And this week saw the Sam Altman-led company unveil its long-awaited GPT-5, along with a sweeping U.S. government partnership. There’s also a key number now in the mix: $500 billion, the reported new valuation OpenAI is set to hit amid a share sale. 

That half-a-trillion number—up from $300 billion—is stunning on many levels. I’ll spare you the obligatory market cap comparisons (“that’s the equivalent of 10 Ford Motor companies!”). Wild though the prospective valuation may seem, it also poses important questions about where we are in the cycle of this AI boom. Venture funding, overall, isn’t booming as much as you’d expect. According to new Crunchbase data, global venture funding hit $29.7 billion in July, down from $43 billion in June. AI, of course, continues to attract most of the action, accounting for 37%, or $11 billion, of the July funding numbers.

And for the top-tier AI deals, valuations are breathlessly high, and that’s not just the case for OpenAI: Anthropic’s reportedly heading towards $170 billion, Perplexity’s reportedly at $18 billion, and Elon Musk’s xAI (yes, also reportedly) is chasing a valuation of $200 billion. This is all happening quickly, said Nnamdi Okike, cofounder and managing partner of 645 Ventures. 

“Many companies are raising huge amounts of money in very short periods of time,” he told Fortune. “Even when there’s fundamental substance behind the rounds, that means there’s typically some dislocation. If you zoom out, how many winners are there really going to be? That’s the really important question. With a rising tide, what typically gets missed is that—in most markets—there are only a couple winners. It might be the case that these fast-rising valuations are justified for one or two of those winners. But it’s certainly not the case that rapidly increasing valuations are justified across the board.” 

Okike does think OpenAI could be a long-term winner. But he’s also a history buff, noting that broadly we’re seeing classic signals of market euphoria and potential bubbles.

“History teaches us that when valuations go up very rapidly, when round sizes and valuations are higher than they’ve ever been, those signs indicate euphoria,” said Okike, who sees echoes of the Dotcom bust and the search engine wars. “They indicate potential bubble-like qualities, and that investors should be very careful when rounds and prices increase as quickly as they’re increasing.” 

See you Monday,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Venture Deals

- August Health, a San Francisco-based electronic health record platform for senior living experts, raised $29 million in Series B funding. Base 10 Partners led the round and was joined by General Catalyst, Matrix Partners, and others.

- Tavily, a New York City-based search layer for AI applications, raised $25 million across seed and Series A rounds. Insight Partners and Alpha Wave Global led the $20 million Series A.

- Orbital Operations, a Long Beach, Calif.-based orbital vehicle manufacturer, raised $8.8 million in seed funding. Initialized Capital led the round and was joined by Harpoon Ventures, DTX Ventures, Rebel Fund, TRAC VC, Karman Ventures, and others.

- Translucent AI, a New York City-based developer of AI-powered financial analyst software for health care operators, raised $7 million in seed funding. NEA led the round and was joined by Virtue, FPV, and Redesign Health.

- Tracelight, a London, U.K.-based developer of AI technology for financial modeling, raised $3.6 million in seed funding. Chalfen Ventures led the round and was joined by Acequia Capital, Inovo, EF, and angel investors. 

- Ostra Security, an Eden Prairie, Minn.-based managed security provider, raised $2.6 million in a Series A extension. General Catalyst and Rally Ventures led the round and were joined by Jeff Cowan at CapitalFour.

Private Equity

- Versaterm, backed by Permira and Banneker Partners, acquired DroneSense, an Austin, Texas-based developer of drone software designed for use by public safety agencies. Financial terms were not disclosed.

Exits

- Shamrock Capital acquired Penta Group, a Washington, D.C.-based stakeholder management firm, from Falfurrias Capital Partners. Financial terms were not disclosed.

IPOs

- Firefly Aerospace, a Cedar Park, Texas-based space and defense technology company, raised $868 million in an offering of 19.3 million shares priced at $45 on the Nasdaq. The company posted $108 million in revenue for the year ending March 31, 2025.

- WhiteFiber, a New York City-based AI infrastructure company, raised $159 million in an offering of $9.4 million shares priced at $17.

People

- Bain Capital Ventures, a San Francisco-based venture capital firm, promoted Abby Meyers and Ron Miasnik to partner.