Chris Lehane

Check out my recent post on why President Trump is the forcing function for us to solve the “Missing Middle” and catch the industrial Tsunami of onshoring coming to the US!

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Interesting piece from Marc Andreessen on how startups are not getting the regulatory support they need to sustain America's technological leadership. "Regulatory agencies have been green lit to use brute force investigations, prosecutions, intimidation, and threats to hobble new industries, such as Blockchain. Regulatory agencies are being green lit in real time to do the same to Artificial Intelligence." While many investors themselves (both in the US and Europe) are worried how AI will change our lives, our jobs and social interactions, the top VC opinion leader thinks regulation is already too restrictive. #techstartups #techleadership #strategicgrowth

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My thoughts on the Senate AI Working Group's new AI Framework: “We have to wait and see what bills and roles are proposed based off of a lot of this but a lot of it is indeed promising. There's a strong emphasis on R&D, there's a strong emphasis on regulatory clarity, for example, and making sure that our existing laws are clear so that we can ensure easy, confident adoption of these technologies. There was clearly a thoughtfulness that went into this,” Mittelsteadt said. I'd estimate around 75% of the package is headed in the right direction: emphasizing engineering-based solutions, clearing up laws, and making targeted spending bets on talent and other discrete priorities. That said, elements such as AI export controls solutions in search of a problem and a recipe for policy failure. Too much is on the line to overzealously regulate. While action is needed on many fronts, with regard to export controls: “They've been there a broken record since at least 2016 about social media regulation, if not earlier. And when you cry wolf for going on 10 years about technology regulation, people stopped believing you,” said Matt Mittelsteadt, a research fellow at George Mason University’s Mercatus Center. “That's exactly where Congress is, and I think the most likely thing that we can expect is nothing."

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In this week's column: The math at the heart of venture capital is out of whack. Successful exits have become vanishingly few and far between. That’s because it’s been next to impossible for startups to go public, and the regulatory climate for extremely large mergers and acquisitions is generally unfavorable, too. Many venture funds so far have been betting on lower interest rates and better IPO conditions in 2025. But the outlook for lower rates is receding, especially given today's strong jobs report. For many funds, particularly those in the middle quartiles when it comes to assets under management or performance, it’s time to move on with life. To survive, let alone prosper, they need an alternative to the traditional venture capital math based on big-number investments, $1 billion-plus valuations and gargantuan exits. The good news is that current conditions have prevailed since the Fed began raising interest rates in 2022—long enough that a few funds have brought forth alternatives to holding their breath or trying to manifest something better. Touring Capital arrived in 2023 with just such a thought in mind: It has positioned itself as an early growth stage fund with a focus on unconventionally modest Series B rounds. Co-founder and General Partner Nagraj Kashyap knew that startups were staying private for longer, but even he was surprised when research showed IPOs could take 15 years, far too long for venture investors to tie up their capital. And he knew firsthand that billion dollar-plus exits via mergers and acquisitions are exceptionally difficult to achieve. Touring builds relationships with startup founders at an early stage and advises them to take a smaller round of capital than they would traditionally raise, especially at the Series B stage. They get less rocket fuel to underwrite rapid growth, but founders and initial investors’ stakes are also less diluted. That should allow them to ultimately sell their companies for more modest valuations and still make substantial returns on their investment of time and capital. “A larger fund will have to invest in a quantum that is very significant because they can’t do $5 million or $10 million at a time,” Kashyap said. “So they’ll invest between $75 [million] and $100 million. Then you see that that means for the full B round, it becomes $150 million and the dilution for the founder becomes significant. That’s basically the math that goes on, which sometimes artificially takes the pricing higher.” The total size of each B round involving Touring is $30 million to $40 million. But it’s important to see that venture capital, designed to capitalize on “broken” models and experiences in a wide range of markets, is beginning to train its sights on itself, where there’s a pressing need for greater liquidity. 

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We (Climate VC) need to stop making excuses for the growth trajectories of our companies There’s a reason why Matthew Stotts and I chose the venture capital asset class to focus on - it has to GROW fast. And there are a lot of fast-growing, money-making opportunity areas with huge problems that could benefit from highly motivated well-funded and skilled teams looking to build a large company. If you need to make an excuse or caveat for any of the statements in the previous paragraph, you’re in the wrong asset class The good thing about VC is it grows fast and BIG. The clock is ticking on our biggest problem areas - let’s get to work!

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Everyone loves the 'picks and shovels' thesis—but the real untapped goldmine? Vertical agents and applications. 💡 As the underlying foundation models continue to advance, there won't be much space to build unicorn businesses that sit between the models on one hand and agentic applications on the other. (Don’t be surprised if GPT-5 is natively agentic in its architecture and capabilities.) The real opportunity lies in massive end markets ripe for "agentization": industries centered on structured, repeatable activities. Industries • Data Management • Customer Support • E-commerce Operations • Finance and Accounting • Marketing • Human Resources • Healthcare Administration • Supply Chain and Logistics • IT and Software Support • Legal and Compliance Digital Jobs • Virtual Assistants • Content Moderation • Market Research • Quality Assurance • Online Tutoring • Social Media Management • Transcription Services • Digital Advertising • Graphic Design • Software Development Support At Mucker Capital, we've built over a hundred companies in vertical SaaS. We see vertical agents as it's next generation.

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The USPTO's portrayal of the Patent Trial and Appeal Board (PTAB) as a balanced forum for patent disputes has come under scrutiny, particularly in light of recent comments by USPTO Director Kathi Vidal. In a recent blog post, Director Vidal claimed that "almost 70% of challenged patents have been upheld at the PTAB." However, this statement has been criticized as misleading and inconsistent with the PTAB's own data. The Reality Behind PTAB Statistics: Contrary to the USPTO's narrative, the PTAB's own records reveal a starkly different picture: - Of patents that reach a final written decision at the PTAB, 85% lose at least one claim, and 70% lose all claims. - These outcomes demonstrate that the PTAB is overwhelmingly favorable to challengers, not patent owners. This is especially troubling for small inventors and startups who lack the resources to endure such proceedings. Misleading Metrics: The USPTO's "70% upheld" figure appears to include cases where petitions were denied institution or settled before a final decision. While these outcomes technically preserve the patent, they do not reflect the PTAB's adjudicative process. By focusing on broader metrics rather than final written decisions, the USPTO obscures the fact that when cases proceed to judgment, patent owners are far more likely to lose than win. Chilling Impact on Innovation: The PTAB's structure and practices disproportionately harm small entities: - The cost of defending a single PTAB challenge can range from $500,000 to $1 million, making it financially untenable for many inventors to protect their patents. - Large corporations dominate PTAB filings, with companies like Apple, Google, and Microsoft among the top challengers. This dynamic allows well-resourced entities to invalidate patents rather than negotiate licenses or acquisitions. - The uncertainty introduced by PTAB proceedings discourages investment in innovation, as potential backers view patents as unreliable assets. These issues underscore the urgent need for PTAB reform. Legislation like the PREVAIL Act aims to address some of these concerns by curbing abusive practices and restoring balance to the patent system. Without meaningful change, the #PTAB will continue to undermine the #patent system’s mission of promoting innovation and protecting inventors. The narrative that the PTAB is "patent owner-friendly" is not supported by data. Instead, it reflects a system that favors challengers and creates significant barriers for small innovators.

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To all those who saw or followed our post about the new U.S. Congress dataset on Hugging Face for policy areas and subjects... At the suggestion of Marci Harris of POPVOX Foundation, our team at DreamProIT now created a new dataset that includes Congressional committees: https://lnkd.in/gzACiADG With this data set, it should be possible to suggest committees to refer any bill to. As with subjects and policy areas, automating recommendations would not replace the judgment of subject matter experts, but could provide a baseline to show what committee would be assigned based on prior precedents of the House and Senate Parliamentarians. #data #uscongress #library

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Join us for an important conversation next week about platform design and elections with Glenn E., Ravi Iyer, Kaili L., and Nicole Schneidman - how is tech getting in the way and/or facilitating election integrity? 🤔 https://lu.ma/59uxawc5

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I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

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It was great discussing SB 1047, California's controversial AI regulation bill, with legal and policy experts Cecilia Ziniti, CEO of GC AI, Todd O'Boyle at Chamber of Progress, and August Gweon at Covington & Burling. I learned a lot. SB 1047 is causing significant concern for firms like Andreessen Horowitz and Y Combinator, prompting their lobbying efforts. Opponents of the bill highlight three main issues: (1) it places the onus on developers rather than users of AI models, (2) the heavy cost of regulatory compliance discourages smaller developers, and (3) it may stifle open-source AI development and research. If passed, the bill will apply to AI companies, developers, and labs doing business in the state, regardless of where they are based. Governor Newsom's decision will be crucial once the bill reaches his desk. Note: This piece was written before Sen. Wiener responded to a16z and YC. https://lnkd.in/eiYJFDeq Article Link: https://lnkd.in/efiDJyC6

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Hey, remember when David Cohen contradicted (https://lnkd.in/ehjYYgQV) the IAB's Internet For Growth's own lobbying agenda? If anyone needs further proof that IAB/I4G is pretending to advocate for small business while actually serving as a mouthpiece for Google, here you go! I wrote about this, and more in my piece for Ricky Sutton's Future Media. Check it out, if you haven't already. Link: https://lnkd.in/emyyX8Gi #transparency #adtech #bigtech

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As the current co-GP of Juniper, the Climate Biotech Fund, I’ve spent the last week trying to wrap my mind around what Trump 2.0 means for climate tech. I wrote a newsletter with my thoughts. I’ve written a summary of that letter below, and if you’d like to read the full version, you can find that and subscribe to our newsletter here: https://lnkd.in/eSrHFP-3 Big picture, Trump's return to the White House isn't the end for climate tech by any means. Governmental support for some climate initiatives may shrink, but support for others may actually grow. And climate tech is poised to continue to grow regardless of governmental support. I won’t pretend that Trump’s next term will be anything but a setback for reducing greenhouse gas emissions in the short term. However, it’s important to remember that bad for climate change policy does not directly equate to bad for climate tech entrepreneurs. Say you have a sustainable aviation fuel company that's able to make fuel 10x cheaper than any of its competitors. This business is using bio-manufacturing and is 100x more energy-efficient and less pollutive than anyone else in the space. This business is eager to build production-scale plants across the United States. Both the Biden administration and the Trump administration want to support this business; they just use different language to describe why they would like to do so. In the case of our hypothetical business above, the Biden administration wants to support this business because it's climate-friendly and sustainable, and the Trump administration wants to support this business because it's onshoring supply chains capacity and competing with China. The means of support might also be different – whereas Biden may support this business through a DoE loan (like the one Tesla received in 2010), the Trump administration might be more likely to use a DoD grant and advance purchase order. In Juniper’s focus area, bio-manufacturing, the first Trump Administration was especially supportive. They promoted initiatives which aimed to boost domestic bio-manufacturing. As such, many climate biotech companies are in particular very likely to receive different types of government support.  Ultimately, the best climate tech companies are those that have figured out how to make the things we need in a way that is not only more sustainable, but more affordable than the legacy alternatives they replace. These companies will continue to get funded regardless of who is in office because they are great businesses. We may see companies label themselves more as ‘deep tech’ or ‘new industrials’ rather than ‘climate tech’ but make no mistake, the way we make everything is being reformed and made not only more efficient but also more sustainable, regardless of what we call it.

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At Costanoa Ventures, we pride ourselves on identifying and supporting exceptional founders poised to create impactful, lasting change. Hona is a shining example, driven by a trio of extremely talented founders: Manny Griffiths, Joshua Christensen, and Matt McClellan. They each bring unique, differentiated expertise to the table, and Amy Cheetham and I are extremely excited to partner with them. There are approximately 450,000 law firms in the United States, with half of those firms being B2C - think personal injury, mass tort, or immigration law as opposed to BigLaw. One of the reasons we love how Hona is tackling this market is their focus on B2C law firms and product excellence - B2B firms are historically difficult to sell brand new software products into, but B2C firms are completely different buyers. Oftentimes there's just a handful of lawyers and paralegals in a partnership, and any piece of technology they can use to give them an edge would be valuable. 44% of negative Google reviews on law firms directly reference poor communication as the reason for a negative experience, and the number 1 reason for Attorney Bar complaints in the U.S. is "lack of communication". On the lawyer's side, attorneys, paralegals and legal assistants spend an average of 7.4 hours per week on unnecessary updates, redundant communication, and activities that aren't directly contributing towards getting a client's case solved. Manny and the team at Hona are working to change all of that. Hona delivers a tightly-integrated communications platform to help facilitate better communication between law firms and their clients. During legal proceedings, client communications tend to be a large resource-stressor for law firms. Clients will frequently call firms for case updates, legal explanations, or general administrative questions that tend to eat away at firm resources without providing any additional progress toward case resolution. Hona exists to ease that burden - it’s a platform that allows law firms to efficiently communicate with their clients over text, easily build customizable web pages and embed videos, and share information on case status and basic legal process education. This crucial communication processes allow attorneys to focus on their job – moving cases forward, while keeping their clients informed and educated. If you're a lawyer dealing with these problems - don't hesitate to reach out to us or the Hona team! It's a privilege to work with Hona on this journey. The company has been growing at a rapid pace, and they're delivering meaningful technology to help people get through legal proceedings in a much more fluid, transparent, and easy process. Manny, Joshua, and Matt are exceptional founders whose combined skills and dedication to continuous learning position them perfectly to lead Hona to success. They're just getting started, and we can't wait to see what they'll achieve.

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Excellent blog post on the realities of Climate & VC. While these are "tough times for the transition," there are also many opportunities. Significant capital will continue to flow, with Corporate VCs playing a larger role in financing this transition. Through this process, they will strengthen their LP positions in funds tackling climate challenges. I receive weekly calls from large Holding & Corporate VCs seeking introductions to Climate / Energy / Infra VC Funds. When I ask about their target sub-verticals within Climate / Energy, they often mention that they default to focusing on specific regions due to limited resources and coverage. In other words, rather than evaluating whether a DACH VC is better positioned for solar or grid-tech compared to a Nordic or US VC, they simply pursue whichever regions they can access—a haphazard approach at best. I always advise LPs to evaluate VCs within their operating market context. Since sourcing is crucial in venture capital, Holding Cos. and Family Offices should carefully assess a VC's location, regulatory context, and market environment before investing and building a portfolio of Funds. I've heard "I wish I had discovered this VC / region sooner" far too many times... * At ComposeVC's Built World Fund, we do not invest in Climatetech or Energytech directly, only as it relates to our Built World thesis.

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It’s time for Meta to bolster and enforce its election-related content moderation policies and language capabilities. The 2024 election cycle presents a unique challenge for social media giants like Meta who bear responsibility for mediating the spread of election-related misinformation content on their platforms. With over 3 billion daily users across the Meta ecosystem of Facebook, Instagram, and WhatsApp, and a record number of national elections taking place globally this year, the stakes surrounding Meta and its Oversight Board’s powers as disseminators of false and misleading election information are at an all-time high.

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I'm pleased to share an in-depth report published by Christopher Walsh, Partner at 7GC & Co. He offers an in-depth exploration of a subject I'm passionate about – the evolution of AI. Chris also delves into these key factors: – The dramatically magnified investment volumes in generative AI. – Reasons behind escalating job cuts in leading tech companies. – A detailed analysis of venture returns through TVPI and DPI, along with the latest trends. – Current investment themes and the areas 7GC is actively exploring for new opportunities. It's a fascinating read: https://lnkd.in/ekT_QFzx #PrivateMarkets #PrivateEquity #ArtificialIntelligence #VentureCapital #Investment #FinTech #InvestorReport

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Our Deepfakes & Democracy Initiative recommends this insightful discussion of the challenges of regulating political deepfakes. Take a listen.

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My most recent Star Advertiser "Tech View" column series falls into the "obligatory-to-have-in-your-home" department. In my experience acquiring a lockbox (let's call it a mini-safe) to stash cash or valuables such as jewelry and/or items you need to keep away from keiki (i.e. handguns) is a no brainer. There are a variety of safes out there with "security" technology such as biometric sanners, RFID, etc. There are other "low-tech" lockboxes that are purely mechanical devices--no electronics that can malfunction. These can work quite well and don't rely on batteries or a wall plug. That means you can hide them anywhere (like under the kitchen sink). The upshot is that you'll want a respository to safeguard your stuff...

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