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- Embedding VC Newsletter - Apr 2025
Embedding VC Newsletter - Apr 2025
Hi friend,
April came and went in a blur of blossoms 🌸, breakthroughs, and maybe a few deep breaths between the chaos. As we step into May, we’re taking a moment to look back—at the quiet wins, the unexpected turns, and everything that made last month meaningful ✨.
Welcome to the April edition of the Embedding VC Newsletter, where we provide insights into the latest developments in our portfolio and the AI ecosystem.
👋 Refresh about Embedding VC:
If it is the first time you received our newsletter. As a fresher, we invest $100K to $1M checks into early-stage generative AI startups. If you or your founder friends are building something exciting, feel free to reach out to us at [email protected].
💻 Embedding VC Has a New Look
We launched a new terminal-style homepage — a design that reflects our builder DNA. Roger vibe-coded it last weekend using our favorite coding agent (shoutout to Augment 👨💻). Check out embedding.vc to explore and play around!
✨ Insight
AI agents are quickly becoming the next big thing in tech. After years of hype around chatbots and automation, we’re now seeing autonomous AI “agents” tackle complex tasks on their own. With 2 investments made in this emerging space in April, we think AI agent infrastructure is a promising frontier worth watching. There’s quite an amount of excitement among founders and investors because the pieces are finally coming together to make AI agents truly useful. More about the AI Agent Infrastructure Stack on our Substack.
🤖 Notable News In The Agent Space
Manus AI | $75M at $500M Valuation: The Chinese AI startup Butterfly Effect, creator of the autonomous agent Manus AI, recently secured a $75 million funding round, led by the iconic venture firm Benchmark. The investment quintupled Manus’s valuation to approximately $500 million in a few months. This is a very contrarian bet by a leading US VC firm given the macroeconomic uncertainty as well as the complex geopolitical tension between US and China. Unlike the firm’s previous investment in HeyGen, another leading Chinese AI company in the avatar space, Manus will continue operating outside of the U.S. Looking at historical data, Benchmark has made several contrarian bets — and they’ve often been right. This time is no exception. We shouldn’t underestimate the insight they may have seen before the rest of the market. The bet on Manus suggests Benchmark believes deeply in the rise of agentic computing and sees Manus as a frontier player in this emerging wave — regardless of domicile. It’s a strong signal: in a bifurcating global AI landscape, great teams building real technology can still attract bold capital if the vision is compelling enough. Regardless of domicile, the next generation of category-defining tech companies may be founded outside the U.S., and the structure of the global technology order may be on the cusp of being redefined.
Anysphere (Cursor) | $900M at $9B Valuation: Anysphere has raised $900 million in a new round led by Thrive Capital, with participation from a16z, Accel, Index Ventures, Benchmark, and OpenAI. Co-founded by former MIT student Michael Truell, Anysphere has now raised over $1 billion to date, solidifying its position as a frontrunner in the competitive AI coding space. The round reflects intense investor interest in AI dev tools.
OpenAI to Acquire Windsurf for $3B: OpenAI has agreed to buy Windsurf, an AI coding tool formerly known as Codium, for ~ $3B, making its largest acquisition to date. This deal is hoped to improve ChatGPT’s coding capabilities.
🗞️ Vectors In The News
Updates from Embedding VC portfolio companies:
AI coding assistant for professional software engineers and large codebases
Exciting Traction: Augment Code more than tripled its ARR in Q1 compared to last year’s close, fueled by the team’s largest enterprise deal to date. Their VSCode plugin downloads grew more than 10x from last year, now with over 143k installs. Huge congrats to the team!
Augment Agent Launch: The team launched Augment Agent, a powerful IDE-native coding assistant built for real dev workflows in large codebases. With 200K-token context, persistent memory, and native integrations (GitHub, Linear, Notion, etc.), it’s already helping engineers with bugfixes, migrations, tests, and more.
Cursor for creatives
FLORA shipped a wave of powerful updates this month:
Unsplash Search: Instantly browse and insert high-quality images without leaving the canvas
Image Blending: Merge two image blocks by prompt to blend style, structure, and subject, powered by Gemini 2.0
WAN 2.1: Add spatial narrative, realism, and motion flow to both Text-to-Video and Image-to-Video generation
Upscaling: Boost image and video resolution up to 4× with Topaz Labs integration
Background Remover: One-click subject isolation to cleanly remove unwanted backgrounds
GPT-4o Integration: Smarter intelligent canvas with the latest multimodal model
Ideogram 3.0: Faster, sharper visual storytelling from posters to full campaigns
The AI inference platform redefining price and performance
Meta Partnership: Meta is officially deploying Groq’s LPU hardware in its own data centers to power the Llama 4 API. This shows strong validation for Groq’s AI inference architecture.
LLM-based data enrichment tools that precisely extract unstructured data from mixed formats
New Launch: the CambioML team has launched Energent.ai, an AI assistant that operates directly on a secure virtual desktop, automating tasks like data scraping, spreadsheet formatting, and macro generation without the need for coding or integrations, streamlining complex workflows for knowledge workers. Try it for free at https://app.energent.ai!
The leading generative AI platform in education
Feature Upgrade: MagicStudent got a major upgrade with a redesigned Teacher Dashboard, pre-made Student Rooms, and helpful tutorials, making it easier than ever for educators to bring AI into the classroom.
New Addition: MagicSchool Data is a new enterprise tool that helps schools securely analyze assessments, group students by need, and uncover learning gaps in seconds. It’s now available for over 13,000 partner schools and districts.
💡 New Embedding Vectors
Embedding VC joins Screenpipe’s seed round
What they do: Screenpipe runs locally on a user's computer (or on a server for B2B) and captures all screen, system, and audio activity, structuring it into a local database that LLMs access via function calling. This is a critical infrastructure layer powering the entire AI stack. Because it's local and open-source, people trust it.
For developers: you can integrate via the screenpipe API/SDK or build Next.js apps and deploy them directly to the screenpipe marketplace, and monetize!
How they stand out: We believe AI agents need deep, real-time context to be truly useful, and Screenpipe is building exactly that at the OS level. As an open-source AI SDK for computer use, it gives developers the power to create context-aware agents with memory, history, and direct interface control, with over 14k GitHub stars, #1 trending repo status (twice), and 10K+ downloads.
We had a celebration with the founders (Louis and Matt) last week in SF!
Embedding VC joins Supermemory’s pre-seed round
What they do: Supermemory’s vision is to be the universal engine for memory, empowering individuals, developers, and enterprises to transform scattered data into actionable knowledge. Whether it’s organizing personal information, enhancing applications with contextual intelligence, or enabling companies to centralize and retrieve internal knowledge, Supermemory becomes the core infrastructure for transforming scattered data into actionable insights.
How they stand out: AI agents are only as useful as the memory they can access. Supermemory addresses this need by providing a scalable, developer-friendly platform. The founder Dhravya Shah, being only 19, 2x acquired founder, and a previous intern at Cloudfare’s AI team, is a young engineering talent who’s experienced in building full-stack products. We see the team and product as a key enabler in the AI agent stack to bridge everyday user data with intelligent, responsive agents.
👋 New month, new energy. May the force be with you.
See you soon! We are Embedding VC.
Embedding VC invests in early-stage Generative AI startups.