Robots falling in love #
Lyzr, an AI agent startup, is raising a $100M Series B relying heavily on its own AI agents to run the fundraise, according to Bloomberg.1
The AI fundraising agents are running a process with 130 firms. Some investors are using the AI agents for exactly the wrong part of the process. Here’s how it’s going:
Analysts pressed the AI system on product positioning, competitive threats and its business model. Some asked it to help them pitch Lyzr to their own investment committees.
I’m going to assume charitably that the analysts are using the AI outputs to inform their presentations rather than wholly relying on them.
Some investors are really digging in with the AI agents:
Nishant Rao, a founding partner at Bangalore-based Avataar Venture Partners and one of the investors that engaged with Lyzr in its latest round, said the experience “meaningfully accelerated the early stages of our evaluation.”
So things are going faster. OK. As we’ve seen before, a fast deal might just mean you are overpaying.2
However, Rao added: “AI agents are still not at the level where they can end up materially accelerating the diligence process per se.”
The diligence part is exactly where AI agents could help accelerate the process the most. The diligence phase is psychologically where both parties would benefit the most from AI. No one wants to screw up the diligence and everyone wants to be able to work productively together afterward. Having AI agents that are sticklers—getting into the nooks and crannies of a business overnight—can be effective. Agents can probe in ways that might be a bit unseemly for a board member (or a founder in reverse diligence) to be seen doing themselves.3
My robots fell in love with your business is not a compelling start to a relationship. You are a 1-of-1 founder with a great market and a rocketship business—I’m 1000% in…I’ll have my robots double-check the numbers and make sure everything ties out while we strategize about how to take over the world is a much better first chapter.
Venture is a conviction business. Don’t borrow conviction from an AI. Sure—of course—of course—it can help with diligence and market research and even thinking through an investment memo.4
The company is planning on open sourcing its fundraising tool, so we can expect to see more attempts at agent-led fundraising.
DocSend reimagined #
A particularly interesting detail from Lyzr’s fundraising AI agents5 is that the agents were actively monitoring investor activities. Specifically, Lyzr agents were watching how long investors spent on different pages in the presentation, according to Bloomberg:
The agent tracked how investors interacted with the presentation …[noting] which sections they lingered on and where they clicked, giving Lyzr a read on how different backers were sizing up its team, technology and revenue. “That helped us sort which investors were a better fit.”
DocSend popularized the concept of tracking presentation read and dwell time. Their product offering had investors needing to enter their email to see the presentation. DocSend then reported the data back to the founder.6
What’s interesting here is how far this concept could be extended both on the startup and investor sides. With AI agents being involved through much more of the fundraising processes, it means there is a much larger surface area for both sides to manage with regard to showing interest and compatibility.
The “which investors were a better fit” question that the Lyzr founder gets at is worth going deeper on. Here’s how we can imagine it went down as Lyzr’s founders went through the investor interaction data:
SCENE 1: Lyzr conference room — present day.
[Founder 1]: Blueshirt Capital7 seems really into us from our agent monitoring. They were all over the model, but in a really positive way. [Founder 2]: I love how into the vision slides they were. Spent tons of time following up with our agents and expanding on the vision. Seems like they get it.
[Founder 3]: Yeah, I mean, Flamingo Fund is all over the competition slides. Do you think they are just getting smart on our market? Seems sus.
[Founder 1]: Let’s talk to Blueshirt. SCENE 2: Blueshirt Capital conference room — the previous week.
[VC 1]: I like this Lyzr deal.
[VC 2]: Cool. It’s competitive, right?
[VC 1]: Yeah. Let’s have our agents show tons of interest in the CEO’s vision. I’ll have our agents take screenshots of all the other materials and move fast through it so we don’t look like we are trying too hard. We don’t want to seem like we’d be tough to work with.
[VC 2]: Haha. Also let’s have our agents play with the model assumptions and make them even more aggressive.
[VC 1]: To the moon! — End —
Wonder about net worth #
Wonder, the food delivery startup founded by Marc Lore—of diapers.com and jet.com fame—is raising a round at a $9B valuation before going public. Wonder, which has a large presence in the NYC market, owns Grubhub and Blue Apron.
Marc Lore has offered to put $200M of his own cash into the deal. His success could work against him.
Jeremy Giffon recently recounted an evaluation framework the legendary investor Richard Rainwater used:
Write your thesis out on a single page. Then tell me what percentage of your net worth you’re going to put into the deal.
The $200M doesn’t quite give a full Rainwater picture.
Charting the Wonder fundraise, you can see it started with rosier aspirations. Initially Wonder went out to raise at an $11B valuation back in April. Now, the round still isn’t closed and it’s at a $9B valuation. Sometimes fundraising can be hard—especially if you are losing a lot of money. According to The Information:
The New York-based startup has projected burning nearly $2.7 billion in cash between this year and 2029 before it starts generating cash in 2030.
It’s expected to lose about $618 million before making about $111 million in 2029 on an adjusted EBITDA basis, according to the materials.
So the thesis is: multi-time successful entrepreneur who can land the jet8 if needed, taking on a huge market with benefits to scale, and a lot of cash that needs to be spent to get to the promised land. If you are Marc Lore and you have the money, you write the check to fund the company. You might need to go further.
Enter the ratchet. Wonder is offering investors a 1.5x ratchet such that if Wonder doesn’t achieve an IPO valuation at target, investors receive more shares. According to The Information, Wonder had a ratchet on its Series C. Wonder also agreed to give investors more shares every month if the company doesn’t IPO by May 2030.
So, Wonder is in a concessionary mood to get the deal done and is experienced with doing termy deals.
If you are an investor sizing up this deal, you go back to Rainwater. The gist of the Rainwater test is *how devastated will Lore be if this investment doesn’t work out*?
Marc Lore is also the co-owner of the Minnesota Timberwolves, the NBA team.[9](#wonder-about-net-worth-note-fn-2)
The Timberwolves dumped some salary costs this off-season with a surprising trade for LaMelo Ball. This could be a normal rejiggering of the roster, but Anthony Edwards is a superstar in his prime. The Timberwolves won’t go above and beyond to help him and incur luxury tax payments if the owner is watching his pocketbook.
As an investor, you muse to yourself about Marc Lore pledging his interest in the team to get the deal done. What’s $200M for Lore anyway—maybe 5% of his net worth? You realize your cousin spent that percentage of his net worth on Knicks Finals tickets. You then wonder how much leverage he’s got across the different interests. Too much distraction. Then you’ve caught yourself having drifted from the deal itself.
It’s a good deal, you tell yourself. Rainwater’s test is too complicated here, you conclude.
And you are right—it is too complicated. The accounting of net worth and incentives is the hardest part of the Wonder deal. Wonder’s business of spending a lot of money to make a lot of money in the future delivering food and doing takeout is comparatively simple.
Wonder is internally rallying around an IPO in Q1 of 2027. For a perennial playoff contender like the Timberwolves, it’s nice if you can line up the IPO to be done before the playoffs start in Q2.