Which makes sense—set in the 1870s in a lawless South Dakota town, it’s a coarsely poetic Western TV show that’s all about the gold rush. 

But here’s the thing: For all the show’s talk of gold, the characters (and the audience) almost never see any. I’ve watched all three seasons twice, and don’t remember seeing more than one or two gold bars ever cross the screen. 

Such is the nature of a gold rush—risk-taking, entrepreneurial people all sprinting to stake their claim and turn that claim, with mining and experience, into a fortune. But definitionally, few ever see life-changing gold. It’s a corollary I’ve been applying to AI and got to chatting about with Rob Biederman, Asymmetric Capital managing partner. 

“Most people looking for gold lost money, and most people backing AI concepts are going to lose money,” said Biederman. “The gains are going to accrue to a relatively small number of firms…Not to be defeatist, but I think in most of these fairly obvious AI spaces, fully 80% or 90% of people who invest are going to lose money.”

Our conversation occurred as the VC sector sifted through a heap of new data. Crunchbase and PitchBook each delivered their latest reports, and the numbers underscored that while the AI boom booms, venture as a whole remains characterized by liquidity limitations and lingering uncertainties.

PitchBook isn’t ready to call a comeback, but deal counts are looking up: In Q2 this year, U.S. VCs invested $55.6 billion in 4,226 deals, marking the highest quarterly deal count since Q2 2022.

Deal value is also at an eight-quarter high, but with a caveat: That high is propped up by heavy hitters and superstars, like when NBA star Luka Doncic scored 73 against the Atlanta Hawks last season. Sure, a win’s a win, but the final score doesn’t reflect a balanced team. That paradigm applies here too: CoreWeave’s whopping $8.6 billion Series C and Elon Musk-led xAI’s $6 billion Series B, which alone account for 26.3% of Q2’s aggregate deal value, according to PitchBook’s analysis. Globally in Q2, AI startups raised $24 billion, making AI the top sector for funding for the first time since November 2022, when OpenAI’s ChatGPT launched.

The uptick in VC funding may be an encouraging sign to many in the industry, but Biederman sees trouble in the numbers: Too many investors are backing too many companies that are just too similar, and that means the returns just won’t be there for LPs.

“My concern, and why I’m speaking out now in some sense, is that as the returns from some AI investments come back and are disappointing, I don’t want people to use that to write off venture capital,” said Biederman. “It just means that perhaps we don’t need to fund 50 or 60 versions of the same idea.”

Biederman’s point isn’t that there’s no gold in the AI hills—he’s very clear with me that he’s not an AI bear. His philosophy is summed up by a sign in Asymmetric’s office that reads “conventional methods, conventional outcomes.” Applied to AI, that means looking for startups in places that aren’t obvious and that might even seem incredibly specific. Think: vertical market software applications that are “10x better” because of AI, where the technology meaningfully improves processes for customers in the legal, healthcare, and insurance industries. 

Other use cases he’s excited about include AI applications that evaluate long-term disability and workers comp insurance claims, and use cases where AI is able to turn physical blueprints into instructions for, say, airplane assembly. 

“The history of financial bubbles and hype usually shows bad to average returns in obvious spaces and shockingly good returns just off the beaten path,” Biederman added via email.

Biederman’s thesis made me think about the broader generational shift in venture right now, as some funds look to change hands while new ones spin out. 

“Gold confers power,” says Deadwood’s arch-villain, George Hearst. “Power comes to any man who has the color.” (That color, naturally, is gold.) And he’s right: Success is transformative, and success in this AI boom could ultimately tip the Silicon Valley scales of power—especially for younger or smaller firms that, on land less traveled, get to see gold. 

Weekend reading…In this week’s “Ask Andy” column, Bonobos cofounder Andy Dunn answers a rather philosophical one: What’s the biggest challenge founders are facing today that can’t be solved with or by technology? Dunn’s answer is multi-layered: “My first gut reaction was to say ‘fundraising.’ The magnetic, mission-driven zeal that is bedrock to raising venture capital seems to be a hard thing to imagine even generative AI (whatever that is) being able to replicate…Then I thought about your question some more.” Read the whole column here. 

See you Monday,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Helsing, a Munich, Germany-based company that provides governments and industries with AI tools designed to promote democracy, raised €450 million ($488.8 million) in Series C funding. General Catalyst led the round and was joined by Elad Gil, Accel, Lightspeed, Plural, and Greenoaks.

- Element Bioscience, a San Diego, Calif.-based DNA sequencing company, raised $277 million in Series D funding. Wellington Management led the round and was joined by Samsung Electronics, Fidelity, Foresite Capital, and others. 

- Earned Wealth, a New York City-based financial services firm for medical professionals, raised $200 million in funding. Summit Partners and Silversmith Capital led the round and was joined by Juxtapose, Hudson Structured Capital Management, and Breyer Capital.

- Fireworks AI, a Redwood City, Calif.-based generative AI inference platform, raised $52 million in Series B funding. Sequoia Capital led the round and was joined by NVIDIA, AMD. and MongoDB.

- Buildots, a Tel Aviv, Israel-based AI-powered progress management platform for construction projects, raised $15 million in funding. Intel Capital led the round and was joined by OG Tech Partners and existing investors.

- Soda, a New York City-based AI-enabled data quality management company, raised $14 million in funding from existing investors Singular, Point Nine, and others. 

- Medal, a New York City-based platform for capturing and sharing short form gaming content, raised $13 million in funding from Arcadia Capital, peak6, Horizons Ventures, and OMERS Ventures. 

- Jacobi Robotics, a Berkeley, Calif.-based developer of AI-powered technology designed to make programming and deploying robots more efficient, raised $5 million in seed funding. Moxxie Ventures led the round and was joined by Foothill Ventures, Humba Ventures, The House Fund, and existing investors Swift Ventures, Berkeley SkyDeck Fund, and LDV Partners.

PRIVATE EQUITY

- Bain Capital agreed to acquire Envestnet (NYSE: ENV), a Berwyn, Pa.-based provider of wealth management technology for investment advisors, banks, and more, for $4.5 billion.

- Platinum Equity Advisors agreed to acquire Héroux-Devtek, a Longueuil, Québec-based manufacturer of aerospace products and landing gear, for approximately $1.35 billion.

- Madison River Capital completed a $190 million recapitalization and $70 million equity investment in JDC Power Systems, an Armonk, N.Y.-based electrical systems integrator for data centers. 

- Long Ridge Equity Partners invested more than £100 million ($129 million) in QX Global Group, a Skipton, U.K.-based provider of consulting and other business process management services. Financial terms were not disclosed.

- Edison Partners invested $15 million in Seismos, an Austin, Texas-based developer of acoustic sensing technology designed to provide subsurface data and insights for drill holes, pipelines, and other enclosed structures

- Infor, a portfolio company of Koch Equity Development, acquired Acumen, a London, U.K.-based provider of revenue growth management solutions. Financial terms were not disclosed. 

- Insurcomm, a portfolio company of Summit Partners, acquired Soil-Away Restoration Services, a Hooksett, N.H.-based disaster restoration company. Financial terms were not disclosed.

- Thrive, backed by Court Square Capital Management and M/C Partners, acquired The Longleaf Network, a Greensboro, N.C.-based provider of IT managed services. Financial terms were not disclosed.

EXITS

- Vallen Distribution, a portfolio company of Nautic Partners, acquired Eastland Engineering Supply, a Dublin, Ireland-based service provider for MRO program supply chain and operations needs, from MML Growth Capital Partners Ireland. Financial terms were not disclosed.

PEOPLE

- The life sciences team at J.P. Morgan Private Capital hired Joseph Stiletto as a managing partner. Formerly, he was with Vivo Capital.

- Upfront Ventures, a Santa Monica, Calif.-based venture capital firm, promoted Kesar Varma to principal.