Andreessen Horowitz has agreed to lead a US$200 million funding round in Periodic Labs, a months-old startup focused on AI for material science, according to people familiar with the deal.

The investment is expected to value Periodic Labs at US$1 billion before the new funding.

Periodic Labs was founded by Liam Fedus, a former vice president of research at OpenAI, and Ekin Dogus Cubuk, a former DeepMind research scientist.

The company aims to use AI to study and discover new materials. OpenAI is also expected to join the round, though terms have not been finalized.

Interest in startups founded by former OpenAI and DeepMind staff has grown.

Investors are paying high valuations for early-stage companies in the sector.

Recently, other ex-OpenAI staff launched Applied Compute, which secured funding at a US$100 million valuation.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Elite AI talent commands billion-dollar valuations without shipping products

The Periodic Labs deal exemplifies a remarkable trend where investors are betting massive sums on AI talent alone, rather than proven products or revenue.

Periodic Labs joins other OpenAI alumni ventures that have achieved extraordinary valuations before launching anything. For instance, Thinking Machines Lab reached a $10 billion valuation with a $2 billion seed round despite having “not yet launched any products,” while Safe Superintelligence achieved a $32 billion valuation without shipping products12.

Collectively, OpenAI alumni have raised over $42 billion for startups without delivering products, demonstrating investors’ willingness to pay premium prices for proven AI expertise2.

This pattern represents a fundamental shift in venture capital, where track records at leading AI companies like OpenAI and DeepMind have become proxies for future success, allowing founders to skip traditional milestones like product-market fit demonstrations.

2️⃣ AI funding increasingly concentrates among a small group of elite startups

The Periodic Labs fundraise reflects a broader concentration of venture capital among a handful of high-profile AI companies and their alumni networks.