Blake Patton

Exciting to see startups aiming to use AI to discover chemicals, materials, drugs, etc. Semi companies have taken notice: AMD is investing in and Cadence is acquiring them. Semi/EDA companies have broken out by becoming critical path, whether it’s through critical software, packaging, IP, design kits from foundries, or user communities. Aside from just making it easy to make new materials, these “AI for making X” companies also need to articulate a vision as to how they can establish monopolistic positions in their industries.

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Last week Massachusetts Institute of Technology published a sobering report on the stark reality divide between the hyped exuberance of AI investments and disappointing outcomes of 95% of GenAI enterprise pilots yielding zero returns. While this led to a cautionary wave in public markets, this scenario echoes the trajectory of cloud platforms in the early- to mid-2010s where where initial hype and trials eventually paved the way for widespread adoption over the next decade. 🔹 A key insight in the MIT report was that opting to "buy" AI solutions often proves more fruitful than attempting to "build" them from scratch. DIY approaches were successful only 1/3rd of the time vs. buying off-the-shelf AI tools resulted in a success rate of 67%. Enterprises don't need to re-invent the wheel; instead leverage your key strengths and core differentiators to build on top of best-of-breed vendors. 🔹 The report also highlighted the main reason why AI pilots fail - flawed enterprise integration. The "learning gap" for both tools and talent is real in a world where technology moves as the speed of light. The tools in itself can be great only when they are appropriately integrated into workflows and the rest of the tech stack, as well as training and re-skilling the workforce to use the tools. We are still in very early innings of the enterprise AI shift where AI is poised to become the cornerstone of software stacks, similar to what cloud is today. Enterprise adoption takes time and often cycles through growing pains as what we're experiencing today. The forthcoming decade promises transformative changes, paving the way for the emergence of groundbreaking enterprise AI companies that will shape the future landscape.

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AI isn't just powering software. BrightAI just raised $51 million to automate inspection and other hardware-based AI capabilities. As Alexa von Tobel, co-founder of Inspired Capital put it: “So many people are so focused on the future of digital AI, but we’re excited about this new layer of AI: the physical world AI.” We are in the early innings of a series of AI-fueled innovations! https://lnkd.in/enhmafvH

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From Europe's first private space re-entry mission to quantum computing breakthroughs and AI innovation, March was a strong month for APEX Ventures portfolio companies. ATMOS Space Cargo secured FAA approval for its PHOENIX capsule, planqc, building neutral atom quantum computers, was selected among Trend Magazine’s Top 50 Startups, and Mobius Labs successfully ran Meta’s Llama70B model on a single GPU — reducing compute needs by 75% without sacrificing performance. In healthcare, contextflow’s AI solution is being piloted in five hospitals across the Netherlands, Robeauté secured EIC Accelerator funding for its microrobotics platform, and CardiaTec Bio published new research applying quantum network analysis to long COVID. The pace of deep tech is accelerating, and we’re proud to support the teams building what’s next. In April, you’ll find our team at two key industry events — a great opportunity for startups to introduce their technologies:   ▶︎ On April 8th, Tim Hos (Investment associate at APEX Ventures) will be attending the Venture Sprind in Berlin. It’s an amazing opportunity for founders and investors to meet 300+ investors and 50+ start-ups. ▶︎ From 9- 10th April, Vera Kunz (VC at APEX Ventures) will be at Energy Tech Summit 2025 in Bilbao, Spain. ▶︎ The next event is Saxon Investors Roadshow I 2025 on 24 April in Zurich, Switzerland, where our principal Ion Hauer will be present.   Let’s connect!   Follow us at APEX Ventures Ventures and subscribe to our newsletter for exclusive content on groundbreaking Deep Tech startups: 🔗 https://t2m.io/EV2qHQuo

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Tech booms are not built on overpricing, they are built on the assumption that there are more great companies than there actually are. In the 2010s, we believed every vertical could yield a platform. In this AI cycle, the illusion has shifted to the application layer. This piece is about how venture markets mistake traction for defensibility, growth for escape velocity, and where the real outliers are likely to emerge. The Illusion of Abundance 👇 https://lnkd.in/eYrUZPsa

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🚨 The AI shift isn’t just about integration — it’s about reimagining what’s possible. I spent the past few days in Birmingham, Alabama where I participated in a strategy session with one of our amazing portfolio companies, Croux, an AI native on-demand hospitality staffing platform. Their use of AI sparked a bigger question I’ve been considering across our portfolio: 👉 There’s a massive difference between founders who are “adding AI features” and those building businesses that simply couldn’t exist without AI. It reminds me of the early days of the iPhone. Most companies made their sites “mobile-friendly” — but the winners (Uber, Instagram, WhatsApp) were born mobile. Today, the same playbook is repeating with AI. In our newsletter this week, I explore: -Why “AI-native” companies will define the next wave of category winners -How founders can design around AI’s current limitations while harnessing its superpowers -The high-stakes implications for healthcare, climate, and fintech 📖 Read the full piece here: https://lnkd.in/eqHpQ37f I’d love to hear your perspective: Are the best founders you know simply integrating AI, or building something that couldn’t exist without it? #AI #startups #venturecapital #platformshift #innovation

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This Should Work… Investments in healthcare technology should work. There can be a legitimate debate about the wisdom of the magnitude of overall AI investment activity, now estimated to be $320 billion just in 2025, but undoubtedly most will see significant healthcare benefits from this infrastructure buildout. But there may also be merit to the argument that certain knock-on effects of AI will undermine for some improvements in the quality of life. At a minimum, it is not entirely clear that the agentic arms race unfolding between payors and providers will entirely help patients versus improving the economics of the combatants. Investor excitement in healthcare AI is reflected in digital health investment activity, notwithstanding challenges to reconcile the more modest valuation multiples for publicly traded companies with those of lofty private market multiples. According to Rock Health, year-to-date $9.9 billion has been invested in 351 companies. For 3Q25, $3.5 billion was invested in 107 companies putting the sector on pace to have ~$14 billion invested in around 450 companies, which would signify an encouraging recovery closer to 2022 levels. Thoughts on what to expect next... https://lnkd.in/ef5s2jJF Flare Capital Partners #digitalhealth

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Here is an article by Leah Hodgson of PitchBook that posed the question "is there is a bubble?" to a number of smaller investors in defense tech. “The people who are saying [that defense tech is a bubble] lack a nuanced understanding of the market,” Nelson said. “They don’t understand what the fundamental markers are and drivers of the flywheel in this ecosystem. Defense tech is like a battleship; it’s not quick to turn around, but once it does, it’s really tough to stop.” I found myself agreeing with Nicholas Nelson, particularly about understanding the nuances. Regardless of whether there is a bubble in defense tech for "defense budget" investors, there is definitely a global gross misallocation of capital if you are a "defense" investor. Most defense systems in the larger countries are almost closed systems. The national defense budget is not optimized for national defense. It is optimized for national defense jobs, and votes from politicians in districts hoping to retain or acquire a portion of the defense budget. This is glaringly true in the US, which spends about half the global defense budget. But it is also true in the UK, France, Sweden, Germany, Poland, etc. Sure, there are exceptions to this, but they are relatively few. If capital allocation were optimized, venture capitalists would invest where the best defense tech is being created. Yet almost no private capital is flowing into Ukrainian defense tech (or Russian defense tech, which is also good). Much safer for VCs to invest in defense budgets rather than defense tech. I spend almost all my waking hours thinking about this and worrying about how the free world will defend itself against the axis of autocracy once China decides to flex its muscles. I concluded that the smart move would be to take a mere 5% of the defense budget VC investor allocations and invest in actual defense tech in Ukraine. Judging by their actions rather than their rhetoric, NATO nations are not that smart. #ww3 #venturecapital #defensetech Marc C L. Daniel Connery in Ukraine 🇺🇦 James Acuna BRAVE1 MITS Capital Alistair MacDonald https://lnkd.in/gCiWtmHw

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Generative AI’s greatest potential lies in the physical world, where the ability to simulate, design, and iterate faster can reshape trillion-dollar sectors. That’s why we’re thrilled to announce that N47 is leading Luminary Cloud’s $72M Series B. The Luminary team is pioneering the Physics AI Model Factory, underpinned by a GPU-native physics simulation platform. This technology is designed from the ground up to unleash the performance of modern GPUs and generate the high-value datasets that power next-generation AI. Now, engineers can run hundreds of design iterations overnight instead of waiting days. AI models trained on physics-grounded data can suggest new aerodynamic designs or optimize energy systems in ways previously impossible, and companies across industries can accelerate their innovation cycles while reducing cost. With co-founders Juan Alonso and Pete Schlampp, Luminary has the technical depth and operational experience to define the new era of Physics AI. We’re proud to partner with them as they create the future of simulation and redefine what’s possible in the built world. Learn more about Luminary Cloud’s vision here: https://lnkd.in/gbjeWrvy 

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