Good day. Venture capitalists today often back more than one company in the same category. The complexities of investing in competitors played out in public this week in the form of an online skirmish between agentic AI companies Factory and Cognition and Khosla Ventures, an investor in both companies. We would like to hear from readers: Do you think VCs can sustainably continue investing in competing companies? What limits, if any, should there be if VC firms plow ahead? Please email your thoughts to vcnews@wsj.com.
Last week we asked whether consumer privacy concerns could hamstring widespread adoption of personal AI assistants like Meta's Muse. Here are edited and condensed highlights of responses:
-- Marcus Ryu, general partner, Battery Ventures: Meta and its peers have been consistently rewarded for betting that consumers' love of convenience and/or social connection will outweigh any misgivings about privacy-or even consumers' readiness to change default settings! I would expect the same here, at least at first. The difference this time is that AI agents are potentially unbounded in their power and potential for mischief, so we should all hope big tech companies put adequate effort into guardrails and consumer safeguards.
-- Samantha Feuer, investment team principal, Evolution Equity Partners: It already is the norm for many organizations and consumers. The utility is simply too high to refuse. An assistant that can't touch your inbox or your systems isn't worth much, so demand pulls the permissions along with it. This is exactly why security and privacy have to be a forethought in how these assistants are built, not an afterthought. Privacy concerns are real and they're slowing some enterprise deployments today, but I'd argue they delay adoption rather than cap it. Buyers have more choice than ever and plenty of breaches to learn from, so trust becomes the deciding factor. The vendors that build security in from day one will pull adoption forward.
-- Medha Agarwal, general partner, defy.vc: My view is that we're entering a world where consumers will increasingly hand over sensitive information to AI systems because the value they receive is becoming too compelling to ignore. We've already seen a dramatic shift in people's willingness to share personal data with AI. Things that would have been "off limits" are now commonplace. I expect this to continue. Historically, privacy concerns have often given way when a new technology delivers enough value, convenience, or utility. Personal AI assistants may be one of the clearest examples of that dynamic because their usefulness is directly tied to how much context they have about you.
Top News
Confronting a new reality. Varun Sivaram, founder and chief executive of data-center startup Emerald AI, wanted to explain during a panel discussion last month how fast construction of buildings full of computer servers can benefit local communities. Protesters wanted to hear none of it.
"You are stealing resources from us!" yelled a man in the audience, soon after the panel got under way at the Javits Center in New York during Climate Week, according to a video posted online and Sivaram's recollections. After the man was dragged out by security, other anti-AI activists got up and continued to interrupt panelists.
AI founders and investors are increasingly facing public criticism as opposition to the fast-moving technology mounts. It's a new experience for many in Silicon Valley who are accustomed to Twitter fights, not town hall brawls.
OpenAI Fires Researchers Researchers After Alleged Information-Sharing
OpenAI has fired three researchers for alleged misconduct including sharing confidential company information with a third-party AI-safety organization, according to people familiar with the matter. The affected employees are Jasmine Wang, Tomek Korbak, and Mikita Balesni, the people familiar with the matter said.
"We have parted ways with three individuals for violating our policies on accessing and handling sensitive company information," said an OpenAI spokesperson in a statement. "Our investigation confirmed that these individuals mishandled sensitive information outside established company procedures, violating our policies and breaking the trust essential to our work."
Can AI Run in Space? Google Is About to Find Out
A prototype satellite containing four of Google's artificial-intelligence chips, called Tensor Processing Units, was launched by SpaceX on Thursday, the beginning of a year-long experiment testing whether TPUs can survive in orbit. The satellite was among several payloads loaded on a rocket that lifted off from California just after 11:30 a.m. local time.
The company hopes the project, known as Suncatcher, will someday allow it to build an orbital data center with thousands of interconnected satellites, fueled by the sun's energy.
Industry News
Funds
Headline announced a new AI-focused $400 million fund - its eighth early-stage vehicle dedicated to European founders.
Solari Capital emerged from stealth with $350 million in capital deployed.
DIG Ventures raised $120 million for its third fund to continue investing in European pre-seed and seed-stage startups across enterprise AI and cloud infrastructure.
BAG Ventures closed its inaugural fund at $11.3 million to back enterprise AI founders.
People
645 Ventures appointed Clare Brandfonbrener as senior associate on the investment and research team. She was previously an investor at Alumni Ventures.
Exits
Digi International agreed to acquire advanced sensing technology provider Disruptive Technologies for $130 million in cash.
Payments company Stripe plans to acquire Parafin, a financial technology startup geared toward small businesses.
New Money
EliseAI, a New York-headquartered AI company automating complex property management and healthcare systems, scored a $350 million investment at a $4 billion valuation. Andreessen Horowitz and Bessemer Venture Partners co-led the round. Sameer Dholakia, partner at Bessemer, joined the company's board.
CScale, a (Palo Alto), Calif.-headquartered optical AI chip startup, exited stealth with $145 million in Series C funding. Atreides Management, Valor Equity Partners and Premji Invest co-led the round, which included participation from Sutter Hill Ventures, Maverick Silicon and others.
Volantis, a semiconductor startup building a new AI inference architecture, landed $88 million in Series A funding. Lachy Groom and Abstract Ventures co-led the round, which included participation from VXI Capital, Susa Ventures and others.
Flow Engineering, a San Francisco-based startup building an agentic platform for hardware development, raised $50 million in Series B funding at a $750 million valuation. Valor Equity Partners' Antonio Gracias and Atreides Management's Gavin Baker co-led the round, which included contributions from Sequoia Capital, Human Capital, Evantic and others.
Miter, a San Francisco-based workforce management platform for the construction industry and the built world, snagged $40 million in Series B funding. Battery Ventures led the round, which included participation from Bessemer Venture Partners and Coatue.
doxx.net, a Miami-headquartered agentic defined networking platform, obtained $38 million in Series A funding. Andreessen Horowitz led the round, with Partner Joel De La Garza joining the company's board.
Relay, a Raleigh, N.C.-based provider of AI voice technology for front-line workers, picked up $36 million in new funding. International Paper led the investment, which saw additional support from Harmonic Growth Partners, Thayer Investment Partners, G2 Venture Partners and Wind River Ventures.
Restate, a startup building reliability infrastructure for AI agents and workflows, grabbed $20 million in Series A funding. Singular led the investment, which saw contributions from Redpoint Ventures and Capital One Ventures. Restate has teams in Berlin and San Francisco.
Daptic, a New York-based product compliance life cycle management platform for manufacturers, nabbed $15 million in Series A funding. Canvas Ventures led the investment, which saw participation from IA Ventures, 8VC and others. Rebecca Lynn, general partner at Canvas Ventures; and Brad Gillespie, general partner at IA Ventures, will join Daptic's board.
Kanu AI, a Seattle-headquartered AI cloud engineer startup, secured $11.7 million in funding led by Trilogy Equity Partners.
Tech News
-- Apax Sets $12 Billion Target for Fund XII
-- Temasek-Backed Vertex Japan Invests in Digital Trading Cards Startup Heartbeats
-- Google Rolls Out New AI Model Gradually Amid Safety Concerns
-- The Global Bond Rout Is Getting Messy
-- Tech CEOs Privately Questioned Amodei for Sounding AI Alarm Bells
-- OpenAI President Backs Out of Pledged $25 Million Donation to AI Super PAC
-- Amazon Tries to Boost Nuclear Power in Maryland After Scrapping Data Center Deal
Around the Web
-- When Data Centers Cluster Together, How Dirty Are They? One County Wants Answers. (New York Times)
-- Effective altruism is this century's biggest idea (Economist)
-- China Chip Smuggling Cases Expose Nvidia's Blind Spots (Bloomberg)
The WSJ Pro VC Team
This newsletter was compiled by Sarah Klearman and Zachary Cole.
Share your tips, comments and questions: vcnews@wsj.com
The team: Matthew Strozier, Yuliya Chernova, Brian Gormley and Sarah Klearman.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
Corrections & Amplifications
This newsletter was corrected on Oct. 7. 2026 to show that Apax is set to launch its latest flagship fund with a $12 billion target, not an $13.5 billion target.