Deeptune, an Andreessen Horowitz-backed startup, builds simulation environments where AI agents practice real-world tasks before touching production systems—think a flight simulator, but for AI agents learning how to use Excel, Salesforce, and Slack. Financial terms weren’t disclosed. And according to Mercor, Deeptune’s team will be relocating to New York.

Foody was listed as an angel investor in Deeptune’s $43 million Series A just three months before the acquisition closed. Foody told me the angel check was written with acquisition already in mind: “It was in a lot of ways the main motivation, actually.” Call it relationship-building or call it a strategic hold. Either way, a16z funded Foody’s future acquisition target, and Foody got a front-row seat before making his move.

The deal is also a direct answer to where the AI training market is heading. Frontier labs (and Mercor customers) like Anthropic and OpenAI now need full digital replicas of enterprise software environments where their agents can practice, fail, and learn. Mercor’s network of more than five million domain experts already builds the tasks and scoring rubrics that tell a model whether it did the job right. Deeptune builds the apps those tasks run inside. Together, they cover the full stack.

Foody claims Mercor is already the market leader in building these so-called reinforcement learning environments—and that all of the Mag Seven except Tesla are customers. The company hit $2 billion in ARR in June, up from $1 billion last year. Foody described the jump as “the fastest growth trajectory ever” from $1 million to $2 billion ARR in 24 months.

Mercor’s acquisition comes on the heels of a massive data breach in March. Hackers exploited a supply chain vulnerability in LiteLLM—an open-source Python library widely used to build AI tools—and exfiltrated an estimated four terabytes of Mercor’s data. This included contractor Social Security numbers, passport scans, interview recordings, facial biometrics, and internal records revealing how Anthropic labels safety data and how Meta builds reinforcement learning pipelines. The hacking group Lapsus$ claimed responsibility and offered the data for sale on Telegram. A class action was filed in April against Mercor in California. 

Foody spoke about the breach like a thing of the past, with the confidence of someone whose customers already voted with their wallets: “Every frontier lab has expanded their relationship with us since the data breach,” he claimed. “The business grew from a $1 billion revenue run rate to $2 billion in ARR in the last four months.”

That’s either a remarkable display of customer loyalty or a reminder that Frontier Labs has nowhere else to go at this scale. 

See you tomorrow,

Lily Mae Lazarus
X: @LilyMaeLazarus
Email: lily.lazarus@fortune.com
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Joey Abrams curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

- Kaon AI, a San Francisco-based generative AI platform and research lab focused on interactive entertainment, raised $60 million in funding from B Capital, Redpoint Ace, Goodwater Capital, and DCM.

- Vendelux, a New York City-based AI-powered business-to-business event marketing platform, raised $50 million in Series B funding. Tribeca Venture Partners led the round and was joined by S3, Pelion Ventures, HubSpot Ventures, and others.

- Alta, a Tel Aviv, Israel-based AI system designed for go to market teams, raised $25 million in Series A funding. IN Venture led the round and was joined by Mindset Ventures, Skywell Capital, LeumiTech77, and existing investors.

- Axle Energy, a London, U.K.-based company that turns EV chargers, batteries, and heat pumps into grid-balancing capacity, raised $25 million in Series A funding. Energize Capital led the round and was joined by existing investors Accel, Picus Capital, and Eka Ventures.

- Fleek, a London, U.K.-based developer of AI infrastructure for the secondhand clothing industry, raised $25 million in Series B funding. Burda Principal Investments led the round and was joined by eBay, FJ Labs, H14, and existing investors.

- EdVisorly, a Los Angeles, Calif.-based AI platform for college enrollment and admissions, raised $13.3 million in Series A funding. Breachway Capital led the round and was joined by U.S. News & World Report, Lumina Foundation, Strada Education Foundation, and others.

- geoSurge, a London, U.K.-based AI startup that builds data infrastructure for brand visibility in generative AI systems, raised $12 million in seed funding. AlbionVC led the round and was joined by Play Ventures, Octopus Ventures, Celero Ventures, Boost Capital, and

- Hakimo, a Menlo Park, Calif.-based AI physical security monitoring company, raised $12 million in funding. Zigg Capital led the round and was joined by Neotribe Ventures, Vertex Ventures, Defy.vc, and Rocketship.vc.

- Emesent, a Milton, Australia-based autonomous mapping and robotics company, raised $10 million in funding from Main Sequence, QIC Ventures, Orion Resource Partners, Hostplus, and NGS Super.

- Kord, a London, U.K.-based fintech startup focused on identity verification and payment processing, raised £6.4 million in Series A funding. Guinness Ventures led the round and was joined by Beringea, SFC Capital, and angel investors.

- Savi Security, a Los Angeles, Calif.-based app designed to protect users from AI scams, raised $7 million in seed funding. Acrew Capital led the round and was joined by Magnify Ventures, TTCER, and Resolute Ventures.

- Pixel-Flo, a Sheffield, U.K.-based MicroLED display manufacturing company, raised £5.3 million in seed funding. Northern Gritstone led the round and was joined by SCVC, the Parkwalk Northern Universities Venture Fund, and HTGF.

PRIVATE EQUITY

- Bregal Sagemount acquired a majority stake in Pandion Optimization Alliance, a Fairport, N.Y.-based group purchasing organization. Financial terms were not disclosed. 

- Capitol Meridian Partners acquired Westway Enterprises, a Herndon, Va.-based classified workspace company. Financial terms were not disclosed.

- Recognize acquired a majority stake in Smartlink, an Annapolis, Md.-based digital infrastructure services company. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- Paradigm, a San Francisco-based venture capital firm, raised $1.2 billion for its fourth fund focused on AI robotics, space, and other tech companies.

- Skynight Capital, a Burlingame, Calif. and New York City-based private equity firm, raised $2 billion for its fifth fund focused on health care, financial services, and tech-enabled services companies. 

PEOPLE

- Grishin Robotics, a Menlo Park, Calif.-based venture capital firm, promoted Elias Can to Partner.

- Highland Europe, a London, U.K. and Geneva, Switzerland-based private equity company, promoted Jacob Bernstein to Partner.

- Singular, a Paris, France and London, U.K.-based venture capital firm, appointed Laura McGinnis as Partner. Previously, she was with Balderton Capital.