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Tech Brew

Venture Capital

Patrick Kulp

techbrew.com

Can an AI chatbot act as your therapist? 93 million bucks says the answer is yes.

That’s how much money Andreessen Horowitz (a16z), Radical Ventures, Forerunner Ventures, and other firms have poured into Slingshot AI, a mental health startup from Casper co-founder Neil Parikh and AI researcher Daniel Cahn. The company just released its first AI chatbot tool, dubbed Ash, after 18 months of development with 50,000 beta users.

Parikh told Tech Brew that Slingshot was born from a desire to help ease a shortage of mental health providers. He hopes Ash might eventually expand access to certain mental health support to those with issues like depression, anxiety, or social isolation, freeing human therapists to focus on patients with the most serious needs.

 But how can a technology that’s reportedly 

 also provide mental health assistance? One key, according to Parikh, is to equip the AI with the ability to push back on its users.

; their built-in yes-man nature might inadvertently egg people down paths of delusion or paranoia. Parikh said Slingshot’s team has taken pains to ensure that Ash will challenge its users when the situation calls for it.

And unlike ChatGPT, Ash, which is available through text or voice, also ends conversational sessions after it deems a certain amount of progress is made, according to Parikh. “We don’t want to build your best friend or your companion,” he said. “The goal is for Ash to actually help you build relationships in the real world.”

 Daisy Wolf, an a16z investment partner specializing in healthcare technology, said she sees mental health AI as a major investment opportunity, given the shortage of professionals in the space.

“The demand is massive, but we’ll never have enough trained professionals to meet it in our lifetimes. The only way to scale support meaningfully is through technology,” Wolf said in an email. “We believe generative AI has the potential to radically expand access to mental health support…but only if it’s built with deep clinical rigor and consumer trust at the core.”

Bryan Kim, an a16z partner on the consumer AI side, said he sees the dataset that Slingshot has assembled as its competitive advantage.

“These guys are training the model, and they’re obtaining the data; that’s really hard,” Kim said. “That’s a really expensive and difficult path to go on, versus ‘Oh, here’s an LLM—let’s post-train it a little bit; let’s fork it a little bit.’”

 Ash consists of a foundation model fine-tuned on therapy data in “dozens of therapeutic styles and approaches” provided by partner organizations. That dataset is about 1% of the size of the base model’s, which is usually at least trillions of tokens—the equivalent of short words or parts of words. Slingshot also has a clinical team that writes custom responses to help train the model.

The model also uses reinforcement learning with human feedback (RLHF) to continually improve based on user interactions.

 Parikh pointed out that the quest to build a therapybot is far from new, dating back at least to a 

 at MIT in the 1960s called ELIZA. It’s also 

startup currently attempting mental health assistance with AI.

Recent studies have started to evaluate the usefulness of these tools (not including Ash), and the results have been mixed. A 

 warned that AI therapy chatbots tend to be ineffective and dangerous. But a New England Journal of Medicine 

 found the technology “promising” for certain contexts, like anxiety, depression, and eating disorders.

As Ash rolls out, Parikh said Slingshot will be collecting feedback from hundreds of customers every day about how it’s working and what to do differently. It’s free now, but the company plans to eventually monetize it.

“We just want to hear from people about what’s valuable to them and what they want out of a product like this,” he said.

Image of transparent brains blending into each other.

Slingshot AI's Ash wants to be your therapist

Slingshot AI is betting that ChatGPT-like tools can perform mental health services—with the right guardrails.

This well-funded chatbot wants to be your therapist

Morning Brew Creative Studio

Given the macro landscape and wave of AI innovation we’re currently living through, what does it actually take to go public in 2025?

NYSE interviewed senior partners at three VCs to help answer this question. These partners have been taking companies public for decades across all kinds of market cycles (from web to cloud to mobile), which should mightily equip them to weigh in on this consideration.

The VCs we’re referring to are Insight Partners (IPOs include Shopify, Twitter, and Smartsheet), NEA (IPOs include Cloudflare, Salesforce, and Robinhood), and ICONIQ Growth (IPOs include Uber, Sprinklr, ServiceTitan, and Snowflake). So, yes, quite the accomplished list.

FactSet data for IPOs over $50 million in size (not including SPACs) shows activity for 2025 as of May 22 at $11.9 billion deal value across 23 transactions, including Hinge Health, MNTN, and eToro in May, versus $14.8 billion in deal value across 32 transactions for the same period in 2024. The numbers are slightly down, but the potential is certainly still alive.

With this in mind, the waters appear (currently) warm. What do the experts have to say? Let’s get into it.

The short answer: It depends. Your company must meet a general threshold to ensure your offering size is worthwhile. But this threshold isn’t set in stone because every company is unique.

For software companies in particular, Ryan Hinkle, managing director at Insight Partners, said 

“There’s no literal line, but you need an offering of sufficient size to make it worthwhile,” said Hinkle. “And I’m just going to round that to $250 million. If you’re having an offering of less than $250 million, I think you’re getting pretty thin in likelihood. And you’re not going to do a $250 million offering for 40% of the company. That’s not how it works.”

“Most companies wouldn’t want to be public at just $100m of ARR,” he continued. “So you have all these constituencies, that series of paradoxes that it takes to get public: What the underwriters and investors want isn’t necessarily the same as what the management teams want or what the existing boardroom wants.”

Hinkle underscores a pivotal consideration with the mention of all the hands, internal and external, that leave fingerprints on a company’s public offering. Think of it like a balancing act more than a magic, one-size-fits-all solution. What can investors afford? What does the C-suite think? And what does the boardroom want? Ensuring this mix of components doesn’t result in contradictions or shaky foundations is paramount. Hinkle says you need four “yeses” from these different constituents for a green light.

 the importance of having an offering big enough that is worthwhile for institutional investors to participate. “Generally, companies are looking to operate in that 8-12% range from a dilution standpoint. So depending on what you're looking at from a size of IPO, if it's going to be $800 million, and you're looking at 10%, you're generally going to be around $8 billion [market cap]. And if it's $8 billion and you're trading at 10 times, then ideally you have $800 million in terms of forward revenue to kind of have things back into what that scale might be.”

But beyond considerations of scale, there is another important factor to going public: predictability. In other words, is this a company akin to the Googles and Apples of the world, where they operate in a dependable way regardless of their size or influence?

Christine Edmonds of ICONIQ Growth draws from ICONIQ’s 

“When it comes to scale, I don't think there's necessarily a threshold at which all of a sudden it becomes magically an opportunity to become a public company, but I think what it lends itself to is a very predictable volume of customers where you can drive that beat and raise motion,” Edmonds said. “We've seen that the top-performing IPOs are able to beat their revenue projections by closer to 3%–5%, relative to all companies [that] are in sort of the 1%–2% range.”

Scott Sandell, NEA’s executive chairman, gives this notion more color. “You want to be a rapidly growing company, but I come back to predictability. Predictability is really the critical thing for going public,” he said. “It’s very hard to change all four wheels in a moving bus, and once you’re a public company, that’s what it looks like. And you want to be out in the size territory where you have enough liquidity to have broad investor participation in the transaction.”

What should companies ask themselves when determining if they’re ready to go public?

Another million-dollar question (possibly literally).

 go public. In fact, some companies that aspire to reach the public markets should probably consider remaining private, at least for a few more iterations. Understanding if this pertains to you comes down to assessing your product or offering with a critical eye on how it’s currently running and what it’ll take for it to uplevel if need be.

Many companies benefit from staying private for longer because it lets them tie up loose ends and revitalize lagging builds 

 going public. After all, you don’t want your profitability impacted by metaphorically cosmetic errors and/or hardware fixes. Doing this before going public also often looks more polished.

NEA’s Sandell calls back his point on predictability.

“I’m probably starting to sound like a broken record with respect to predictability, but what’s behind predictability?” he said. “You have a product line which you can take to customers. You can predictably grow that business. What kind of a return you’re going to get by hiring the next salesperson or running the next advertisement.”

He also touches on our point regarding innovation.

“Do you anticipate that in order to maintain that growth, you’re going to have to invest significantly in innovation?” he said. “Because that’s hard to do in the public market if it detracts meaningfully from your ultimate profitability. So we have companies in our portfolio that have chosen to stay private because they had a big innovation agenda.”

Sandell cited Databricks as an example of a company meaningfully benefitting from staying private longer.

“Rule of 40 has been a really important metric,” says Will Griffith of ICONIQ Growth. “There’s really more emphasis and value placed on the growth side of that relative to the free cash flow side. And in particular, in today’s environment, that’s roughly a trade of around 2.3 times relative to one margin improvement in profitability…And we’ve seen over time, there’s actually a pretty strong correlation in lower interest rate environments where the Rule of 40 and that multiple is higher in lower interest rate environments where growth is going to be higher prioritized.”

“So growth is really prioritized in this market,” Will continued, “and something that I think companies need to be thinking about is the top priority when we think about going public and sustaining the high multiple in the public markets.”

When compared to other supercycles that investors have invested through (web, e-commerce, mobile, social), how does our current cycle compare?

As you might have guessed: It’s time to talk about AI.

“There are two things to keep in mind,” said Sandell. “One is the cyclicality of the venture business itself and then the secular trends that layer on top of that. We’re in a secular trend of AI, and I would say we’re pretty early on in that. That will probably run 10 or 20 years, maybe 50 years.”

Thinking about the lifecycle of a “trend” like AI is a deeply important context to keep in mind. Is AI the star of this cycle? As Sandell mentioned, he thinks it’s too early, but he thinks AI is a budding understudy.

We’re also in the middle innings of a cyclical change in the venture industry,” Sandell added. “Obviously when interest rates went up, risk went off, not just in the public markets but [also in] the private markets. Capital flowing into the ecosystem dried up substantially. And so everything drives sort of a purging of the ecosystem that I think we’re coming out of now.”

As the beginning of a cycle approaches, the ground seems fertile. So, which companies sprouted through the soil? Sandell said “the really great companies” have survived.

“They’re getting funded, they’re growing fast, but it was a big readjustment,” he continued. “It wasn’t that long ago that it was growth at all costs, and now all you hear about is the Rule of 40 and when you’re going to be profitable and so forth. So I think we’re in the middle innings of that transition. The IPO market is still relatively nascent, but there’s no doubt it will become more and more attractive because more and more of these companies have matured to the point where it makes sense for them to go public.”

This cycle does not appear radically different from previous mega hitters. While trends and lifecycles vary in strength and size, potential doesn’t just still exist for companies looking to go public. It’s currently growing in multiple elements of the market by the day.

Going public in 2025 isn’t just a reflective result of the year’s characteristics; it’s also reflective of a company’s timing, security net, dependability, and capability to set foot into yet another supercycle.

If you’re looking for a dependable partner to go public with, team up with one whose legacy spans every change, pivot, and growth spurt in recent memory: 

Huge celebratory banner on New York Stock Exchange building

NYSE

nyse_june25_article

 Insights from senior partners at VCs on going public in 2025

Experts weigh in on what it really takes.

Going public in 2025

Tricia Crimmins

The National Venture Capital Association has joined the fight to save the Inflation Reduction Act’s clean energy tax credits.

 to the House Ways and Means Committee, the NVCA expressed its support for green tech tax credits now that they’re on the 

 to Congress from green tech business leaders, the NVCA letter emphasized the importance of reliable tax policy for economic development—especially when it comes to startups, which traditionally begin with no or low taxable income.

“Scaling breakthrough energy technologies requires sustained, reliable policy support,” the letter said. “The IRA credits provide the kind of certainty needed to attract long-term investment in American energy innovation, creating jobs, economic growth, and enhancing American energy security.”

To that point, the letter also spotlighted specific IRA tax credits that aid clean tech startups in getting off the ground: provisions allowing for tax credit transferability, which helps early-stage companies fund their initial work; a provision allowing small-scale carbon capture companies to get credits; an investment tax credit that incentivizes supporting domestic clean tech companies; and the investment tax credit for standalone energy storage.

“These credits have played a critical role in supporting early-stage energy technology innovation, enabling promising startups to scale, reduce costs for American consumers, and strengthen our nation’s energy security,” the letter said.

Unlike the BCSE letter, the NVCA’s statement was only signed by NVCA President and CEO Bobby Franklin and not other members of the association. However, it did specifically disclose that both 

 used the IRA clean energy tax credits to deal with “long commercialization timelines and significant capital needs.”

And though the prognosis for the survival of the clean energy tax credits is currently “

,” according to IRA tax credit proponent 

, many trade and business organizations are sending the message to members that the fight is far from over.

“Keep pushing. After the committee votes, it will go to the House floor. If it passes, it will go to the Senate and additional changes will be made there. Then, the House and Senate bills will be reconciled before getting voted on by both chambers again,” Solar Energy Industries Association President Abby Hopper said in a 

. “This is a marathon, and we need to sprint every step of the way.”

National Venture Capital Association urges Congress to protect IRA’s green tech tax credits

The National Venture Capital Association’s letter is the latest in a slew of pleas from business and trade organizations.

VC group urges Congress to protect IRA’s green tech tax credits

Alexa, do you have time for an elevator pitch?

The Alexa Fund, which began in 2015 as a way to 

 in Amazon’s then-burgeoning voice ecosystem, is widening its net beyond its namesake platform. The tech giant’s venture arm recently announced several new hardware- and AI-centric investment areas, along with four startups it’s backing as part of that expanded scope.

 of its Alexa platform with a slew of new generative AI features. It also comes after Amazon pushed into the foundation model game for the first time with the new family of Nova models it announced last December.

Alexa Fund Director Paul Bernard said Alexa’s expanded capabilities offer more avenues for startups to engage in the platform, although that’s not the fund’s sole focus anymore.

“Our mission is not really about advancing Alexa’s cause, per se, like we start with making bets on these themes that have applicability for many parts of Amazon,” Bernard told Tech Brew. “At the same time, Alexa is getting more capabilities. Alexa has ears, Alexa has eyes, Alexa has screens. And so the applicability of these technologies to Alexa is relevant, and is only going to get more relevant.”

The Alexa Fund will cover five new areas:

: Bernard said this category spans new devices and sensors beyond smartphones, as well as conversational AI and other AI-related mobile products that set the stage for an app-free future, where “customers are removed from the constraints of iOS and app stores.”

 “There will be an AI YouTube, there will be an AI Netflix, and we’re interested in things happening in that area,” Bernard said.

 This includes AI agents and chatbots focusing on domains like education, health and wellness, and travel.

 Bernard wants to explore what might come after the current generation of transformer-based models.

 Eventual generalized robots and other physical embodiments of AI.

Along those lines, the fund announced new investments in NinjaTech, an AI agent-based assistant platform; AI media generation studio Hedra; Ario, an AI organization assistant for parents; and HeyBoss, a code-free app development platform.

In addition to funding, Alexa Fund also offers founders access to Amazon’s resources, including APIs and software developer kits (SDKs) and partnership opportunities with Amazon businesses. But with a company as vast as Amazon, there’s not necessarily a guarantee that other parts of the company won’t be competing with a given startup.

“Amazon’s a big company, and oftentimes teams at Amazon don’t know what other teams at Amazon are doing. There’s certain things that are self-evident…areas where Amazon is so focused on a product or an experience where it doesn’t make sense for us to be an investor. In most areas, though, it’s very ambiguous, and especially in the world of AI, where so many of these things are going to combine and work together in some complementary way,” Bernard said.

“You’d be surprised at the sophistication of founders in understanding the world is complex and that things are very fluid, and they need to make their own calculations about the virtues of working with us as a fund that has a demonstrated track record of bringing value to our companies.”

Amazon is far from the only tech company using a venture arm to back companies that might complement its AI goals. Salesforce expanded its AI investment fund to $1 billion last September, OpenAI 

 of different AI startups, and Cisco rolled out its own $1 billion AI fund last June, 

Amazon’s Alexa Fund expands its AI scope

The company’s venture arm is no longer just about voice.

The months after ChatGPT’s release might have seemed like peak hype for generative AI, but it wasn’t until 2024 that the excitement translated into a real breakout year for startups built on the technology.

AI startups pulled in $101 billion last year, a more than 80% jump from the $55.6 billion invested in 2023, according to a recent year-end report from Crunchbase. That marks the biggest year in a decade for AI startups, which previously clocked an $83 billion record in 2021.

But the funding frenzy around AI skewed an otherwise lukewarm venture market; overall funding grew only 3%—$10 billion—from 2023 to $314 billion, well below the boomtime highs of 2021 and 2022.

 Despite the lack of huge growth in the overall funding market, Crunchbase senior data editor Gené Teare told Tech Brew an uptick in the final quarter of 2024 generated some optimism going into the new year.

“What’s changed year over year is the mood in 2024 is very, very different, and we saw a big pickup in Q4,” Teare said. “There’s a little bit more excitement this year than there was a year ago in the venture markets, even though year over year, it kind of looks the same.”

 While nearly a third of AI funding went to foundation model companies like OpenAI, Anthropic, and xAI, Teare noted that number is actually down from 40% in 2023, as a greater proportion of money goes to applied AI and infrastructure.

“What that means is two-thirds went into that sort of infrastructure layer, the chips and the sort of picks and shovels,” Teare said. “But also a lot of funding went into the sort of applied AI space as well.”

 Nearly 20% of 2024 funding—$58.3 billion—went to billion-dollar rounds, a testament to how much money is behind big AI startups. That’s up from around 15% in 2023, according to the report.

Teare said she doesn’t expect AI investing to lose much momentum going into 2025.

“What I’ve seen in speaking to investors is everyone is pretty much focused on AI as a sector. So everything is aligned with a lot of funding going into the AI sector. Investors are focused. Founders are focused. Big Tech is focused,” Teare said. “We’re two years into this moment, and for most investors that you’re talking to, they see this as a decades-long trend that’s going to need to play out.”

 But enthusiasm around AI stands in stark contrast to almost every other sector of startups, where funding growth remains largely stagnant, according to Teare.

“Everything is down from 2021 except for AI,” she said. “And then when I look at all the sectors, they’re all kind of largely in line or slightly below year over year in 2024. So AI is clearly the standout sector. I don’t think any other sector stands out from the crowd as much as AI does in 2024.”

Business hand handing money over to AI hand representing venture capital funding to AI startups.

AI startups had a blockbuster year in 2024

The tech has been carrying an otherwise sluggish venture market.

 earlier in the year, businesses are continuing to spend on generative technology—and investors are still eyeing it as a growth area.

That’s according to a few recent reports we’ve rounded up on the current state of the AI revolution. Data show that generative AI remains the fastest growing area of business software spending, as well as the biggest likely area for startup investment.

 Corporate finance management platform Ramp found that business spending on AI vendors in the third quarter of this year increased 38% from Q2 to reach over $20 million.

Half of the top 10 fastest growing enterprise software vendors on the platform were AI startups, including AI code assistants Cursor, Replit, and Supermaven; video generation and editing platforms Runway and Luma AI; and development platform LangChain.

While OpenAI’s ChatGPT still reigns supreme—Ramp found that businesses chose it over Anthropic’s Claude 80% of the time—more businesses are opting to spend on multiple LLM services. Ramp found that around 22% of OpenAI customers now spend on Anthropic as well, a big boost from the 3% at the start of the year.

 AI has been one of the few bright spots in an otherwise sluggish VC market all year. A new report from Dynamo Software expects that trend to continue in the months to come.

Three-quarters of limited partners surveyed in the report said they plan to increase AI investments in the next 12 months, with cybersecurity, predictive analytics, and data centers garnering the most interest. Autonomous vehicles and computer vision ranked last for sub-fields of AI catching investor attention.

Limited partners are also planning to increase investments in AI-specific funds in the coming months, the report said. In the next half year, 72% said they plan to increase investment in AI funds and 37% of those said the increase would be “very significant.”

 over how much AI might actually boost company productivity, a new report from Accenture claims that the tech is already yielding efficiency results.

The report found that productivity was flat among global companies studied in the past year, and 40% of large companies recorded negative productivity growth. That said, Accenture said one-quarter of companies increased productivity significantly—by more than 8%—and those companies were more likely to be invested in technology like generative AI.

How companies are spending on AI right now

A roundup of some recent data on the tech’s growth.

Investors are still ready to whip out their wallets for AI startups, though there are some signs of possible growing pains ahead for the generative AI craze.

 this week found that the number of deals and amount of funding being poured into AI remained robust in the first quarter of 2024, despite fewer eye-popping cash infusions overall than during parts of last year.

Venture capitalists sank a total of $12.2 billion into AI-related startups across 1,166 deals in the first three months of the year, a 4% uptick in total funding and a 9% increase in deals from the previous quarter. While total investment was down about 25% YoY, Chris Metinko, the report’s author, noted that Microsoft’s 

 to OpenAI last January skewed the scales a bit.

 Those kinds of blockbuster cash infusions may be growing fewer and further between. The report noted that the quarter saw only one billion-dollar-plus deal (the 

) and only two others that surpassed $600 million (California-based 

“While that is still impressive, it seemed like such rounds were being raised every week by an AI startup just last summer as the sector saw some of the biggest raises of 2023,” Metinko wrote.

The ongoing bonanza comes amid an otherwise dreary time for the startup market. A 

 found that the quarterly aggregate value of deals dropped to its lowest level since 2017 in the first quarter, as high interest rates continue to make venture capital investments less attractive.

 While funding may remain strong, some generative AI startups are reorienting or struggling to compete with some of the 

 in a capital-intensive tech race, the New York Times and the 

 both reported in separate features on Monday.

One-time AI startup darling Inflection has been bailed out by Microsoft via some 

. And some early generative AI success stories—

—have each reportedly had to lay off staff.

The flux may indicate that startups are facing 

 as Big Tech in finding business models that monetize AI enough to compensate for the massive investments needed to build it.