Venture Geopolitics Issue 49
26 May 2026
The AI backlash — booed commencement speeches, data-centre fights, etc — is aimed at the wrong target. The problem is not AI. The problem is that AI is accelerating the concentration of extraordinary economic and political power into the hands of a very few.
Society is increasingly using “AI” as shorthand for something bigger: the centralisation of power. In venture capital language, this is ‘founder mode’ applied at civilisational scale.
At startup scale, founder mode is an operating philosophy. Paul Graham’s original essay was about keeping founders close to the product and avoiding the deadening effect of managerial abstraction. It was not written for companies seeking trillion-dollar valuations while building infrastructure that governments, markets and other companies depend on.
At infrastructure scale, founder mode becomes something else. It becomes a governance ideology: the argument that the person who built the machine should continue to control the machine, even after the machine becomes part of the public operating system.
SpaceX makes this explicit. Its S-1 claims a $28.5 trillion TAM, 93% AI. Musk holds 85.1% of voting power through supervoting shares — ten votes to one for public investors. He serves simultaneously as CEO, CTO and Chairman and cannot be removed by a shareholder vote. US pension funds have called it “the most management-favourable governance structure ever brought to the US public markets at this scale.”
They will own it regardless.
That is the strange bargain public markets are being asked to accept: fund the infrastructure, own the exposure, absorb the index weight — but do not expect meaningful governance.
The biggest conundrum is, maybe it works?
SpaceX has built the world’s dominant launch platform, having deployed ~10,000 satellites (of a total ~14,000 orbiting the earth) — infrastructure that is no longer just commercial, but geopolitical. SpaceX now controls the launch cadence, orbital logistics, compute capacity and communications layer on which other actors depend.
This is why the backlash is so politically difficult. These companies are becoming indispensable, while remaining astonishingly concentrated.
AI doomers fear a paperclip maximiser without a conscience. But this is something stranger and seemingly more difficult to govern: a paperclip maximiser with a human at the head. A system optimising relentlessly for scale, control and indispensability, producing real value while distributing power appallingly badly.
The anti-AI movement is right to sense danger. But the structural issue is not machines replacing humans. It is humans using machines, capital and infrastructure to become functionally ungovernable.
IPOs / Publics
SpaceX filed for what could be the largest IPO ever, seeking to raise $80B+ despite $5B losses on $19B revenue after merging with xAI, with Musk securing 85% voting control through supervoting shares & reserving 30% of allocations for retail investors rather than institutions. The S1 outlines a $28.5T addressable market, hinging on Starship’s commercial viability for Mars colonisation & orbital AI data centres. Three major US pension funds called Musk’s control rights “the most management-favourable governance structure ever brought to the US public markets at this scale” (here, here & here)
OpenAI is preparing to file for an IPO ‘very soon’, with reports suggesting a filing could come as early as last Friday & a public debut as soon as September (here)
Oura (smart ring maker) filed confidentially for US IPO following $11B valuation in October, as health-tech listings draw renewed investor interest amid broader IPO momentum spurred by SpaceX’s filing (here)
Blockchain.com confidentially submitted draft S-1 filing for proposed IPO - the crypto wallet provider claims 95M wallets, 43M verified users & $1.1T in facilitated transactions since 2011 (here)
Nvidia authorised an additional $80B share buyback programme whilst growing revenue 85% YoY, signalling exceptional cash generation ($48.6B free cash flow in Q1) & management confidence despite losing China market & rising competition from customer-built chips (here)
Google is executing a coordinated pivot from conversational AI to autonomous agents across its entire stack: Gemini 3.5 Flash now powers a revamped Search - its biggest overhaul since launch, expanding queries and introducing standing information agents - alongside the new Antigravity 2.0 development platform, with banks and fintechs already automating multi-week workflows (here, here & here)
Despite posting record growth, Cloudflare cut around 20% of staff, with CEO Matthew Prince arguing AI is eliminating “measurer” roles (those in middle management/finance/legal/audit etc) & signalling a shift toward leaner AI-first organisational structures (here)
Salesforce & Snowflake earnings this week set to highlight AI’s complex impact on enterprise software - whilst companies report strong AI revenue growth, these gains appear to cannibalise existing revenue rather than drive net growth acceleration (here)
Reddit shares fell 6% after Meta launched Forum, a standalone iOS app for Facebook Groups that analysts see as direct competition to Reddit’s discussion-based model. Reddit is down 40% this year despite 7 consecutive quarters of 60%+ revenue growth (here)
Big Dogs
Anthropic hit profitability 2 years early with $10.9B Q2 revenue (here)
Anthropic agreed to pay SpaceX $1.25B monthly ($15B annually) through May 2029 for access to Colossus data centres, revealed in SpaceX’s IPO filing - highlighting AI companies’ desperation for compute capacity as data centre opposition grows (here)
Anthropic launched self-hosted sandboxes & MCP tunnels for Claude Managed Agents to solve enterprise AI security - agents execute tools within company infrastructure whilst credential control moves to network boundary rather than travelling with the agent (here)
Andrej Karpathy, former OpenAI co-founder & Tesla AI head, joined Anthropic’s pre-training team to lead AI-assisted research for Claude model development (here)
Alibaba is likely to end this quarter as the single largest provider of tokens processed globally. ByteDance is second. OpenAI, Anthropic and Google together account for less than a third (here)
OpenAI’s internal model solved the 80-year-old planar unit distance problem, marking the first time AI has autonomously resolved a major open mathematical problem (here)
Venture Capital
EQT/the EU’s €5B ScaleUp Fund wants to invest in UK startups despite Brexit complications - signalling potential bridge between European capital & British tech scale-ups amid ongoing regulatory uncertainty (here)
OpenAI CEO Sam Altman offered every Y Combinator startup $2M in OpenAI tokens via SAFE agreements, targeting 1-4% equity stakes in future funding rounds as part of a pilot programme exploring ‘tokenmaxxing’ startups (here)
Boulder Ventures closed its ninth fund at $55M after 120 days of fundraising, adding 27 new investors to 100 existing LPs, with the Colorado-based firm citing top decile DPI performance in recent vintages (here)
British Business Bank committed £25M as cornerstone investor to Antler’s UK Fund II, the VC’s largest single-location fund, which will back UK founders from inception with up to £500K initial investments alongside syndicate including Lloyds Banking Group (here)
Berlin’s Earlybird & Paris-based AVP (formerly AXA Venture Partners) are raising a €500M defence fund, joining the growing European defence investment wave following recent funds from Atomico, BGF, and others (here)
Regulation
Trump scrapped a planned AI executive order after tech CEOs including Zuckerberg & Musk voiced opposition, with adviser David Sacks arguing the regulation would harm US AI leadership over China - highlighting tensions between safety advocates & accelerationists within the administration (here)
House Oversight Chair James Comer launched an investigation into prediction markets Kalshi & Polymarket over suspected insider trading, citing suspicious bets on military actions including $2.4M in profits from Iran war bets & a US Army soldier making $400K from classified Venezuela operation intel (here)
Trump administration mandates most green card applicants apply from overseas rather than within the US, forcing temporary workers including tech talent to return home during processing - tech leaders warn the move will harm AI research & business competitiveness amid existing visa backlogs (here)
California Governor Gavin Newsom issued an executive order directing state agencies to explore labour policy overhauls ahead of potential AI-driven job displacement, including subsidies for companies that retain workers, expanded retraining programmes, and universal basic capital - the first such mandate from a US governor (here)
EU Parliament & Council agreed to simplify AI Act implementation with staggered timelines - high-risk systems rules apply Dec 2027, product integration rules Aug 2028 - whilst banning ‘nudification’ apps & extending SME privileges to mid-cap companies (here)
Musk vs Altman trial ended anticlimactically on statute of limitations grounds, but exposed AI industry leaders consumed by power struggles & profit motives rather than humanity-saving ideals, undermining public trust in sector that once positioned itself as alternative to tech monopolies (here)
Spain temporarily banned prediction markets Polymarket & Kalshi for operating without gambling licences, imposing a 3-4 mo suspension while authorities investigate compliance with local user protection requirements including identity verification & access controls (here)
Venture Geopolitics
US & Iran agreed in principle to reopen Strait of Hormuz with Iran committing to dispose of highly enriched uranium, though mechanisms remain unclear & deal awaits approval from Trump & Iran’s supreme leader (here)
London mayor blocks Palantir’s contract with Metropolitan Police as CEO Alex Karp positions the company’s AI as critical infrastructure for western democratic advantage (here)
Former Attorney General Sir Michael Ellis called London Mayor Sadiq Khan’s blocking of the £50M Palantir police contract ‘extraordinary’ & suggested the US data analytics firm should pursue legal action (here)
Euro-zone imports of IP services from America hit $200B annually as European governments & companies face massive software dependencies - Germany’s federal government alone pays Microsoft nearly €500M yearly, spurring digital sovereignty initiatives across the continent (here)
London’s economy grew at a tenth the rate of 20 years ago in the 4 years to 2023, with productivity falling since 2019 despite generating a quarter of UK GDP & a fifth of tax revenues - raising concerns over national policy neglect of the capital’s economic engine (here)
Elon Musk backed Restore Britain in the Makerfield by-election, sparking a bitter row with Reform UK leader Nigel Farage who accused the billionaire of trying to split Britain’s right-wing vote - highlighting how tech moguls’ political interventions can fragment opposition movements (here)
EU bootstrappers can build serious applications for under €10/month using a full European stack - Hetzner Cloud VPS at €7/month plus free tiers from EU providers covering email, analytics, monitoring & authentication, offering viable digital sovereignty alternative to US hyperscalers (here)
One-third of UK university students expect AI job displacement to trigger civil unrest, despite being heavy users (77% use AI monthly vs 46% of workers), highlighting growing anxiety about economic disruption among the cohort entering an AI-shaped labour market (here)
Netherlands blocks Kyndryl’s acquisition of Solvinity, the company behind DigiD digital identity services used by Dutch citizens, citing public interest risks - part of broader European pushback on US tech dependency ahead of Brussels’ tech sovereignty package (here)
Sweden will have more spy satellites than many European countries within a year, including France, after acquiring five Pelican satellites from US firm Planet Labs - shifting Europe’s geospatial intelligence balance but creating potential dependency on American technology (here)
Strategic Sectors
AI
Several commencement ceremonies have been interrupted by boos & jeers when speakers have brought up AI, an indicator that while AI is easing into many parts of life, backlash is rising (here)
Manus co-founders are exploring raising ~$1B to buy back their agentic AI startup from Meta at $2B+ valuation following Beijing’s demand to unwind the controversial acquisition, highlighting escalating US-China tech tensions & regulatory intervention in completed deals (here)
Google DeepMind CEO Demis Hassabis criticises AI-driven layoffs as shortsighted, arguing companies should use productivity gains to expand operations rather than cut staff - while Google debuts new coding models to catch up with Anthropic & OpenAI (here)
Pizza Hut franchisee Chaac (111 locations) sued for $100M+ damages, alleging the chain’s mandatory Dragontail AI delivery system caused DoorDash drivers to batch orders & delay deliveries up to 15 minutes, turning 90% on-time performance into cascading failures & customer dissatisfaction (here)
Analysis suggests hiring engineers in cheaper countries plus local AI models like DeepSeek ($0.094 per million tokens) will become more economical than frontier models ($2.80) within 11 mo, as US labs triple pricing whilst token consumption surges - creating natural price ceiling for OpenAI & Anthropic (here)
Stability AI released Stability Audio 3.0 models that generate 6+ minute songs, with smaller versions running on-device - highlighting competitive pressure in AI music generation amid ongoing licensing battles between AI startups & major record labels (here)
Cohere released Command A+, a 218B-parameter open-source AI model under Apache 2.0 licence - the company’s first fully permissive release. The sparse MoE architecture runs on just 25B active parameters with lossless 4-bit quantization, achieving 375 tokens/sec on single Nvidia Blackwell GPU whilst scoring 85% on complex reasoning benchmarks. Features native citations linking outputs to source documents & 48-language tokenizer optimised for non-European languages, targeting enterprise sovereign AI deployments (here)
Cerebras deployed Moonshot AI’s trillion-parameter Kimi K2.6 model at 981 tokens/second - 6.7x faster than GPU clouds - marking the first trillion-parameter model on its wafer-scale architecture as it challenges Nvidia’s $20B Groq acquisition with enterprise-first inference (here)
Huawei unveiled the Tau Scaling Law, a new semiconductor development principle, targeting 1.4-nanometer chip production by 2031 - just 3 years behind TSMC’s 2028 timeline, demonstrating faster-than-expected progress despite U.S. export controls aimed at limiting China’s chip capabilities (here)
Uber president Andrew Macdonald says the company exhausted its annual AI budget 4 mo into 2026 & struggles to justify rising token consumption costs without clear productivity gains, as the link between AI spending & ‘useful’ consumer features remains unclear (here)
High-bandwidth memory now accounts for 63% of AI chip component costs, up from 52% in early 2024, as HBM spending surged from $12B to $32B in 2025 - the fastest growth of any component category across Nvidia, AMD, Google & Amazon designs (here)
Notable deals:
Modal raised $355M at $4.65B led by General Catalyst & Redpoint, growing 5x since September to $300M annualised revenue. The AI cloud platform powers inference, agent runtimes & RL workloads for companies from DoorDash to Physical Intelligence, with over 1B sandboxes launched (here)
Exa Labs raised $250M at $2.2B from Andreessen Horowitz, tripling its valuation from $700M last September as the AI search startup targets agents rather than humans - with queries growing from 100M to 1B over 12 mo & partnerships including Google’s Gemini (here)
SiFive raised $400M at $3.65B from Atreides, Nvidia & others to develop data-centre CPU designs using open RISC-V standard, positioning against Arm Holdings as Arm shifts to competing with its own customers (here)
Cybersecurity
Anthropic’s Mythos & OpenAI’s GPT-5.5-Cyber models found 75 bugs vs usual 5-10/mo at Palo Alto Networks, but required significant human expertise to validate findings & distinguish exploitable vulnerabilities from 30% false positive rate (here)
Defence
White House approved secret $9B request to buy cutting-edge chips for US spy agencies, with CIA & NSA unable to deploy latest AI models on classified systems due to chip shortages - highlights critical infrastructure gap as AI becomes central to espionage operations (here)
Russia allegedly jammed signals of an RAF aircraft carrying Defence Secretary John Healey as he returned from visiting British troops in Estonia, highlighting escalating electronic warfare tactics in the Baltic region (here)
RAF will spend £1B over 15 years switching to sustainable aviation fuel (SAF) that costs 3x conventional fuel, with critics arguing the expense - equivalent to 12 F-35 fighters - diverts resources from defence priorities whilst Starmer’s defence investment plan remains delayed (here)
UK defence chiefs warn Britain’s 6,000-drone stockpile would last only one week in war with Russia, compared to Ukraine’s 9,000 daily usage rate. With Russian invasion risk peaking by 2030, military leaders demand urgent industrial scaling after Exercise Arrcade Strike revealed critical munitions gaps despite £4B government investment (here)
The UK’s next-generation Global Combat Air Programme stealth fighter - developed jointly with Japan & Italy - faces a critical funding dispute, with London preparing a £6B injection after Tokyo warned that delays are threatening the 2035 timeline (here). The row will be familiar to those who followed Eurofighter: GCAP is structurally identical to the Typhoon programme - same multilateral fragility, same early-stage partner commitment problems - which ultimately delivered an aircraft a generation behind US fifth-gen jets at £215M per unit, with chronic availability failures (here)
Germany will buy a 40% stake in KNDS, the Franco-German tank maker clearing path for its planned IPO targeting €15B-20B valuation before summer; France will reduce its stake to match at 40%, with both countries planning to drop to 30% within 2-3 years (here)
France seeks to join the UK-German deep precision strike programme to develop 2,000km-range missiles capable of hitting targets inside Russia, as Europe races to build autonomous defence capabilities after Trump cancelled US Tomahawk deployments to Germany (here)
Pentagon’s Darpa programme aims to develop batteries with 2,000 Wh/kg energy density - five times current lithium-ion & approaching diesel fuel efficiency - to counter China’s 55% global battery dominance led by BYD & CATL, though experts view the target as extremely ambitious given DoE’s existing 1,000 Wh/kg goal was already considered a long shot (here)
Notable deal:
Berlin-based strike drone startup Stark is in talks for a blockbuster funding round after winning a contract with German armed forces for kamikaze drones, highlighting accelerating European defence tech investment amid geopolitical tensions (here)
Energy
SpaceX committed over $2.8B to purchase gas turbines for AI data centres supporting Musk’s xAI unit as it pushes into cloud computing, raising questions about carbon emissions from fossil fuel-powered AI infrastructure (here)
Crypto
Per the WSJ, Binance facilitated billions in Iranian regime transactions despite 2023 guilty plea & $4.3B fine for sanctions violations, with key financier Babak Zanjani moving $850M through the exchange continuing into 2026, prompting fresh Justice Department investigation (here)
EVs
Waymo suspended all freeway operations across San Francisco, LA, Phoenix & Miami after safety incidents including driving through construction cones & flooding-related crashes - highlighting ongoing challenges in autonomous vehicle deployment despite years of development (here)
Quantum
US Commerce Department allocated $2B in equity stakes across nine quantum computing companies including PsiQuantum ($100M, backed by Trump Jr’s 1789 Capital) & D-Wave (taken public by current Pentagon official Emil Michael), signalling strategic state investment in critical technology through CHIPS programme (here)
UK pushes quantum computing & neuromorphic chips as path to computing sovereignty after missing the AI race, with 90% of global AI compute controlled by US & China - government launched £2B quantum initiative & £500M Sovereign AI fund as experimental technologies offer leverage in the new computing arms race (here)