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In a recent discussion, fund manager Sophie Liao addressed the state of fundraising, investment strategies, and the impact of political and economic shifts on venture capital. Led by Megan Thorp and joined by Chayton Westbrook, the conversation offered a window into the challenges fund managers face as elections approach and geopolitical issues mount. 

Adjusting to Geo-Politics 

Liao explained how fund managers often adjust fundraising strategies to election cycles.  The September-October window is a period of heightened activity, a pattern she finds typical as fund managers push to close deals before market disruptions tied to political uncertainties.

Favorable international investment regions for U.S.-based funds are countries like the U.K., Japan, Singapore, and South Korea.  Those more strategically aligned with U.S. interests make them attractive sources of capital. Notably, South Korean LPs are outpacing their Chinese counterparts in funding Silicon Valley VCs, marking a shift towards U.S.-South Korean collaboration.  Singapore’s fintech-friendly environment has positioned it as a popular fundraising destination, particularly for funds in cryptocurrency and blockchain. Japan’s LPs, known for their rigorous due diligence and loyalty once committed, provide a steady partnership for U.S.-based funds. 

Navigating Political Risk and Regulatory Impacts 

Our conversation then shifted to how political changes could impact specific sectors. Liao noted that a deregulatory environment under a Trump administration might benefit fintech, particularly digital payment platforms and peer-to-peer lending, by reducing compliance costs. However, this could also lead to increased risks related to fraud and financial instability, which prompted Liao to consider integrating AI-driven fraud detection tools in her fintech portfolio. 

In contrast, a Democrat-led administration might adopt stricter regulations for consumer financial products through bodies like the Consumer Financial Protection Bureau (CFPB). This focus on regulation could present new opportunities for fintechs focused on financial inclusion, aligning well with Liao’s investments in solutions for underbanked populations. 

Liao also foresees divergence in AI priorities. A Trump administration might prioritize AI for national security, which could benefit AI-focused funds. Conversely, a Democratic administration may push for ethical AI, concentrating on fairness and reduced biases, affecting developments in hiring, credit scoring, and law enforcement. 

Investment Strategy Beyond the Short-Term 

On timing investments around elections, Liao’s guidance to LPs is that while election outcomes may have short-term effects, the long-term nature of venture capital investments provides a buffer. With typical early-stage VC investments spanning 7-10 years, there’s ample time to adapt to policy shifts. Liao advises LPs to focus on broader sector trends over the long term rather than immediate election impacts. 

To address high interest rate concerns, Liao offers an interesting approach. To address it, she assesses each LP’s assets under management (AUM) and income sources to gauge their risk appetite. For well-capitalized LPs, she positions VC as a high-reward, small portion of the portfolio, emphasizing its long-term potential amid short-term fluctuations. 

Building Trust is Paramount

Transparency and relationship-building with LPs is extremely important.  Regular updates and proactively sharing insights builds trust with prospective investors.  Her fund appeals to LPs who value a macroeconomic approach, aligning investment strategies with significant policy and technology shifts. By highlighting her macroeconomic expertise and resilience in handling geopolitical challenges, Liao differentiates herself as a fund manager.  By staying attuned to both political and market trends,her fund is positioned to strategically navigate these turbulent times, fostering relationships with LPs who share her long-term vision for growth and resilience.

🧭 PATH AHEAD SPEAKERS ANNOUNCED

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Bay Area Startups Secured Over $18.8B

The month of October ended with $18.8B in total fundings, the most we've recorded in a single month in the Bay Area. $16.2B of that total came from megadeals – sixteen of them, with the two largest going to OpenAI ($6.6B) and Waymo ($5.6B). While AI took the largest share, investment from those megadeals was spread across multiple sectors – cleantech, security, customer service, legal, robotics, healthcare and medical devices. For more on what happened in October, join us next Friday for the WITI-LinkSV webinar, register here.

There were a couple of October exits of note – but for different reasons. Raising hopes was Septerna's upsized IPO offering raising $228M and share price closing up 18%. It didn't last - their share price has not stayed up, and this may be the last IPO we'll see this year. Other companies like Omada Health and Cerebras Systems – who have filed and are waiting for "the right time" will likely continue waiting.

But Stripe's acquisition of stablecoin-platform Bridge for a record $1.1B was the real deal. It was Stripe's largest acquisition yet and the most valuable deal so far in the cryptocurrency industry. The $1.1B was a big bump up for Bridge from the $200M valuation in their $40M Series A and some welcome liquidity for their investors, including Sequoia, Haun Ventures, Index Ventures and Ribbit Capital.

Follow LinkSV on LinkedIn to stay on top of Bay Area startup fundings and exits.

Early Stage:

• GMI Cloud closed a $15M Series A, a digital infrastructure company that simplifies how businesses build, deploy, and scale AI through integrated hardware and software solutions.

• SapienX closed a $8.7M Seed, providing autonomous coworkers for financial analysis at enterprises.

• Bifrost AI closed a $8M Series A, building generative AI tools that enable users to create virtual 3D worlds and synthetic images on-demand with granular control via an intuitive interface.

• Cornerstone AI closed a $5M Seed, unlocks the power of clinical data through advanced software that quickly and accurately prepares data for analysis.

• Zerobase closed a $5M Seed with $5M, a real-time ZK prover network, providing privacy and access to the fastest decentralized computing infrastructure in the world.

Growth Stage:

• Armis closed a $200M Series D, the cyber exposure management & security company, protects the entire attack surface and manages the organization’s cyber risk exposure in real time.

• Sierra Technologies closed a $175M Series C, the conversational AI platform that helps companies elevate their customer experience with AI.

• Evommune closed a $115M Series C, a clinical-stage biotechnology company discovering and developing new ways to treat immune-mediated inflammatory diseases.

• Decagon closed a $65M Series B, the leader in AI-powered customer support agents designed to enhance enterprise customer support by automating and resolving inquiries at scale.

• Third Wave Automation closed a $27M Series C, the only forklift automation solution that deploys in four modes: autonomous, remote operation, remote assist or manual operation.

  
  

Ignite and Peachscore Launch On-Demand Startup Support Platform

Ignite has partnered with Peachscore to introduce an innovative, virtual accelerator platform that provides early-stage startups with critical tools, insights, and resources—without requiring equity or relocation. This new data-driven platform addresses key challenges that founders face in the first 48 months, offering them tailored support to navigate the complexities of growth.

Tackling Early-Stage Challenges During the initial years, startups often struggle to access targeted guidance, funding, and mentorship. This partnership aims to bridge that gap with a streamlined approach that helps founders achieve market entry, connect with capital, and build strategic partnerships.

Key Features

1. Go-to-Market Support: IgniteGTM’s GTM expertise and Peachscore’s analytics assist startups in establishing an actionable path to market and accelerating growth.

2. Data-Driven Insights: Real-time analytics help founders benchmark progress, assess product-market fit, and make informed fundraising decisions.

3. Expanded Network Access: Founders connect with investors and industry experts, leveraging IgniteGTM’s tech network and Peachscore’s Angel Group, with funding opportunities up to $500K.

4. Comprehensive Tools: The platform offers resources for corporate setup, equity management, and $2M+ in partner perks, along with mentorship and pitch practice.

Applications for the Peachscore + Ignite Accelerator are now open. The 12-week program culminates in an online demo day, with startups receiving a full year of support and access to both the Peachscore and Ignite ecosystems.

For more information, or to apply, visit https://app.peachscore.com/signup.

Around The Valley

TECHCRUNCH WEEK // SAN FRANCISCO

Just back from an unforgettable week at TechCrunch Disrupt San Francisco, where Moscone Center became the epicenter of tech innovation. While the main conference delivered powerful insights on AI and sustainability, the city came alive with dozens of satellite events that sparked even more meaningful connections.

The nights were just as dynamic – from intimate investor dinners to an after-party that exceeded all expectations. But the true highlight was witnessing the organic exchange between industry veterans and rising innovators, as they challenged conventional thinking and built tomorrow's partnerships.

Llama Lounge // San Francisco

GenAI Collective @ SVB // San Francisco

Nebius + Signalfire Afterparty was wild!

Happy Halloween!

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Our mission is to provide you with an insider's view of Silicon Valley's undercurrents – insights often overlooked by mainstream sources. While many newsletters offer broad market overviews, we focus on delivering a unique, in-depth understanding of the local ecosystem. We share behind-the-scenes conversations, introduce key players we meet at events, and offer exclusive insights.

Your feedback is crucial in helping us refine our content and maintain the newsletter's value for you and your fellow readers. We welcome your suggestions on how we can improve our offering. [email protected] 

Logan Lemery
Head of Content // Team Ignite

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