October 17, 2024

Reduce, reuse, recycle

Hi there,

Here is this week’s Hot or Not.

Hot: Reusable rockets

Yesterday, we marveled at SpaceX's latest achievement: catching a massive rocket booster with pinpoint precision.

This accomplishment isn't just a spectacle — the successful return and capture of the rocket booster marks a significant milestone in the development of reusable rockets.

While SpaceX is leading the charge, it isn’t the only player working to make it happen.

For example, Stoke Space is focused on rocket reusability and reducing the time between launches.

And the startup is drawing the attention of investors like intelligence and defense investor In-Q-Tel, which invested in the company twice last year.

How do these bets fit into IQT’s broader aerospace ambitions? Check out our IQT investment thesis map.

Not: US digital health deal share

The US drew 52% of digital health deals in Q3’24.

This marked a 9 percentage point drop QoQ.

Meanwhile, Europe and Asia both saw their deal shares rise to 21% in Q3.

Asia experienced the greatest jump in deal share, gaining 7 percentage points QoQ while Europe gained 3.

Alongside rising deal counts in both regions, this shift suggests growing investor interest in markets outside of traditional US hubs.

What else is happening in digital health? Check out our State of Digital Health Q3’24 Report.

Hot: Nuclear power

As demand for energy-intensive AI applications grows, big tech is going nuclear:

• Microsoft recently signed a deal with Constellation Energy to reopen the Three Mile Island nuclear plant to power its data centers.
• Amazon bought a nuclear-powered data center from Talen Energy earlier this year.

Traditional nuclear reactors’ high costs and long development timelines, as well as the broader need for reliable, low-carbon power sources, are creating an opening for small modular reactors (SMRs) to power future data centers. 

Google and Amazon both announced plans this week for building these small, factory-produced reactors, which have not yet been commercialized:

• Google signed a clean energy agreement with Kairos Power for up to 500MW of nuclear power from its SMRs, with its first deployments expected by 2030.
• Amazon signed agreements with Dominion, X-energy, and Energy Northwest to support the deployment of SMRs in the US. Amazon’s Climate Pledge Fund also led a $500M equity round to X-energy.

CB Insights customers can track the SMR market and related data here.

Not: Legal AI agent differentiation

Legal AI agents & copilots have seen rising investment over the last year, led by Harvey. 

However, our conversations with these solutions’ customers paint a less optimistic picture. 

Buyers point to a lack of product differentiation, and low switching costs between competitors — signaling that the likelihood of consolidation in the market is high. 

When asked how difficult it would be to switch to a new solution, customers of both Casetext (acquired by Thomson Reuters) and Luminance note it would be “easy.”

A customer of Eve similarly points to deeper integration as an important way to increase value to clients.

Source: CB Insights — Eve buyer interview

Players in the market overlap in features and functionality, with a primary focus on 3 workflows:

• Querying and knowledge management
• Document drafting
• Document and contract review

Of the 16 companies we track in this market, just under 40% focus on all three functions mentioned above, and nearly all of them focus on at least 2.

On top of this, other players in the broader legal tech space — such as case management and document management providers — already offer much of this functionality.

We map out buyer sentiment and M&A candidates in the market here.

The +1

Status. A visual representation of “It’s complicated.” Shoutout to Wes Houghton for sharing this with us.

I love you.

Anand

@asanwal 

Co-Founder & Exec Chair

P.S. We’re getting ready to announce this year’s Fintech 100. Meet the winners on October 24.

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