Good morning. Andrew here. Here’s an unusual conundrum facing Silicon Valley: With start-up valuations sky high, venture capital funds are running out of capital to lead fund-raising rounds. Sri Muppidi goes behind the scenes of the latest rescrubbing of the financing game. More below. (Was this newsletter forwarded to you? Sign up here.)
Another jobs showdownStocks are trading just below recent highs, but investors are still on edge about the Fed. The central bank’s next move on interest rates will become clearer after this morning’s jobs report, due at 8:30 a.m. Eastern. Weak data from the Labor Department could buy the Fed and its chairman, Kevin Warsh, more time to stay on hold. But a hot number — especially if next week’s Consumer Price Index report is disappointingly high — could force the Fed to raise borrowing costs to combat persistently high inflation. What to watch for:
Wall Street is divided about this morning’s report. A Reuters poll of economists sees 80,000 new jobs in July. But Adam Schickling, a senior economist at Vanguard, forecasts just 18,000 new hires, with “significant” downward revisions to previous months’ reports.
Watch the bond markets. Bond holders drove up the yields on long-dated Treasury notes and bonds last week after Warsh’s news conference, worried that the Fed wasn’t sufficiently tackling inflation. What is the Fed’s view on rates? Lisa Cook, a Fed governor, and Neel Kashkari, the Minneapolis Fed president, both laid out cases this week for why the central bank should raise borrowing costs to tamp down inflation. Alberto Musalem, the St. Louis Fed president and a nonvoting member this year, said yesterday that the Fed was already late in raising rates. A rate hike would most likely rankle President Trump, who has repeatedly pressured the Fed to cut rates. “A steady labor market and sticky inflation support our call for three hikes this year,” economists and analysts at Bank of America wrote to investors yesterday. Warsh may be more hawkish on rates than many expect, The Financial Times reports, citing unnamed sources familiar with his thinking. He could support raising borrowing costs as soon as next month depending on the latest economic data and the market reaction to it. The futures market this morning sees a 55 percent chance that the Fed will raise rates in September at its next meeting. (The odds implied by bets on Kalshi are evenly split.) Follow The Times’s coverage of today’s report here.
A New Mexico judge orders Meta to pay $567 million. Yesterday’s ruling comes on top of a $375 million award from the jury, which found the tech giant liable of designing products that enable harm of minors. (The judge also required Meta to change how children access its platforms.) It is the latest setback for the company, which is battling a series of state lawsuits. Google’s debt binge continues. Alphabet received roughly $115 billion worth of orders for its latest bond sale, more than four times what it was seeking, Bloomberg reports, citing unnamed sources. (Last month, investors punished the tech giant for its artificial intelligence spending plans.) Elsewhere, SK Hynix, the South Korean memory chipmaker, is set to spend $38 billion to expand production amid robust demand. Washington’s yen intervention reportedly blindsides the European Central Bank. The Treasury Department’s unusual move last week to prop up Japan’s currency involved selling euros, a transaction that the E.C.B. learned about only after the fact, The Financial Times reports, citing unnamed sources. Some E.C.B. officials see the lack of coordination as a breach of longstanding conventions, potentially adding to European tensions with the Trump administration. Big A.I. deals cause headaches for V.C.sThe scale and unrelenting pace of the artificial intelligence boom are driving markets and reshaping the global economy. That growth has created an unexpected new challenge for venture capitalists and start-ups, Sri Muppidi reports. The problem? V.C.s tell DealBook that the average fund-raising round is getting so big — even at the earliest stages — that it’s becoming hard to get a firm to step forward as the leader and write the biggest check for new funding events. “Seed rounds are now billion-dollar rounds as well,” said Gayatri Sarkar, the founder and C.E.O. of Advaita Capital, a growth-stage venture fund. Average deal size has soared in 2026. Through the end of June, there have been 7,541 fund-raising deals completed for a total value of $412.7 billion, according to PitchBook. That compares to $319.2 billion in all of 2025 across 15,762 deals.
Step back: Typically, multiple investment firms back a start-up that’s raising money, with one lead investor usually setting the terms of the deal, such as the company’s new valuation. Other venture firms contribute smaller checks to fill out the round. But with A.I. start-ups raising huge sums out of the gate, there are only so many firms that can dole out hundreds of millions of dollars to lead a round. (V.C. firms can also co-lead rounds.) One example: Volta, an A.I. cloud start-up founded just seven months ago, raised $300 million this week in early-stage funding at a $2.4 billion valuation. The round was led by the Silicon Valley heavyweights Azora, Andreessen Horowitz, Altimeter Capital and Nvidia. Early-stage venture funds may only manage funds in the hundreds of millions — sometimes less than the size of a single A.I. start-up’s fund-raising round. What to watch: Will the number of V.C. firms able to lead major funding rounds continue to shrink? Some V.C.s believe so. There could also be more “lead-less” funding rounds. And if you’re not the hottest start-up in Silicon Valley, V.C.s say, it may take longer to rally investors and raise the capital you need. QUOTE OF THE DAY “It began as satire. Then the submissions started arriving.”Madi Walser, a comedian and entrepreneur, on a website she created advertising artists who were willing to stay in empty New York City vacation homes, one of many proposals that have emerged to help owners avoid a new pied-à-terre tax. (Walser’s site drew enough interest from homeowners that she’s now looking to hire lawyers.)
Chinese robots are having an I.P.O. momentIf you spend time scrolling social media, you’ve most likely seen human-looking robots moving dexterously. Many of those robots, known as humanoids, are the product of Unitree Robotics, a Chinese company. On Monday, Unitree is set to debut on the Shanghai Stock Exchange. It’s seeking to raise about $900 million in a public offering that would value the company at roughly $9 billion. The humanoid robot industry is seen as a critical technology by investors and governments alike, Steve Lohr and Xinyun Wu of The Times report: Today’s A.I. systems, like chatbots, learn primarily from analyzing vast quantities of digital data culled from the internet and elsewhere. But humanoid robots will increasingly learn by interacting with people and objects in the physical world. That emerging field is known as “embodied A.I.” or “physical A.I.” Self-driving cars are one application, but humanoid robots are expected to operate in more varied and unpredictable environments — from factories and warehouses to stores and, eventually, homes. For technology companies, humanoids represent an emerging market for chips and software. Jensen Huang, the chief executive of the American chip giant Nvidia, has declared physical A.I. as the “next frontier” for artificial intelligence. Unitree’s offering will serve as an early litmus test of the market’s interest in the technology. While the near-term commercial application of humanoids is still small, the tech’s long-term potential is huge: A Morgan Stanley report estimates that the market could exceed $5 trillion by 2050 and that as many as one billion models could operate worldwide. The national security stakes are high. Last month, the Federal Communications Commission announced a U.S. ban on humanoid and quadruped robots from China. Security officials are concerned that the robots, if deployed in commercial and residential settings, could collect sensitive data. The ban drew a threat of retaliation from China. China is still powering ahead, Lohr and Wu write: Chinese manufacturers shipped roughly 18,500 humanoid robots in the first half of this year, compared with about 4,000 by U.S. companies, according to Omdia. Unitree’s products range from less than $5,000 to more than $150,000, spanning industrial, educational and consumer markets. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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Correction: Yesterday’s newsletter misstated the amount invested in special purpose vehicles on Sydecar’s platform in 2022. It was $100 million, not $100 billion. Thanks for reading! We’ll see you tomorrow. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com. Follow DealBook on Instagram: @nytdealbook |
