Predictions about OpenAI’s future diverged wildly, as was the case for Perplexity.
Some of the most split opinions involved Alphabet’s self-driving car subsidiary Waymo—even from investors within the same firm. Marissa Moore and Julianna Vitolo of OMERS Ventures took the bull and bear cases for Waymo’s future.
“Waymo throws in the towel as a robotaxi and robustly commercializes by licensing its IP out to other automakers and fleet operators and becomes the dominant platform for passenger vehicle autonomy in the U.S.,” Moore predicted.
Vitolo’s take, meanwhile, was: “Waymo is set to eclipse Uber and Lyft in metros like SF before running the table in other urban environments…We’ve passed the point of no return and Waymo will ultimately eclipse the rideshare 1.0 players.”
Very few survey respondents seemed terribly optimistic about the recently IPO-ed CoreWeave or French startup Mistral. As Umesh Padval, Thomvest Ventures managing director, said: In addition to CoreWeave’s customer concentration concerns, the company faces “the risk that GPU supply may outpace demand which will lead to pricing pressure and a potential depreciation period for GPUs that could be shorter than the anticipated six years.”
“As an open-source model provider, Mistral may struggle to compete and generate revenue in a market increasingly dominated by Meta’s Llama and major players like Anthropic and Cohere,” Padval added.
But it’s not all bad for Mistral, as Anik Bose, general partner at BGV points out, “Mistral may benefit from Europe’s AI sovereignty agenda.”
Ethan Batraski, partner at Venrock, wrote to Fortune that he expects IBM or Oracle will acquire Cohere, xAI to become “the consumer market leader,” and that Perplexity will be acquired by Microsoft in an effort to revive Bing. And: “OpenAI won’t be profitable, ever,” he wrote.
Since we’re talking about AI, I decided to feed all the reader responses into ChatGPT and asked it to summarize the overall reader feedback regarding the various AI startups.
Anthropic was considered “smart, solid, unspectacular” by Term Sheet readers, according to ChatGPT summarization. The most unreservedly positive take was around Databricks, “durable and disciplined, infra crown jewel.” Sentiment around Mistral was described as “underdog with geopolitical tailwinds, but limited ceiling.” Perplexity and xAI were described as “polarizing,” Canva as “strong brand, but at risk of stagnating,” while Waymo was described as “contested, uncertain.”
ChatGPT’s punchy synopsis of sentiment around OpenAI called its maker a “consumer kingpin with no path to profit.” But I’d argue Sophie Bakalar, Collaborative Fund partner, put it best: “OpenAI feels inevitable, given its head start and ownership of consumer mindshare, but it’s also carrying the heaviest expectations.”
See you tomorrow,
Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.
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VENTURE DEALS
- Auradine, a Santa Clara, Califl.-based blockchain and AI infrastructure sustainable solutions provider, raised $153 million in Series C funding. StepStone Group led the round and was joined by Maverick Silicon, Premji Invest, Samsung Catalyst Fund, and others.
- Exaforce, a San Jose-based SOC AI agents developer, raised $75 million in Series A funding. Khosla Ventures and Mayfield led the round and were joined by Thomvest Ventures, Touring Capital, EDB, and others.
- Toku, a Santiago, Chile-based accounts receivable SaaS platform, raised $48 million in Series A funding. Oak HC/FT led the round and was joined by existing investors Gradient Ventures, F-Prime, Clocktower, and others.
- Skin Analytics, a London-based AI-powered skin cancer detection company, raised £15 million ($19.9 million) in Series B funding. Intrepid Growth Partners led the round and was joined by existing investors Hoxton Ventures, Crista Galli Ventures, and Mustard Seed Ventures.
- Meadow, a New York City-based student financial services provider, raised $14 million in Series A funding. Matrix Partners led the round and was joined by existing investors Susa Ventures, Giant Ventures, Treble Capital, and GoGlobal Ventures.
- Brellium, a New York City-based AI-powered clinical compliance platform, raised $13.7 million in Series A funding. First Round Capital and Left Lane Capital led the round and were joined by Menlo Ventures, Digital Health Venture Partners, Necessary Ventures, and angel investors.
- Capsule, a Los Angeles-based AI-powered video editor for brands, raised $12 million in Series A funding. Innovation Endeavors led the round and was joined by Swift Ventures, Hubspot Ventures, and others.
- Cy4Data Labs, a San Jose-based data protection cybersecurity company, raised $10 million in funding from Pelion Venture Partners.
- Hexium, an Austin-based isotope enrichment technology developer, raised $9.5 million in seed funding. MaC Venture Capital and Refactor led the round and were joined by R7 Partners, Overture VC, Humba Ventures, Julian Capital, and others.
- 1Fort, a New York City-based AI-powered business insurance platform, raised $7.5 million in funding. Bonfire Ventures led the round and was joined by Draper Associates, Karim Atiyeh, existing investors Village Global, Operator Partners, 8-Bit Capital, and others.
- Bauplan, a San Francisco-based serverless data platform, raised $7.5 million in seed funding. Innovation Endeavors led the round and was joined by Wes McKinney, Aditya Agarwal, and Chris Re.
- Arcana Labs, a Los Angeles-based AI-powered production studio, raised $5.5 million in funding from SEMCAP AI.
- Spur, a New York City-based AI-powered quality testing company, raised $4.5 million in funding from First Round, Pear VC, Neo, angel investors, and others.
- Trellis Health, a Seattle and San Francisco-based women’s lifetime health platform, raised $1.8 million in pre-seed funding from Palette Ventures, Swizzle Ventures, NEXTBLUE, and others.
- Graze, a Portland, Ore.-based Bluesky custom feed builder, raised $1 million in pre-seed funding. Betaworks and Salesforce Ventures led the round and was joined by Factorial, Apertu Capital, Skyseed, and angel investors.
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PRIVATE EQUITY
- Patient Square Capital acquired Patterson Companies, a St. Paul-based dental and animal health distributor, for approximately $4.1 billion.
- Bow River Capital acquired a majority stake in CloudShare, a Tel Aviv-based business growth cloud company. Financial terms were not disclosed.
- IQ-EQ, a portfolio company of Astorg, agreed to acquire the AMAL Group, a Sydney-based corporate trust, agency services, and loan servicing solutions provider. Financial terms were not disclosed.
- Stonepeak, acquired Dupré Logistics, a Lafayette, La.-based logistics solutions provider. Financial terms were not disclosed.
EXITS
- Global Payments agreed to acquire Worldpay, a Cincinnati-based payments company, from GTCR for $24.3 billion.
OTHER
- Infinite Reality agreed to acquire Touchcast, a New York City-based agentic AI company, at an enterprise value of $15.5 billion.
- MISUMI agreed to acquire Fictiv, an Oakland-based supply chain technology company, for $350 million in cash.
- Charles Schwab acquired a minority stake in Wealth.com, a Tempe, Ariz.-based estate-planning platform. Financial terms were not disclosed.
- Databricks acquired Fennel, a Menlo Park, Calif.-based incremental compute engine. Financial terms were not disclosed.
- Trove acquired reverse.supply, a Berlin-based resale platform. Financial terms were not disclosed.
IPOS
- Chagee Holdings, a Shanghai-based teahouse franchisor, raised $411 million in an offering of 14.7 million shares priced at $28 on the Nasdaq. The company posted $1.7 billion in sales for the year ending Dec. 31, 2024. Junjie Zhang, X Capital Management, Yang Zhou, and Dengfeng Yin back the company.
PEOPLE
- Greylock Partners, a Menlo Park, Calif.-based venture capital firm, added Shreya Shekhar as an investor. Previously, she was at Bedrock Security.
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