For Seth Rosenberg, an investor at VC firm Greylock Partners, there’s one underrated area that he’s eyeing for A.I. investments. “People talk about, ‘Is the best opportunity for A.I. in startups or incumbents?’ I think there’s opportunities in both, but I think there’s a third category that’s maybe a little bit overlooked, which is companies that are maybe one to two years old, that have an amazing product or some amazing value that can be significantly accelerated with A.I.,” he told me. “In some ways, they’re really at a sweet spot, because they’re more nimble than an incumbent to…totally change their business model, totally change how the product is built to be A.I.-optimized, but they have a head start versus a brand new seed-stage company.”  

Rosenberg reasons it’s easier to incorporate A.I. technology into an established (but still young) business for something like, say, mortgage origination, than the other way around. A fledgling startup “would need to spend the next two years figuring out underwriting, getting capital markets partnerships, getting servicing contracts, and…two years from now, then they would start adding on A.I. to automate the process,” he said. But Greylock’s portfolio company Pine, a Canada-based digital mortgage lender, has “already done all that.” While A.I. wasn’t part of the investment thesis when the firm invested in Pine in 2022, Rosenberg says it’s now a big part of their strategy moving forward.

It all plays into Rosenberg’s thesis around competitive advantage in A.I. He says he views it in two ways: Is the main value of the business derived 80% from the large language model the startup is using, or 80% from something else? For companies like Pine, Rosenberg argues that 80% of their value comes from their fintech business versus what A.I. model or technology they use. That formula—80% fintech + 20% A.I.—can make these companies hard to compete with, he thinks. 

But I wonder, what’s to stop the incumbents—be it Big Tech or in financial services—from just buying up these startups or A.I. teams to do it themselves? And aren’t pretty much all companies talking about using A.I. now? 

When I asked Rosenberg, he theorized that even if these incumbents are able to acquire A.I. talent, it’s harder for them to totally overhaul (in his words, “destroy”) how their business currently works. But in a larger sense, Rosenberg believes investors “over intellectualize” the competition question. “If you think of the massive consumer technology platforms that have been built over the last 10 years, most of them don’t have, like, a crazy [intellectual property] moat,” he says.  

Though they haven’t made any recent investments in these types of companies, Rosenberg says, he’s been looking into it in addition to helping Greylock’s current portfolio A.I.-ify themselves. Whether or not Rosenberg’s strategy would pay off, it could have one major benefit: Investing in startups that are still branded as a “fintech” or “healthcare” company could help the firm avoid paying an inflated A.I. premium. 

See you tomorrow,

Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Kincell Bio, a Gainesville, Fla.-based contract development and manufacturing organization focused on cell therapies, raised $36 million in funding led by Kineticos Ventures. 

- Protect AI, a Seattle-based A.I. and machine learning security company, raised $35 million in Series A funding. Evolution Equity Partners led the round and was joined by Salesforce Ventures, Acrew Capital, boldstart ventures, Knollwood Capital, and Pelion Ventures.

- ev.energy, a London- and Palo Alto, Calif.-based electric vehicle managed-charging software platform, raised $33 million in Series B funding. National Grid Partners led the round and was joined by Aviva Ventures, WEX Venture Capital, InMotion Ventures, Energy Impact Partners, Future Energy Ventures, and ArcTern Ventures.

- Collaborative Robotics, a Santa Clara, Calif.-based robotics company, raised $30 million in Series A funding. Sequoia Capital led the round and was joined by Khosla Ventures, Mayo Clinic, Calibrate Ventures, Neo Ventures, and 1984.vc. 

- GlossGenius, a New York-based business solution for the beauty and wellness industry, raised $28 million in Series C funding. The Growth Fund of L Catterton led the round and was joined by Bessemer Venture Partners and Imaginary Ventures. 

- AutogenAI, a London-based A.I.-enabled procurement and tender writing platform, raised $22.3 million in funding from Blossom Capital. 

- Bunker, a Singapore-based financial analytics platform, raised $5 million in funding. Alpha JWC, January Capital, Northstar Group, GFC, Money Forward, and other angels invested in the round. 

- Effectiv, a San Francisco-based fraud and risk management platform for financial institutions and fintech companies, raised an additional $4.5 million in seed funding. Better Tomorrow Ventures led the round and was joined by Accel and other angels.

- Flipturn, a New York-based EV fleet operations platform, raised $4.5 million in seed funding. Accel led the round and was joined by Comma Capital and Background Capital. 

- Materials Nexus, a London-based deep tech company, raised £2 million ($2.59 million) in funding. Ada Ventures led the round and was joined by High-Tech Gründerfonds, The University of Cambridge, MD One Ventures, and others. 

- Space DOTS, a London-based miniaturized in-situ testing developer for advanced materials in space environments, raised $1.5 million in pre-seed funding. Boost VC, Sie Ventures, 7Percent Ventures, Blue Wire Capital, and other angels invested in the round.

PRIVATE EQUITY

- Haveli Investments agreed to acquire Certinia, a San Jose-based Services-as-a-Business platform, from Advent International and Technology Crossover Ventures. Financial terms were not disclosed.

- H.I.G. Capital agreed to acquire RBmedia, a Landover, Md.-based audiobook publisher, from KKR. Financial terms were not disclosed.

- NewSpring Holdings acquired Bridge Core, a McLean, Va.-based visual intelligence, cybersecurity, and other technical solutions to the U.S. government intelligence community. Financial terms were not disclosed.

- The Any Hour Group, backed by Knox Lane, acquired Black Diamond Experts, a Salt Lake City-based home services provider, and Bumble Breeze, a Las Vegas-based heating, cooling, indoor air quality, and plumbing service provider. Financial terms were not disclosed. 

OTHER

- Aprio acquired Culotta, Scroggins, Hendricks & Gillespie, PC, a Birmingham, Ala.-based accounting and business consulting firm. Financial terms were not disclosed.

- Coro acquired Privatise, a Jerusalem-based network security solutions supplier for in-office and remote work. Financial terms were not disclosed.

- Cumming Group, jointly owned by New Mountain Capital, Tailwind Capital, and management, acquired PCM Consulting, a North Andover, Mass.-based project and cost management consulting firm. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

- Bansk Group, a New York-based private investment firm, raised $800 million for a fund focused on investing in and building consumer packaged goods brands. 

- KKA Partners, a Berlin-based private equity firm, raised €230 million ($254.76 million) for a fund focused on SME companies and growing enterprises through technology enablement in the DACH region. 

- Prime Movers Lab, a Jackson, Wyo.-based venture capital firm, raised $245 million for a fund focused on early-stage investments in climate tech, space, semiconductors, and other sectors.

PEOPLE

- Battery Ventures, a Boston- and San Francisco-based investment firm, promoted Danel Dayan and Max-Julian Kaye to principal and Becca Jones to vice president. 

- ICONIQ Growth, the San Francisco-based growth investment arm of ICONIQ Capital, promoted Roy Luo to general partner.