Will bacteria be the next Gucci?
Feb 5, 2025
Kaley Ubellacker
Market Stirrings 🚩
Here's what the week looked like in pre-seed:
$6.2M
10
Data aggregated from proprietary research and Crunchbase; valuation estimate based on 10-20% ownership stake.
Who was the jewel of January? According to Crunchbase data, Addis Energy claimed the top spot with the largest pre-seed round of the month, raising $4.25 million. They were followed by Rybodyn and Rena Labs. Surprisingly, the top spot for the most funds raised didn’t go to an AI company—but rather, to a climatetech one. Kudos to Addis Energy for their groundbreaking underground drilling mission to produce ammonia cleanly.
Good Reads 📖
For the rushed reader …
This New York Times article offers perspectives from top investors like Matt Turck of FirstMark Capital, Eric Vishria of Benchmark, and Gavin Baker, shedding light on how DeepSeek’s $6 million AI breakthrough is forcing a reevaluation of the billions invested in foundation models.
Early-stage startup Modern Synthesis is harnessing bacteria-grown nanocellulose fibers to create sustainable, biodegradable materials that are both durable and compostable.
For the first time in a decade, experienced managers are outpacing emerging ones, according to the latest PitchBook-NVCA Venture Monitor.
For the less rushed reader …
600 forks in the Deep dish
Even though 1 week is at least 7 years in AI time, DeepSeek is nowhere near finished shattering the internet. This New York Times article offers perspectives from top investors like Matt Turck of FirstMark Capital, Eric Vishria of Benchmark, and Gavin Baker, shedding light on how DeepSeek’s $6 million AI breakthrough is forcing a reevaluation of the billions invested in foundation models. The success of DeepSeek has prompted VCs to question the need for massive capital in AI development, with Turck warning of a potential “race to the bottom.” Vishria calls foundation models the "fastest depreciating asset in human history," while others like Baker defend their bets, citing various data sources. Meanwhile, over 600 forks of DeepSeek’s model have already appeared on Hugging Face, signaling a rapid shift in how startups are approaching AI development. Everyone wants a byte of the DeepSeek pie.
A material change for the better
Bacteria isn’t always the bad guy. Early-stage startup Modern Synthesis is harnessing bacteria-grown nanocellulose fibers to create sustainable, biodegradable materials that are both durable and compostable. These fibers are processed into products that mimic synthetic materials like leather and textiles but break down naturally—unlike traditional plastics and polyester. After recently raising $5.5M in a seed round led by Extantia Capital, the company is scaling up production and already collaborating with brands like Ganni on eco-friendly, petrochemical-free handbags. With applications spanning from fashion to automotive, Modern Synthesis is focused on creating materials that are not only long-lasting and sustainable but also won’t contribute to environmental waste. Who knew “biodegradable” and “built to last” could actually go hand in hand?
Off pitch ...
2024 was a tough year for emerging GPs, with many, like Beta Boom’s Sergio Paluch, seeing their fundraising efforts go from oversubscribed to near-collapse. For the first time in a decade, experienced managers are outpacing emerging ones, according to the latest PitchBook-NVCA Venture Monitor. The pullback is driven by a mix of LPs tightening their purse strings after ballooning valuations and a lack of quick exits. LPs, once flush with capital in the boom years, are now questioning the sustainability of funds without strong differentiation, and the sheer size of larger funds makes it hard for smaller managers to compete. One thing is certain: emerging managers are feeling the fund-amental shift.
Fire Up the Pre-Seeds🔥
Highlights from this week’s pre-seed raises:
healthtech
PGxAI - New creatures on the Pharma.
PGxAI raised $1.3 million. PGxAI is at the forefront of innovation in pharmacogenetics, on a mission to create personalized medical solutions using its AI-powered platform.
Systole Health - Group care can be heart to find.
Systole Health raised $2 million led by Benchstrength. Systole Health is building a virtual platform focused on women’s heart health, supporting women through group care.
fintech
Taxflow - Making everyone's favorite season that much better.
Taxflow raised $750k from BFF, Platanus Ventures, and prominent angel investors including Brian Requarth from Latitud and Brian York. Taxflow is creating a platform powered by AI agents to simplify tax filing for accounting firms.
AI
Franzy - So smooth it sends investors into a Franzy.
Franzy raised $1.2 million led by Overline at a $10 million pre-money valuation. Franzy is developing an AI-powered platform to transform the franchising industry with a streamlined process to buy businesses, making it 4x faster to source than traditional methods.
Outro🚪
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Thanks for reading, and see you next week!
