A Note From the Redbud VC Team

New month, same headlines. OpenAI raised a casual $40 billion at a $300B valuation, GPU servers are sweating under the weight of anime-inspired image generation, and Google just wrote the biggest check in its history for Wiz. But beneath the headlines, the same tension lingers: private valuations remain sky-high, liquidity is elusive, and the gap between startup timelines and fund lifecycles keeps widening. Traditional IPOs are a waiting game, M&A is sluggish, and the old VC playbook is looking a little dusty. But founders? They’re still shipping, adapting, and rethinking what success looks like—and we’re here for it. If you're building with urgency and looking for early partners who move fast, you know where to find us.

Redbud VC invests monetary ($50k-$150k) and social capital in early-stage tech founders. We bring monthly Redbud VC, tech, and economics updates. - We've filtered thousands of sources for our 14k+ readers, so you don't have to. Enjoy🥂

Missouri Startup Weekend is sold out 🚀 

It’s our biggest year yet, and MOSW is officially sold out!!

We still have a handful of tickets for those who want to watch participants pitch on both Friday and Sunday nights. Reserve your spot to watch below ⤵️

The Doordash x Klarna partnership is a recession indicator if we’ve ever seen one.
Will ½ of America be financing their Chipotle bowls - only time will tell…

🔥 Burning question of the month 🔥

📈 Macro Trend Report  

• AI | Another month = another AI raise. OpenAI announced a $40B raise this week, led by SoftBank, giving the company a post-money valuation of $300B. That makes this the single largest venture capital round in history, which is impressive considering the last record was also held by OpenAI when it raised a “measly” $6.6 billion. CEO Sam Altman, never one to miss a moment, took to X to casually drop that ChatGPT added “one million users in the last hour.” Blink, and there’s another round, another record, and apparently another million people signing up to ask ChatGPT if their business idea is any good. But all that AI magic comes at a cost. OpenAI’s new o1-pro reasoning model is out, and its pricing is officially the highest in the industry. Why? Because this model isn’t just answering questions, it’s “thinking” through them with complex, multi-step logic. That level of computing horsepower doesn't come cheap. For companies connecting their products to AI through APIs, every prompt starts to look like a line item in a cloud bill. Inputs and outputs are charged per million tokens - tiny units of data that turn your words, images, or videos into something the model can digest. Over in Elonland, xAI just acquired X (formerly Twitter) in an all-stock deal that smashes together Musk’s AI ambitions and his social media play. Valuations are a bit squishy, but Musk put xAI at $80B and X at $45B (debt included), meaning the two are now legally hitched in a partnership that combines data, distribution, compute, and, of course, vibes. The move isn’t just strategic, it’s also a lifeline for Twitter’s early investors, many of whom watched the platform’s value crater after Musk’s $44B acquisition in 2022. By rolling X into xAI, Musk is essentially giving shareholders a second chance at the AI boom. In typical Musk fashion, he announced the merger with some florid prose about unlocking “immense potential” by merging xAI’s models with X’s user base.

• IMAGE GENERATION | OpenAI’s latest power move is melting GPUs. The newly launched GPT-4o now lets ChatGPT not only talk but draw, edit and create photos thanks to native image and photo generation baked right into the model. Pro users ($200/month club) already have access, and soon, everyone else will be able to tap into the same visual magic that used to live in DALL·E 3. GPT-4o takes a bit longer to process prompts, delivering more detailed, accurate, and stylistically rich images… even if that means OpenAI's servers are basically running on 24/7 GPU blood, sweat, and tears. The internet immediately went to work and landed squarely in Ghibli-core. X feeds are now flooded with AI-generated photos that look straight out of Spirited Away, except they’re starring politicians, Tony Soprano, or your favorite meme. While the results are visually stunning (and often hilarious), they’ve also reopened the debate around copyright and artist rights. OpenAI insists it’s respecting creators with opt-outs and usage policies, but with demand spiking and servers reportedly straining to keep up the images keep on printing.

• VENTURE CAPITAL | The VC identity crisis is continuing. Pitchbook’s latest VC Tech Survey shows that investors are feeling the squeeze from every direction. Cracking the top of big issues: sky-high private market pricing and liquidity issues. And, of course, those two are deeply linked. Inflated valuations make it harder for buyers to buy, especially when public market multiples are compressed, which in turn chokes off the exits VCs are counting on. Nontraditional investors, who once dumped mountains of cash into late-stage deals, are now largely on the sidelines, leaving a gaping capital void where liquidity used to be. If you zoom out, the pattern isn’t new. Over the past two decades, big banks have been reliable participants in VC, but only when the macro backdrop is favorable. Back in 2000, U.S. megabanks dropped nearly $6B into VC-backed startups, mostly in tech. That number cratered during the dot-com bust and again post-GFC, only to spike again during the ZIRP-fueled frenzy of 2021. But with interest rates climbing and economic volatility up, bank involvement has cooled again. The venture asset class has never consistently delivered the kind of returns large banks want at scale, which explains their hot and cold capital deployment. Now, T-1 firms like SignalFire are arguing the model itself is broken. Startups are taking 15+ years to exit, but VC funds are still built around 10-year timelines, a big mismatch. IPOs are harder to pull off, M&A has slowed, and investors are sitting on illiquid positions that were supposed to be cashed out years ago. That’s forcing forward-thinking firms to rethink the whole game: offering liquidity through employee tenders, pursuing venture buyouts, and embracing private-to-private deals.

Check out The Data Outlet to grab data on sourcing investors, talent, and co-founders at a cost lower than other marketplaces or the time spent scraping.

💰 Micro Trends

• BURRITO NOW - BUY LATER | DoorDash and Klarna just linked up, and it’s a big win for people who like their burritos now but prefer to pay later. The new partnership brings Klarna’s flexible payment options (Pay in 4 and Pay Later) into the DoorDash app and website. That means everything from weekly groceries to that impulse DashPass subscription can now be split into smaller, more manageable “bites.” But not everyone’s clapping. Critics (including the debt-free king Dave Ramsey) are side-eyeing the idea of financing your fried chicken. That said, Klarna’s move feels more like a strategic expansion than a slippery slope. With DoorDash’s footprint in food, retail, and even streaming bundles, this could be a savvy pre-IPO flex for Klarna 👀

• HR TECH WARS | The hottest drama involves the most boring software… HR & Payroll tech. According to a new lawsuit, Rippling accused Deel of running a months-long corporate espionage campaign straight out of a spy thriller with secret searches, stolen sales data, and one alleged mole who, when cornered by court-appointed officials, reportedly locked himself in a bathroom and declared, “I’m willing to take that risk” when warned he could go to jail. Bold move for a guy with a Slack search history 6,000 queries deep. 😂 Rippling claims it not only caught the mole red-handed but baited Deel’s execs with a honeypot trap: a fake Slack channel named “d-defectors.” Hours after Rippling’s lawyers dangled the bait, the spy allegedly took it—proof, Rippling says, that Deel’s senior leadership was actively orchestrating the spy. With allegations ranging from poaching employees to manipulating press coverage, this isn’t just about a rogue employee; it’s a war between billion-dollar tech darlings. The next YC founder reunion is about to be a little awkward…

• A LITTLE BIT OF LIQUIDITY | Google completed the biggest acquisition in company history, dropping $32B in cash to scoop up cloud security startup Wiz. Add in another $1 billion in retention bonuses to keep the 1,700-person team from bolting, and you're looking at a deal that averages out to over half a million dollars per employee. Casual. Google’s not the only one on a startup shopping spree. PepsiCo announced its $1.95 billion acquisition of prebiotic soda Poppi. For a brand that didn’t even exist a decade ago and was once pitched on Shark Tank, that’s a serious glow-up. The 2020s have seen a rise in the “better-for-you” beverage boom, with rivals like Olipop raising $50M and being valued at $1.85B just last month and Coca-Cola launching Simply Pop. Corporates are in full acquisition mode, with Q1 2025 already notching a record $54.5B in venture-backed startup buys, up from just $6B in the same quarter last year. Whether it's Alphabet writing billion-dollar checks or Meta chasing Korean AI chip cos, the vibe is clear: the M&A window is wide open, and strategic buyers are willing to pay up.

  

📰 Heartland Headline of the Month

Bear market? 🐻 

Looks like it’s not for Bread and Butter Ventures who just closed their $40M Fund IV. The firm has previously backed cold-brew giant Bizzy and designer swimsuit company Summersalt!

💰 Flyover Deals

Many strong early rounds closed across the heartland this month! 🚀

• Check out the 131 flyover deals for over $3.1B in funding we tracked here, deals and funding are down MoM by ~10%

• Niles, Illinois-based Sibel Health closed a $30M Series C

• Chicago had a handful of large rounds this month 💰

  • Nerdio raised a $500M Series C with participation from General Atlantic

  • Certiverse raised a $11M Series A

  • Vermillio closed a $16M Series A

  • Madison Scientific raised a $7M Seed Chicago-based

  • Capital Markets Gateway closed a $30M Series C with participation from StageDotO

• Plymouth-based Laplace Interventional completed a $22M Series C Round

• Chicago-based Unvale completed a $1.8M Pre-Seed Round

• St Louis-based Quercus Biosolutions completed a Pre-Seed Round

• Minneapolis-based Gem Health wrapped up a $7M Series A with participation from HealthTrend Capital, LFE Capital

• Indianapolis-based Entegrata closed a $4.5M Seed with participation from Chicago Ventures

• Cleveland-based Nexus Bedside raised a $2.6M Seed

🐄 Middle America vs. National Macro Trends

• Unemployment in Missouri stayed steady this month at 3.7%, while the National Average slipped to 4.1% ✅

• The Midwest Consumer Price Index fell slightly this month at 3.3%, while the national rate is up 3.1% on the year (✅ 

  

🧠 This Month's Recommendations

📚 What We’re Reading

• Our learnings on venture funds

• The unbelievable scale of AI’s pirated books problem 

• The best VC fund you’ve never heard of

🎧 What We’re Listening To

• David Velez on how Nubank defied the odds to became the largest Latin American neo bank, with over 100 million customers across three countries [49 mins] 🇧🇷

• Chad Byers, Tesla, and Pepsi on the TBPN Live podcast [3 hrs 19 min]

• How to build the future with Tony Xu [31 mins]

📆 What We’re Doing

• Prepping for Missouri Startup Weekend, held at EquipmentShare’s (2014 startup weekend winner) new $100M facility in Columbia, MO, built over the last year.

🪝Heartland Picks of the Month

🚀 Redbud Highlights

Great companies 🤝 Our backyard

We are thrilled to back dScribe AI's $1.2m Pre-Seed round alongside Abstraction Capital, KCRise Fund, Flyover Capital, and EquipmentShare.

We’re big believers in Jordan Mryyan, Warren Wang, and Cole Robertson, and we’re humbled to be the first institutional investor as they build towards powering the transcription of the internet. More on dScribe below ⤵️

🛠️ Resources

• The only market sizing guide founders will ever need

• What to include in a data room 🗄️ 

• Early Stage Financial Template 💰

• Need some examples? Check out these 50 pitch deck examples from successful fintech startups

• ➡️ +200 Non-VC Funding Sources for SaaS Founders

• Thinking of raising some capital? Here’s the Due Diligence Checklist every founder should see  👀

• YC's essential startup advice

• Brian Chesky on when to hire 🧍🏼‍♀️

• Metrics 101: What VCs look at while evaluating startups

• Get started to build an outbound sales motion with these 130 SaaS Cold Email Templates

• 🤖 Why code is no longer a moat

• A list of low/no code tools to get your company off the ground 🚀

• Marc Andreessen on how to hire the best people

• The complete guide on How to Interview and Hire ML/AI Engineers (one of our favorite reads on hiring out there)

• One of the largest VC lists with over 18k investors 🫰 

• Founder who 120 VCs—he closed $2.7M in 5 weeks with demand for $5M+. Here's his step-by-step guide to close a round. 💰

• 📊 All-In-One Startup Metrics Guide - What to track, when and why

• Resource page for founders we made here 📒

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The information provided in this newsletter is intended for general understanding and educational purposes only, not as a guide to investment decisions. The authors, publishers, and distributors of this newsletter are not licensed financial advisors and are not providing financial advice or investment advisory services.s