Category: 3. Business

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During the 2010s tech boom, Silicon Valley’s uniform was the hooded sweatshirt. Mark Zuckerberg caused a stir on Wall Street in 2012 when the young chief executive had the audacity to wear a hoodie to pitch investors during Facebook’s roadshow for its initial public offering. That was when paying $1bn for fledgling photo-sharing app Instagram seemed sensational.

These days, the twenty-something founders in San Francisco are wearing $2,000 Moncler vests. And a billion dollars, once the hallmark of a feted “unicorn”, has become the price of entry, not exit, for artificial intelligence start-ups. 

In recent months, several small teams of entrepreneurs and researchers exiting the likes of Google DeepMind and OpenAI have been able to walk into venture capital firms and demand upwards of $1bn to fund a new idea for a “frontier” AI model developer — and walk out with a clutch of offers, sometimes in a matter of days. 

The past few weeks have taken deep chunks out of the market values of tech stocks including Nvidia, Microsoft, Oracle and Palantir. But if AI bubble fears are stalking Wall Street, they are yet to reach Sand Hill Road, where dealmaking is frenzied. 

The consistent message from those investors is that they will keep ploughing money into private AI start-ups regardless of what happens to the public markets. Even in the event of a US recession, one VC argued, it would merely be the non-AI start-ups that would suffer. 

VCs acknowledge that AI mania will inevitably cause heavier-than-usual losses in their industry, where funds typically have one or two hits out of 10 investments. But they are hewing to the idea that the winners will be so enormous, the many losers won’t matter. 

That makes the pressure to do deals intense. In the AI era, founders have all the leverage. That is a key difference to the mobile boom of the mid-2010s. Then, it seemed like anyone could come up with an app worth millions overnight (and often disappear just as quickly — anyone remember Flappy Bird or Yo?). 

Today the most scarce commodity in AI is not Nvidia chips, it is talent. Many top researchers are realising that they can command top dollar by leaving Big Tech to start their own companies. 

The trendsetters here were Ilya Sutskever and Mira Murati, the former chief scientist and chief technology officer of OpenAI. Their start-ups, Safe Superintelligence and Thinking Machines Lab, were valued in the tens of billions within a year of their creation. “Thinkies” is said to be closing in on a new fundraising valuing it at $50bn, up from $12bn in July.

Now Amazon founder Jeff Bezos is jumping on the bandwagon. His new start-up, called Project Prometheus, has reportedly raised more than $6bn to develop manufacturing-focused AI from investors.

But even without the allure of those big names, there are many more of these new-wave frontier labs coming. Last month Reflection AI, led by two former Google DeepMind researchers, announced a $2bn fundraising to build a new “open” model, aiming to counter China’s DeepSeek. Others are more narrowly focused on robotics or scientific research, or abandoning today’s large language models for a new approach, such as “world models” or “multimodal” systems. This reflects a growing sense that more value will accrue to underlying AI systems, not the app developers who build on top of them. 

It is also a testament to appetite from those VCs who passed on OpenAI, Anthropic or xAI when they were valued in the tens of billions and can’t bring themselves to pay up now they are priced in the hundreds of billions. They still need to show their investors that they have a bet in the frontier AI model race. 

Founders are not afraid to exploit this fear of missing out. One VC told me of an encounter with an AI engineer who was looking to raise hundreds of millions for a new model start-up. The CEO proclaimed he already had commitments of $100mn apiece from multiple marquee VC firms. The next lucky investors had a weekend to decide if they were in for the same. There was no time for due diligence of any conventional sort.

If things go wrong, the soft landing for these companies could be a multibillion-dollar “acqui-hire” from an AI talent-starved Big Tech group. The potential upside? On Sand Hill Road last week, a veteran investor confidently predicted that at least one of the current crop of AI labs would hit a trillion-dollar valuation within the next 24 months, even before going public. When the 2027 IPO roadshows come around, hoodies will be the least of Wall Street’s worries.

tim.bradshaw@ft.com

PA Media

‘Defining moment’

The Climate and Clean Air Coalition (CCAC), the International Council on Clean Transportation (ICCT), and C40 Cities today announced a strategic partnership to accelerate the global transition to zero-emission non-road mobile machinery, beginning with construction equipment. The collaboration will scale city, national, and regional efforts to replace diesel-powered machinery with electric alternatives—cutting climate pollutants, improving urban air quality, and supporting a just transition for workers and industry.

The non-road sector—comprised mostly of construction and agricultural machinery—emits over 1 billion tonnes of CO2, 3 million tonnes of methane (CH4), and 250,000 tonnes of black carbon (BC) annually, exceeding the climate footprint of the global maritime sector. Construction machinery alone contributes around 40% of those emissions, making it one of the largest and most immediate opportunities for action.

Norway’s Minister of Climate and Environment, Andreas Bjelland Eriksen, launched the partnership during an event at the Super Pollutant Solutions Pavilion. “This collaboration will be key to elevate non-road emissions onto the climate agenda. The electrification of construction machinery is a good starting point, where Norway and the City of Oslo have relevant experience. A key point to succeed is to dismantle barriers to adoption”.

“Non-road machinery is the next frontier to help us tackle climate change and air pollution,” said Martina Otto, Head of Secretariat, Climate and Clean Air Coalition (CCAC). “Electrifying construction equipment is a fast and very visible way to cut black carbon—a powerful short-lived climate pollutant—while delivering a quieter and healthier environment, for workers and citizens. This partnership combines policy leadership, technical expertise, and on-the-ground know-how to take this turn .”

The benefits go beyond climate. In major markets, non-road equipment drives 50–70% of particulate matter (PM) and about 30% of nitrogen oxide (NOx) from mobile sources—key drivers of poor air quality and ozone formation. Replacing diesel engines with electric motors helps cities move toward World Health Organization air-quality guidelines and delivers immediate health benefits for urban residents.

Encouragingly, more governments are setting zero-emission transformation goals and policies for the non-road sector, supported by rapid technological progress and a growing market. Electric machinery has advanced across equipment types—including compact loaders and excavators—with model offerings expanding and performance increasingly matching diesel in key duty cycles. Manufacturers are investing in electrified product lines, signaling a clear shift from niche pilots to broader market readiness.

“We’re seeing remarkable technological progress in the non-road sector,” said Drew Kodjak, President and CEO at ICCT. “Dozens of electric models are now available across construction machinery categories, and governments are beginning to align industrial, air-quality, and climate policy to accelerate adoption. This partnership will connect technology, policy, and implementation—helping countries and cities design and implement the standards, incentives, and procurement frameworks that make zero-emission construction machinery the norm.”

Cities are central to this effort. They experience the brunt of construction-site noise and pollution, and most construction happens within city limits. Cities are already showing electrification is possible through pilots and procurement. “Cities are on the front line of both the problem and the solution,” said Mark Watts, Executive Director at C40 Cities. “By electrifying construction equipment, we protect residents’ health, reduce noise, and cut climate pollution. Working with CCAC and ICCT, we’ll help cities move from pilots to full-scale deployment—setting policies that align clean-construction equipment supply and demand and drive a fair, resilient transition for all.”

This partnership marks a turning point for an often-overlooked sector. Together, the CCAC, ICCT, and C40 will elevate non-road equipment on the global climate agenda to unlock the attention and investment needed for large-scale transformation.

C40 is a network of nearly 100 mayors of the world’s leading cities collaborating to deliver the urgent action needed to confront the climate crisis and create a future where everyone, everywhere, can thrive.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The chief executive of Italian bank Banca Monte dei Paschi di Siena is under investigation for alleged market manipulation and obstruction of supervisory functions in connection with its takeover of rival Mediobanca.

MPS said on Thursday that it had received a search warrant and its chief executive Luigi Lovaglio had been served a “notice of investigation by Milan’s prosecutor’s office in his capacity as chief executive officer”.

Milanese prosecutors are also investigating MPS and its top shareholders Delfin and Francesco Gaetano Caltagirone for alleged market manipulation and obstruction of regulatory functions, according to three people familiar with the details of the investigation.

Delfin and Caltagirone were also top shareholders in Mediobanca.

The investigation was first reported by Italian newspaper Corriere della Sera.

Delfin declined to comment. Caltagirone did not immediately reply to a request for comment.

MPS said it was “confident it can provide all the necessary information to clarify the correctness of its actions and expresses its full trust in the competent authorities, with whom it confirms its full co-operation”.

Shares in MPS fell more than 4 per cent in afternoon trading in Milan.

This is a developing story