Menlo Ventures Raises $1.35 Billion for Fledgling AI Firms

Menlo Ventures has raised $1.35 billion to invest in artificial intelligence (AI) ventures.

The new capital will be split between early-stage fund Menlo XVI and early growth fund Menlo Inflection III, partner Matt Murphy told Bloomberg News Thursday (Nov. 16). 

The focus will be on fledgling AI companies and not later-stage investment, Murphy said, adding that AI has become an important focus for Menlo, which has also backed Anthropic.

He said that despite the tough fundraising landscape, Menlo could generate large funds because of its track record and also because it invests at earlier stages.

“The place where valuations got the most egregious were in the growth market where we don’t play,” he said, saying that Menlo’s limited partners appreciated that it adhered to its early-stage goal and “stayed focused and disciplined.”

Menlo’s news comes days after a group of more than 40 venture capital (VC) firms, including General Catalyst, Felicis Ventures, Bain Capital, IVP, Insight Partners and Lux Capita, signed voluntary commitments around how the startups they back should develop AI technology responsibly as the technology and the copmanies behind it continue to grow.

“Sound familiar? It’s because voluntary commitments around AI safety are all the rage,” PYMNTS wrote. “The White House had one, and the commitments signed by the over three-dozen VC firms were in fact created with feedback from the Biden administration’s Department of Commerce.”

The initiative comes from Responsible Innovation Labs, an organization founded by General Catalyst CEO Hemant Taneja.  

It focuses on five key commitments: a responsible approach to AI including internal governance; proper transparency and documentation; risk and benefit forecasting; auditing and testing; and feedback cycles and ongoing improvements.

The report also noted that whatever the inventions behind the commitment, the reaction inside the AI startup ecosystem has been divided, with some observers claiming that the responsible AI commitments designed to ensure safety actually hurt AI safety more than they help.

This month also saw IBM launch a $500 million venture fund to invest in AI companies, particularly those working accelerating generative AI technology and research for the enterprise.

“The fund will provide startups with opportunities to establish meaningful partnerships with IBM, gain operational expertise in product and engineering, and develop go-to-market strategies,” PYMNTS wrote. “Led by a team of investors and enterprise AI experts, the fund aims to fuel innovation, strategic partnerships and generate returns by investing in enterprise AI-focused startups.”