Erik Rannala

Legal AI startup Harvey just raised $150M at an $8B valuation.  Niche vertical SaaS is where the biggest winners are emerging. Here’s why you should pay attention👇 In Q2 2025, 46% of all SaaS M&A was vertical SaaS. And the bigger players are buying smaller, niche SaaS to dominate entire industries. Traditional verticals (healthcare, real estate, education, hospitality) are strong. Hyper-niche ones are stronger. Think: - Software just for dental clinics - Tools for boutique hotels - Platforms for small schools Hyper-specialization is creating tons of M&A action. Private equity firms lead this buying spree by acquiring niche SaaS, combining them, and creating valuable companies. > Thoma Bravo acquired NextGen Healthcare for $1.8B > Vista Equity Partners bought Mindbody for ~$1.9B > Bain Capital bought HealthEdge for $2.6B The winning formula is clear:  Deep industry integration + embedded finance + AI defensibility. The next decade belongs to founders who build the operating systems of industries. --- Our team at FE International is more bullish than ever on the rise of AI-first businesses. If you're a founder curious about your company’s true value, get a free valuation. (Link in comments) 👇

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Nearly four years since the November 2022 public launch, "the ChatGPT generation" has become a label for two very different groups of founders. A handful of founders are building at the center of the storm: models, infrastructure, and the copycats around both. Almost all the press coverage goes to them. But a much larger, quieter group is applying the same technology to industries built long before any of this existed, and almost everything durable is coming from that second group. I wrote up what four years of backing this cohort has taught us at Asymmetric: how their failure modes look nothing like the ZIRP generation's, the new questions we've added to diligence, and why we'd still give them a better grade than the founders who came before them, if they can go acquire the industry knowledge and distribution that abundance never made them build. Full piece linked in comments.

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I just found the simplest document on the steps required to spin up an SPV. There are 10 distinct steps. I feel like SPVs, similar to venture capital in general, are a bit of a black box. They seem simple on the surface, but they actually have a lot more operational overhead than most realize. And for those looking to do their first one, you may not even know all the steps required to do this successfully (I didn't). This doc helped me a lot so I hope it helps you too! Here's what a clean SPV process looks like: → Entity formation handled → Compliance docs tracked and timestamped automatically → Legal templates ready → Investors reviewing, signing, and committing in one place → Real-time visibility into who's funded and who's not → Distributions automated This gets even more complicated as your SPVs scale in size and you have more investors / institutional investors joining in. Safety and security are another layer to consider as well. SPVs can supercharge returns for fund managers and they can allow non-fund investors to build syndicates. Everyone should be understanding them - they are an important tool in the VC ecosystem! --- There are end-to-end platforms that can help you with this process. The one I'd recommend is Verivend because they are secure (PE-backed) and provide a white-glove service for those looking to get started or those looking for a more flexible experience. Worth a look: https://lnkd.in/grrJxqxq #venturecapital #SPV #Verivendpartner

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VC schedules, and thoughts on being a VC noob. -- VC schedules to know -- Most venture capital firms hold partner meetings on Mondays. This is typically when the investment committee votes on new investments and other key decisions. Savvy founders learn the exact timing and may need to provide additional data over the weekend to stay in motion. It is also well known that many venture capitalists observe a “European summer,” with August often being light or fully off. Similarly, the winter holidays reduce activity across much of December. That said, data from Carta shows a meaningful year-end push to close deals in December, followed by a flurry of activity in January. Founders should be cautious about kicking off fundraising during these slower periods. You do not want a raise to go stale and fall apart. VCs talk to each other, the industry is highly interconnected. -- I’m a mid career Noob! -- I am an “emerging manager,” effectively a new VC, less than three years in. In venture capital, the timeline is long. On my Linkedin you'll see I have two roles at Blitzscaling: Limited Partner means I put money into a fund, but have no decision making ability, and General Partner means I'm actively finding startups, bringing them to the partnership, and funding. As a General Partner, you are often considered an emerging manager for close to a decade, as it takes years for a fund to fully mature and establish a VC track record. Investing is a long game, but the upside can be extraordinary. Fortunately, I entered this role with a positive angel track record from my own bank account, which is often a good idea to have as a VC. When I learn a new VC concept or term, I’m an AI first, I’ll link to my post a few days ago in the comments, I totally live for constant growth and learning, if you’re not growing you’re dying. Fun fact: Many/most start their VC career in their 40s, as they need to have enough tech and biz cycles, a broad enough network, resources, and a platform to stand upon. As we end the year, I'm sharing more career thoughts, and productivity thoughts, rather than industry trends and market maps and frameworks and forecasts. I wrote all of this by hand myself, but used AI to edit some of it.

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Polymarket acquired Dome (YC F25) - unified prediction market API from ex-Alchemy founders. ~4-5 mo post-Demo Day, est. $10-20M deal. We've written extensively on top YC startups now exit faster and faster. Lightning-fast strategics like Dome truncate the classic 5-7 year VC hold for 10-100x returns. Top decile founders now field offers mid-batch, squeezing LPs on time-weighted returns while acquirers (e.g., Polymarket at $9B val) consolidate infra plays cheap. Bad for patient capital, bullish for YC's "exit factory." TAEV = (Exit Value / Equity Raised) / Years YC’s model is almost secretly a Time-Adjusted Exit Value machine, and it’s not an accident. Three structural factors drive this: YC compresses T. --> The program forces speed to PMF through intense three-month cycles, weekly office hours, and cultural pressure to ship. That compression either kills you or teaches you to move faster than competitors, which directly improves TAEV by reducing the denominator. YC encourages capital-light E. --> Small initial cheques ($125k for 7% historically) plus pressure to “do more with less” means companies learn to validate ideas without burning through Series A capital. This improves E - you don’t raise $5M before finding PMF, only $500k. Capital efficiency at the start compounds through later rounds. The brand and network amplify S. --> YC’s reputation gives companies access to top customers, hires, and follow-on capital faster than non-YC peers. That doesn’t guarantee success, but it meaningfully increases the ceiling on potential exit value.

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If you’re fundraising right now, this one’s for you. Here are a few firms that just launched or added fresh capital. 🔴 North Carolina-based GEM closed $82M to invest in early-stage funds. 🔴 New York-based Floating Point raised $125M for its third fund to tackle “real world” businesses. 🔴 Tel Aviv-based Team8 raised $265M for its third enterprise AI fund and an additional $100M for follow-on investments in existing portfolio companies. 🔴 Bengaluru-based Bluehill(dot)vc closed its maiden fund at $42M, including a $5.25 greenshoe option. The fund will invest in semiconductors, defense, space, energy, and more. 🔴 San Francisco-based Reach Capital closed its fifth $265M fund to back AI founders. 🔴 Rhode Island-based Teknor Apex Company, launched its corporate venture and innovation arm, TekVentures. TekVentures will invest in early-stage founders focusing on next-generation materials, manufacturing, and industrial intelligence. 🔴 US and UK-based EMERGING and Promethean announced $300M for its Experience Fund. The fund will invest in AI for hospitality and experiential entertainment. 🔴 Germany-based EIT Culture & Creativity raised a $9.9M fund to support creative tech startups and scale-ups across Europe. 🔴 Brussels-based European Commission announced its $5.7B Scaleup Europe Fund to back AI and technology companies across Europe. 🔴 Singapore-based K2 Global raised $200M for its AI fund. 🔴 Beanstalk Agtech launched Monsoon Ventures, a Singapore-based venture studio that will support Southeast Asian founders to commercialize agtech solutions. 🔴 Toronto-based Ripple Ventures closed its fourth fund to invest in early-stage frontier technologies. The fund amount was undisclosed. Check out the full list of latest VC funds closed on our website: https://lnkd.in/eWCmpB8C

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The next big AI infrastructure opportunity may not be another model, it may be the layer that sits between the models and the enterprise... ...or so that can be gleaned from the conversation I had with Camber Creek portfolio company founder & CEO David Potts on the latest Catalyst podcast (link in comments). David’s story is particularly interesting because CloudQix wasn’t dreamed up as an AI startup. It emerged from a problem he was solving at SalesWarp (also a Camber Creek portfolio company) for years: getting disparate enterprise systems to actually talk to each other. Then something changed: as AI adoption accelerated, that integration layer became even more important. Enterprises now have more models, agents, data sources and applications than ever but they also have more questions around security, identity, governance, observability and compliance. And in regulated industries, “just connect it” isn’t good enough. One point David made really stuck with me: AI can generate the connection. It can’t necessarily deploy it securely, govern it, manage identity and secrets, provide observability, or create the audit trail. That distinction is going to matter a lot. CloudQix is starting with wealth management and RIAs, where the need is particularly acute. The goal isn't to replace the systems advisors already use. It's to connect them and put a governed AI layer across the workflow. A simple example: client onboarding can require pulling together documents, custodial data, CRM information and notes from multiple systems. CloudQix can bring that information together, use AI to process it, identify missing information and surface recommendations, all while keeping a human in the loop for approval. The result isn't just “AI productivity.” It's a new operating layer for how regulated businesses actually use AI. The models may be the headline. But the pipes, controls and governance underneath them could be where a lot of the enterprise value gets created. Great conversation with David; worth a listen if you're thinking about what the AI infrastructure stack looks like beyond the model layer. #podcast #venturecapital #AI #infrastructure

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This is very true. The valuation trap is real. But I don’t think this is a YC story. It’s a market story. We’re seeing the exact same thing here in Israel. Seed rounds at 30–40M for companies with no product, no real validation, sometimes barely a prototype. Not second-time founders. First-timers. I’ve personally seen more than 20 rounds like this just last year. This isn’t about YC “pushing” companies. The system as a whole hasn’t adapted. The cost of building collapsed. The speed of iteration exploded. But pricing logic stayed anchored in 2021. When capital doesn’t recalibrate to reality, it doesn’t just create paper risk. It creates structural fragility. Good companies get boxed into impossible expectations. They are forced to grow into valuations instead of growing into product-market fit. That’s how promising businesses die early. The tragedy isn’t overvaluation. The tragedy is killing companies that could have become durable, profitable, meaningful businesses. This isn’t a YC issue. It’s a venture industry inertia issue. And the longer it takes to adjust, the more collateral damage we’ll keep seeing.

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