Bain Capital Ventures Raises $1.6 Billion for Life After AGI

Bain Capital Ventures, the venture arm of private investment firm Bain Capital, has raised $1.6 billion to back new startups focused on the next stage of artificial intelligence.

The fund, which is slightly larger than its predecessor of $1.4 billion, will target early-stage companies in infrastructure, the physical world, security and services, Bain Capital Ventures said on Wednesday. That could include startups handling customer support or information technology work.

The firm expects these sectors to grow in importance even after the world hits artificial general intelligence, or AGI, the point when AI technology can improve itself and outperform humans at many tasks.

It’s a delicate moment for AI investing. The biggest AI companies, including Anthropic PBC and OpenAI, have discussed tapping the brakes on technology development after a number of high-profile cybersecurity incidents.

Read More: Amodei, Altman, Musk Call for Slowing AI Model Development

Despite the potential chilling effect of a slowdown, Bain Capital Ventures partner Enrique Salem wants the industry to keep pushing forward — and he doesn’t expect fundraising to decelerate anytime soon.

“It’s an exciting, brave new world, and we need to keep moving forward, eyes wide open,” Salem said in an interview.

In this new world, security will only become more important, he argues. OpenAI recently disclosed that its advanced AI models hacked Hugging Face Inc. in July, sparking concerns about rogue AI agents.

Read More: OpenAI Says It Could Have Reacted Sooner to Prevent AI Hack

More companies will take this opportunity to build better controls to protect against malicious activity, Salem said. He also downplayed fears that AI will eventually threaten humanity — an issue raised by some researchers.

“I’m betting on the humans,” Salem said. “I’m not losing any sleep about what happens over the next three to five years around humans and extinction of humans.”

Read More: Anthropic Worker Quits Over AI Firms ‘Gambling With Our Lives’

The AI industry is facing other challenges, including the high cost of infrastructure. Over the past two years, venture capitalists have had to get comfortable funding more asset-heavy companies, which are paying a fortune for computing power.

Bain Capital Ventures’ portfolio is no exception: Its roster includes data center developer Crusoe, which has sought billions of dollars to expand its facilities, and Periodic Labs, a scientific-discovery AI startup that raised a $300 million seed round, one of the largest in history.

Slater Stich, a partner at Bain Capital Ventures, said part of the firm’s value to startups is helping connect them with different types of capital — beyond traditional VC money. Bain Capital has a credit and private equity arm, for example.

Over the last 12 months, the venture firm has set up “AI treks” in which it helps private equity leaders tour San Francisco and meet with portfolio companies, including coding firm Cognition and AI support startup Decagon.

Still, Bain isn’t alone in taking this approach. Magnetar Capital, General Catalyst and other firms also offer alternative sources of financing alongside venture capital.

“The right way of financing a multihundred-billion-dollar construction project does not look like selling 20% of the company to VCs for equity,” Stich said.

The high cost of computing has prompted some startups to make questionable choices, Stich said. Some companies are “over-financed in cash” and have taken “unnecessarily dilutive” approaches to raising capital, meaning they’ve given up too much ownership.

“It’s strange to sort of raise a large quantum of capital and then immediately kick a huge chunk of it out the door” to buy processing power, he said.

Stich said his firm’s strategy is to help startups raise early “risk capital” until they’re ready for non-dilutive financings at the later stages.

Unlike other firms, which have chosen to double or triple their fund size even at the earliest stages, Bain Capital Ventures has stuck with more modest increases. It plans to manage the latest fund in a similar way as it did with previous ones: by investing in 30 to 40 companies across two to three years.

Stich believes the latest fund is “rightsized” for this moment. And the firm is making sure it thinks about the ultimate return rather than just a startup’s initial valuation.

“You actually have to think about these things quite carefully on both sides,” he said.