Lux Capital has a new $1.15 billion war chest, and cofounder Josh Wolfe says he’s hunting for the most promising A.I. startups

April 19, 2023, 10:43 AM UTC
Josh Wolfe, cofounder and managing partner at Lux Capital.
Courtesy of Lux Capital

If you ask Josh Wolfe, the cofounder and managing partner at science and tech-focused VC firm Lux Capital, the future will look like the stuff of science fiction—a Shazam app on your iPhone, but for detecting smells, or using computers to program cells for specific functions. Now, Lux just raised its largest-ever single fund to invest in those cutting-edge types of technologies—including not-your-typical A.I. startups. 

Wolfe says he wants to use the fresh funds to invest in (among other things like aerospace and defense) a host of artificial intelligence’s possible uses, “particularly in these verticals like biology and drug discovery and what we call the tech of science—applying all of these tools and software to increase the productivity of scientific researchers,” he told me on Friday. 

Lux raised $1.15 billion for its eighth core fund, Lux 8, announced last week—which was reportedly its fastest raise ever, in about 10 weeks, and which will focus primarily on early-stage startups. Though absent this time around, Wolfe told me that they may still raise an opportunity fund, a type of fund typically used to invest later in existing companies—something the firm last raised in 2021 alongside their seventh fund. The new raise comes at a time when VC funding is not only scarce, with global funding hitting a three-year low in the first quarter, but A.I., a key area for Lux, is becoming increasingly hyped and buzzy.

But Wolfe doesn’t have his eyes set on the next Lensa AI or OpenAI. “We now see that if you have deep datasets that are proprietary—we can think about, like, what Bloomberg [has] for financial data—if you have this in certain domains like biology, within hospital or clinical records, you’re going to have an advantage. It’s going to be the equivalent in some cases of being able to train on all of the visual imagery, like some of these folks did from Getty Images, but now on real proprietary biotech, scientific data, clinical data.” He believes there’s “gonna be a big thrust there.”

Wolfe isn’t alone in his views, and other VCs are chattering about how A.I. can be applied to science. In February, I spoke with FPV Ventures’ Wesley Chan about why he sees lots of promise in using A.I. in drug discovery, as startups like FPV portfolio company Enveda Biosciences are doing (Lux is also an investor in Enveda). 

For his part, Wolfe says he’s “absolutely convinced” that there’s going to be an “explosion in entrepreneurial talent and breakthroughs” within that tech-meets-science area. Lux already has two companies, Eikon Therapeutics and Strateos, that let “you see inside of cells in real time and watch how a drug is metabolized,” and that automate labs, respectively. Wolfe predicts a future where scientists will be able to do their work “on the beach in the Bahamas” with an iPad. Where A.I. would come into play, for example, is with an experiment’s data: “It says, you know, ‘We just looked through all the scientific papers of the past 200 years and there was a paper in 1979 and a paper in 1987, and it might lead to a spurious correlation. But do you want to rerun the experiment using these different proof parameters?’ And you just click a button and say yes. Science will be running 24/7 between automated lab robots and A.I.,” Wolfe predicts. 

Lux is looking to invest, among other aspects within A.I., in startups where A.I. can be used as a tool to enable scientists and labs to create hypotheses and do experiments, and projects at the intersection of A.I. and cellular biology “to explore areas that haven’t been explored yet,” like programmable cells.

But for VCs, actually investing in those companies might take time. Wolfe says there are researchers working on these ideas that they’re “pulling together into companies.” He also predicts that there will be more pressure on the big tech companies to do spinouts, adding that space is “ripe for us to be able to capitalize and then partner with them” for new ventures. 

Indeed, Lux helps spin out companies (like they did with scent-cataloging startup Osmo from Google Research), as well as create new companies altogether through what they call Lux Labs, which pulls capital from Lux’s funds. For the firm’s new fund, Wolfe expects “we’ll have between 40 and 50 companies—somewhere between five and 10 will be Lux-created companies from scratch,” he tells me. 

One A.I. project Wolfe says he won’t be investing in is Elon Musk’s planned OpenAI challenger—what Musk is dubbing “TruthGPT.” Wolfe thinks when there’s a buzzy space, “the pendulum always swings a bit too far. All whitespace [is] filled, lots of experiments [are] tried. Most of them fail….But yeah, the Elon thing seems to me to be sour grapes,” he says, seemingly referring to Musk’s resignation from OpenAI, of which he was a founder, after a reported failed attempt to take it over years ago. But “sour grapes” are, as he adds, “often a great motivator.” 

Tribe Capital considering another swing at FTX: Though VC firm Tribe Capital, like other VCs, was burned in the implosion of their now-bankrupt portfolio company FTX, they seem to be considering taking another swing at a possible revamp of the exchange. Per a Bloomberg report, Tribe is reportedly considering leading a $250 million fundraising campaign for a potential FTX reboot, with $100 million from Tribe and its LPs.

Crypto’s M&A boom: As the crypto industry contends with myriad headwinds, some companies are doubling down and bulking up: Per a recent report, mergers and acquisitions in the crypto space hit an all-time high during the first three months of 2023.

See you tomorrow,

Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
Submit a deal for the Term Sheet newsletter here.

Update: The online version of this newsletter has been updated to reflect that Lux Capital is also an investor in Enveda Biosciences.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Odeko, a New York-based operations partner for independent coffee shops, raised $53 million in Series D funding. B Capital led the round and was joined by GGV Capital, Tiger Global Management, Amex Ventures, KSV Global, and FJ Labs

- Semgrep, a San Francisco-based code security solution company, raised $53 million in Series C funding. Lightspeed Venture Partners led the round and was joined by Felicis Ventures, Redpoint Ventures, and Sequoia Capital

- Memora Health, a San Francisco-based clinical automation company, raised $30 million in funding. General Catalyst led the round and was joined by Northwell Holdings, NorthShore – Edward-Elmhurst Health, PagsGroup, and others.

- SpecterOps, a Seattle-based cybersecurity solutions provider, raised $25 million in Series A funding led by Decibel

- Rally, a Portland, Ore-based checkout platform for e-commerce brands, raised $12 million in Series A funding. March Capital led the round and was joined by Felix Capital, Commerce Ventures, Afore Capital, Alumni Ventures, and Kraken Ventures.

- Fervo Energy, a Houston-based geothermal technology company, raised $10 million in funding from Devon Energy Corporation

- Mansa, a Los Angeles-based streaming platform for Black cultural content, raised $8 million in seed funding. MaC Venture Capital led the round and was joined by WndrCo, Galaxy Investment Partners, Base Ventures, Dubin & Co, Rainmaker Films, and Robert F. Smith

- Plexigrid, a Gijon, Spain- and Stockholm-based climate tech startup, raised €4.5 million ($4.94 million) in seed funding. Swedish Polar Structure, Vargas Holding, and TheVentureCity invested in the round. 

PRIVATE EQUITY

- Alsendo, backed by Abris Capital Partners, acquired Ecolet, a Bucharest, Romania-based parcel services platform. Financial terms were not disclosed. 

- Aretum, backed by Renovus Capital Partners, acquired Miracle Systems, an Arlington, Va.-based prime contractor. Financial terms were not disclosed.

OTHER

- GSK agreed to acquire Bellus Health, a Laval, Canada-based biotechnology company, for about $2 billion.

- Butternut Box acquired PsiBufet, a Warsaw, Poland-based dog food company. Financial terms were not disclosed.

- Fama acquired Social Intelligence, a Santa Barbara, Calif.-based social media screening platform for hiring. Financial terms were not disclosed. 

- Infinitum acquired Circuit Connect, Nashua, N.H.-based printed circuit board fabrication company. Financial terms were not disclosed.

- Lessen acquired Blue Skyre, a Chicago-based global facilities management solution provider. Financial terms were not disclosed. 

- Transaction Network Services acquired the managed hosting and colocation business of BornTec, a Chicago-based data transferring platform. Financial terms were not disclosed. 

- ZeroFox agreed to acquire LookingGlass Cyber Solutions, a Reston, Va.-based attack surface management and global threat intelligence company. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- Define Ventures, a San Francisco-based venture capital firm, raised $460 million across two funds to invest in the health care sector.

PEOPLE

- Activant Capital, a Greenwich, Conn.-based growth equity firm, promoted Adam Geisler to CFO and CCO.

- C5 Capital, a Washington, D.C.-based venture capital firm, hired Pete Cooper as a managing director and global head of partnerships. Formerly, he was with the U.K. Cabinet Office

- Capstreet, a Houston-based private equity firm, hired Dustin Hollas as principal, business development, and Alyssa Fox as senior vice president of marketing, operating executive group. Formerly, Hollas was with Clovis Point Capital and Fox was with Alert Logic.

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet