A Note From the Redbud VC Team

The question on everyone’s mind this month: Is Sam Altman about to slip into Steve Jobs’ turtleneck? 👔 OpenAI’s decision to shell out $6.5 billion for Jony Ive’s stealth hardware studio—and task the design legend with crafting a family of “AI-native” devices has the Valley buzzing about a new product-led icon in the making. Beyond the valley, Elon Musk has timed out of his stint running DOGE in D.C., and Moody’s just followed Fitch in yanking America’s last AAA credit rating. Looks like another ZIRP era isn’t coming our way… Meanwhile, in venture land, the public-market window is cracked, Chime filed for IPO, and U.S. secondary volume swelled to roughly $60B in Q1. So we’re asking: Does Sam become the new Steve? If VCs keep pouring money into AI, are they also coding their obsolescence? And when will the IPO door swing fully open? As always, we’re eager to partner with early founders posing the big, not-yet-answerable questions. If that’s you, let’s talk. 

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🥂

Keep your Team’s licenses safe at home. 👀 

Seems like a zero-sum game

Are we in a simulation? This can’t be real

🔥 Burning question of the month 🔥

Bonus Question 🎰 

That said, there is a trend of operators starting pre-seed funds, like the founder of Mercury, the founder of Plaid launching Mischief, and the founders of EquipmentShare starting Redbud VC.

📈 Macro Trend Report  

• AI | OpenAI just wrote its biggest check ever, snapping up Jony Ive’s stealth hardware outfit io for $6.5B. The goal is to “design a family of AI-native devices” like ambient microphones, cameras, and copilot brains wrapped in Ive’s no-screen minimalism, heading for a public reveal next year. The bet is that “physical AI”⁠ robots, wearables, and autonomous widgets that sense and react in real time⁠ is the next platform shift. Every Big Tech name is hunting the same toehold, but only OpenAI can pair ChatGPT-scale models with the designer who once slipped an iPhone into every pocket. Is Sam the new Steve? 👀 Upstream, the silicon that powers those dreams is still making money. Nvidia’s Q1 revenue hit $44.1B (69 % YoY) with a GAAP gross margin north of 60 %, a Rule-of-40 score that would make most SaaS founders hyped, and a market cap brushing $3.4T. Despite beating projections and AI co’s printing money, CEOs are trimming headcount on the faith that generative AI will soon stand in for armies of junior analysts. Anthropic’s Dario Amodei warns half of entry-level white-collar roles could vanish, driving unemployment to 10–20% within five years, and joblessness among recent grads has already crept toward 6%. Regulators are watching the power shift too: in closing arguments of the Google search-monopoly trial, Judge Amit Mehta asked whether generative AI newcomers might finally dent Chrome-powered dominance. At the same time, the DOJ floated spinning off Chrome entirely.

  

• HOUSING |  With the 30-year fixed parked at 6.89% for the week of May 29, borrowing costs are still roughly double their 2019 level, yet national prices keep inching higher (the Case-Shiller index was +3.4 % YoY in March). The affordability squeeze is warping the buyer mix: first-timers made up just 24 % of 2024 closings, down from one-half in 2010, and the median rookie homeowner is now 38. Overall, buyers clock in at a record-high 56, many arriving with the equity (or inheritance) to write all-cash offers. Gen X and Boomers are still playing musical chairs with the housing market while Millennials and Gen Z stand at the edge of the dance floor, priced out by rate math and limited supply. That supply is getting older right along with its owners. A fresh Redfin dive pegs the median age of a home sold this year at 36, up nine years from 2012 and the oldest on record. Fewer ground-up starts over the past decade mean “new” inventory increasingly comes with 1980s wiring and vintage HVAC, and renovators, ADU builders, and retrofit-tech startups are licking their chops. Expect more capital to chase anything that slashes time/cost on rehab or unlocks square footage (think prefab panels, 3-D printed additions, and heat-pump financing).

• VENTURE CAPITAL | The question on every VC’s mind right now: Will investing in AI eventually take away VC? Every investor is writing checks into generative-AI startups even though the same tech is busy automating their workflows. On a recent a16z podcast, Marc Andreessen shared his opinion that venture capital might be “one of the last jobs people do,” arguing that intuition, relationships, and founder-therapy can’t be reduced to an algorithm, at least not yet. Reality already hints at the opposite: fund ops, first-pass diligence, and even memo drafts are sliding to LLM copilots, letting firms trim junior ranks in what was once an apprenticeship guild. The question isn’t whether AI can pick winners, but whether LPs will still pay 2 & 20 when the bots get good at it. While that debate rages, the secondary market is supplying the one thing founders and LPs both crave, liquidity. PitchBook pegs U.S. direct-secondary volume at around $60B for Q1, up from $50B a quarter ago, with average shares now clearing at a 6% premium after two years of haircuts. But the bifurcation is brutal: rank-and-file unicorn stakes still sell 30–60% below their last rounds, while first-tier names trade at or above print as investors flee to quality. Pitchbook noted that every policy wobble “spooks venture,” concentrating demand in the very few companies buyers trust to exit. Our take: the craft isn’t dead, but it’s changing fast. Firms that fuse relationship capital with automation and keep dry powder for high-quality secondaries look best positioned to survive the very machines they’re funding.

Build your investor pipeline with the comprehensive VC List we crafted for all founders

💰 Micro Trends

• TROUBLE IN PARADISE | Elon Musk’s whirlwind, 130-day sprint in the White House wrapped up this week with an X post confirming he’d hit the legal ceiling for “special government employees.” In that brief window, Elon claims to have slashed $175B in federal outlays and shed 200K jobs (far below his original $1T) target but disruptive enough to trigger lawsuits, agency shutdowns, and a send a wave of pink slips across Washington. The farewell, however, looks more like a soft pivot than a hard exit. President Trump assured reporters that “Elon’s really not leaving… it’s his baby,” while Vice-President Vance called the billionaire a “friend and adviser” going forward. Musk, for his part, used the goodbye tour to torch the administration’s $2.2T “big, beautiful bill,” complaining that it swells deficits by ~$3.8T over a decade and “undermines” DOGE’s work. Musk is now busy with the Starship flight that roared off the pad, cleanly hot-staged, and reached space before a stuck payload door and downstream fuel leaks ended the mission in two bright flashes over safe splash zones, prompting an FAA investigation. Musk nonetheless called the attempt “progress you can measure in altitude” and promised to “fly again in weeks, not months”. If Starship eventually sticks the landing, it could slash launch costs tenfold and unlock a new logistics layer for frontier-tech startups; until then, expect the world’s richest engineer to spend less time in the White House and more time chasing Mars. 👽

• DEBT | Moody’s just yanked the U.S. credit rating down to AA1, joining S&P’s 2011 and Fitch’s 2023 downgrades and ending America’s century-long run of perfect credit. The agency pointed to our $1.8 trillion deficit last year (about 6 percent of GDP) and a massive $882B in interest payments that already exceed the Defense and Medicare budgets. Add it all up, and public debt sits near $36.2 trillion with Moody’s projecting a 134% debt-to-GDP ratio by 2035 if Washington doesn’t tap the brakes. Markets wasted no time: the 30-year Treasury yield punched back above 5%, a level last seen in late 2023. Why should founders and investors care? When the “risk-free” benchmark costs 5%, the discount-rate math that floats SaaS multiples and late-stage valuations gets much less forgiving. Seed rounds must clear a higher hurdle, “2× ARR” convertibles finally earn their 8 percent, and ghost-pepper burn replaces last year’s merely spicy term sheets. Bottom line: runway is the king, lock in fixed-rate debt if you must borrow, chase non-dilutive grants where you can, and remember that sober unit economics age far better than “zero-interest” when money starts charging full price again.

📰 Heartland Headline of the Month

Our friends at M25 celebrated their 10-year anniversary with a new $36.5 million fund!
Read more about the fund below, and the next Midwest Unicorn they’re backing below

💰 Flyover Deals

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

Check out the 243 flyover deals for over $2B in funding we tracked here; deals were up by 37%, but total funding was down by 22%

• Realta Fusion secured a $36,000,000 Series A in Madison, Wisconsin

• Stately Bio closed a $12,000,000 Seed round in Chicago

• Indy-based Olio raised a $11,000,000 Series B

• XP secured a $6,200,000 Seed round in Chicago, backed by a mix of early-stage climate funds

• Indiana-based Insignum AgTech closed a $4,177,294 Seed round

• Big month for Ohio-based companies 🅾️

  • TeamCentral raised a $3,875,000 Seed round in Dayton

  •  NeuroForge brought in $1,500,000 Pre-Seed

  • Aindo raised a $3,400,000 Seed round out of Cincinnati

  • AssetWatch closed a $75,000,000 Series C

  • Opus Biotech locked in $1,200,000 Pre-Seed

• Prediction Guard landed $3,700,000 in Seed funding in Lafayette

• Michigan-based Coral closed $3,300,000 Seed round

• CivicGrid secured $3,000,000 in Seed funding out of Madison

• Detroit-based Neuron raised $2,900,000 

• Chicago-based Pulse Charter Connect landed $2,000,000 in Seed funding

• Indy-based EndoAI wrapped a $1,900,000 Seed round

• AgriQuant closed a $1,700,000 in Seed funding in St. Louis

• KC-based Carbonloop completed a $1,300,000 Seed round

• CivicGrid closed a $1,200,000 round

• Indiana-based Nanowave Systems raised $1,100,000

🐄 Middle America vs. National Macro Trends

• Unemployment in Missouri fell slightly this month to 3.6%, while the National Average slipped to 4.0% ✅

• The Midwest Consumer Price Index rose slightly this month at 3.5%, while the national rate is up 2.4% on the year ✅ 

🧠 This Month's Recommendations

📚 What We’re Reading

• As Below, So Above - In space, satellites are submarines

• The trust matrix, building a personal brand as a founder, and being better than the 99%

• Generalist problem solvers

🎧 What We’re Listening To

• Inside Mischief VC's Evolution with Zach Perret and Lauren Farleigh [46 min]

• Listen to Airbnb founder and CEO Brian Chesky on the Diary of a CEO podcast chat about the brutal truth about rejection, resilience, and building world-changing companies. [14 mins]

• 20VC breaks down OpenAI and Jony Ive’s Deal [1hr 16min]

📆 What We’re Doing

• We’ve been hitting the road this month across the Midwest and South all spring long! Here’s where we’ve been this month:

  📍Bentonville, AR - NWA’s Ecosystem Immersion Summit

  📍Cape Girardeau, MO - Startup and Investor Visits

  📍Kansas City, MO - Startup and Investor Visits

🪝Heartland Picks of the Month

🚀 Redbud Highlights

Forbes covered portfolio company, Mattoboard’s recent seed round and product leadership at the crossroads of design and AI.

Read the full spread below ⤵️

🛠️ Resources

• If Morning Brew’s CEO Alex Lieberman was planning a 12-month, weekly entrepreneurship class, here's how it'd go...

• Actually good fundraising advice straight from a founder

• 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