Gates Frontier Led a $110 Million Bet Against Silicon

Gates Frontier Led a $110 Million Bet Against Silicon

On January 22, an Austin startup called Neurophos closed an oversubscribed $110 million Series A led by Bill Gates’ venture arm, with Microsoft’s M12, Aramco Ventures and Bosch Ventures alongside. Total funding reached $118 million.

Worth being precise about what happened, because the shorthand gets it wrong. Gates Frontier led the round rather than writing the whole cheque, and the deal was announced publicly, covered at the time by the trade and technology press. What makes it interesting is not secrecy. It is the direction of the bet.

Neurophos is trying to compute with light instead of electricity. Its optical processing unit packs more than a million micron-scale optical elements onto a single chip, using metamaterial modulators the company says are 10,000 times smaller than conventional photonic elements — the miniaturisation that would make large-scale photonic computing manufacturable at data-centre scale for the first time. Its chief executive describes a single on-chip photonic sensor measuring 1,000 by 1,000, roughly fifteen times the 256-by-256 matrix used in most AI accelerators.

The reason capital is moving is the constraint we wrote about on Tuesday from the other end. Traditional silicon is hitting a thermal wall: performance now costs heat and electricity in quantities that data centres struggle to supply. Light produces far less heat, travels faster and is less sensitive to temperature. The catch has always been manufacturing — optical components are physically large and awkward to mass-produce, and they need converters to move data between digital and analogue.

And this is a field, not a single company. AI chip startups have taken $8.3 billion globally this year. Two weeks ago a London firm raised $312 million at a $3.3 billion valuation on a photonic interconnect design — nearly three times the Neurophos round, seven months later.

The sober part belongs in the same paragraph as the enthusiasm. Neurophos has no shipping product, no revenue and no customers running production workloads. First commercial systems and a manufacturing ramp are targeted for 2028. What it has is a claim and a roster of backers betting the claim survives contact with a foundry.

Here’s why it lands on your desk: for three years the way to own the AI build-out has been to own the incumbent chipmaker. The people with the best view of what comes after are now funding the thing designed to replace it — and they are doing it at the stage where the companies are still private.

Source: Company announcements / TechCrunch / Dealroom via CNBC

He Didn’t Ask for Coverage. He Moved the Money.

Bill Gates made a $110 million bet.

No press release. No CNBC appearance. No announcement.

His private venture fund — Gates Frontier — quietly backing one photonics company.

He didn’t ask for coverage. He just moved the money.

Jason Bodner spotted the same opportunity before Gates wrote the check. He’s naming his #1 pick in this space — free.

Three Days After the IPO, Congress Bought

SpaceX went public on June 12. On June 15, a South Carolina congressman bought between $50,001 and $100,000 of it — and he is one of six House members or their spouses who bought within days of the listing.

The detail that makes it more than a curiosity is the committee assignment. Representative William Timmons IV chairs the House Oversight subcommittee on military and foreign affairs, a panel whose jurisdiction runs directly through the Pentagon’s largest launch contractor. The trade appears in periodic transaction reports filed with the House Clerk. It is legal under current rules, and reporting has turned up no evidence of insider trading.

It is also not unusual. A New York Times review covering 2019 to 2021 found that nearly one in five members of Congress had traded stocks in sectors directly related to the committees they sat on. The STOCK Act requires disclosure of any transaction above $1,000 within 30 to 45 days — after the fact, and with a penalty of $200 for a first-time late filing.

Congress has noticed. On July 22 the House passed the Stop Insider Trading Act by 232 to 198, with thirteen Democrats joining. It would bar members, spouses and dependent children from buying individual stocks, require seven days’ public notice before a sale, and raise the late-filing penalty to $2,000 or 10% of the transaction, whichever is greater.

Read the exemptions and it looks smaller. Existing holdings can be kept. Sales are not prohibited — one member called it a stock trading ban that still allows stock trading. The president and vice president are outside its scope entirely. And Senate leadership has shown little appetite, which is where bills of this kind usually stop.

The distinction worth holding: these filings are public, searchable and published on a lag. What they show is not a secret, and it is not a signal either — a disclosure arriving forty days late tells you where money went, not where it is going. But they do reveal which sectors the people writing the budgets are willing to put their own money behind.

Source: House Clerk filings / CNBC / NOTUS

Five of Them Sit on the Committees

Six days after the largest space IPO filing in history, six U.S. Representatives quietly bought the exact same stock.

Five of them sit on House committees overseeing defense, satellites, and AI.

They didn’t buy SpaceX. They bought the tiny $4 Florida company that makes SpaceX possible.

Here is what they know that the public doesn’t:

Commercial space is now a $686 Billion critical infrastructure race.

Satellite manufacturing is surging up 67%.

Elon Musk admitted only three companies on Earth can cast these parts.

This unknown contractor just unlocked what insiders call a “launch cheat code” — launching twice as fast at 1/10th the cost of SpaceX.

The Pentagon is doubling its budget to $126 Billion, and politicians are already stacking their portfolios.

Robert Kiyosaki’s “Financial 007” believes this $4 ticker is about to leak to the press.

P.S. When politicians on armed services committees buy a defense stock before a licensing milestone, they aren’t guessing. See the full “Shadow SpaceX” research dossier here.

The Next Billion Users Arrive Where the Money Isn’t

Global advertising spending is set to reach $1.17 trillion this year. The United States accounts for 40.7% of it — a share wildly out of proportion to its share of the world’s phones.

Look only at digital and the concentration is the same. The US takes roughly 40% of global digital ad spend, around $272 billion. China follows at 18%, the United Kingdom at 5%, Japan at 4%. Everywhere else, together, shares what is left.

The collection is concentrated too. Google, Meta and Amazon between them capture an estimated 64% of all global digital ad revenue, and that share has been rising rather than falling. Google and YouTube alone are forecast to bring in $229.42 billion this year, marginally ahead of Facebook and Instagram.

Now set that against where the growth in users is. Satellite direct-to-phone coverage is arriving first in exactly the places terrestrial networks skipped — rural, remote and low-income. Those are real people with real screen time, and they sit in markets that contribute a small fraction of global ad growth. Latin America, Africa and the Middle East together are forecast to supply around 12% of it this year.

That gap is the whole commercial question of the next decade of connectivity. Attention is being created at the edges of the map. Revenue per hour of that attention is a fraction of what it is in Ohio, and the machinery for collecting even that fraction is owned by three companies in one country.

If you are looking at connectivity as an investment theme, the useful question is not how many people come online. It is who ends up collecting from them, at what rate, and whether anyone new gets between the user and the incumbent that already takes two thirds of every advertising dollar.

Source: eMarketer / IAB / WARC

Starlink Sells the Connection. Then What?

SpaceX’s IPO made history. The stock hit $165 in a week.

But the most important part of this story may not be the rockets.

It’s Starlink. T-Mobile just enabled Starlink satellite connectivity on every iPhone and billions of phones are coming online for the first time.

Starlink sells them the connection. That’s where its job ends. But every hour those people spend on their phones generates ad revenue - and someone has to collect it.

I found the company doing it. 490 million users. A billion dollars earned and saved. 32,481% revenue growth - enough to make it the #1 software company according to Deloitte’s fastest growing companies list in 2023. $11.8 million in EBITDA in 2025. And it hasn’t gone public yet.

Series A open at $0.55/share.

But soon, the opportunity to invest at this price closes — and it’s gone after that.

Every previous round sold out. I don’t expect this one to last either.

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Walmart Beat and Raised. The Refund Did Some of the Work.

Revenue of $187.9 billion, up 5.9% and ahead of the $186.8 billion expected. Adjusted earnings of $0.81 a share against a $0.74 consensus. Full-year guidance raised.

Operating income rose 28.8%, or 17.4% on an adjusted constant-currency basis — a startling number for a retailer growing sales at six. The explanation is partly tariffs running in reverse. The finance chief told CNBC the company is eligible for $2.9 billion in tariff refunds, with just under $100 million still to come, and that it intends to put the money into lower prices.

Which is the caveat worth carrying. A refund is a one-off that flatters the gross margin rate this quarter and not the next, and spending it on price investment means it does not stay in the margin either. Net income actually fell year over year, to $6.37 billion from $7.03 billion. The operating leverage is real; some of this quarter’s version of it is not repeatable.

The part that connects to everything above: Walmart’s fastest-growing business is not groceries. Global advertising grew 37% last quarter, with the US arm up 36%, and membership fees rose 17.4%. Advertising and membership together now throw off roughly a third of operating income. The largest retailer in the world increasingly earns like a media company that happens to own shelves.

Set the week together and the consumer looks fine at both ends and shaky in the middle: Home Depot beat on Tuesday, Target beat and raised on Wednesday while Lowe’s cut its outlook, and Walmart beat and raised today. Nobody is collapsing. But three of the four leaned on something other than customers simply buying more.

Source: Company release / CNBC