Instinct in Talks for USD 1 Billion Round at About USD 10 Billion Valuation

Instinct, a personal AI assistant, is in talks for a new USD 1 billion funding round at a target valuation of about USD 10 billion, with Sequoia Capital and Benchmark negotiating to lead. The company's operating entity is Spear Street Technology, founded in October 2025. Less than a month earlier, it had just completed a USD 250 million Series B at a USD 2.25 billion pre-money valuation, co-led by Index Ventures and Benchmark, bringing cumulative funding to USD 350 million.

Instinct was founded by 23-year-old Noah Shinn. Its product is an AI personal assistant to which users grant access to their email, text messages, location and other permissions, and then assign tasks via text message or phone call, including replying to emails, booking flights, buying groceries and cancelling subscriptions. The product remains in invitation-only beta testing, with users having just passed 100,000, and no public revenue figures. Shinn has said he does not want to charge users and mentioned exploring other commercialization paths such as advertising.

Shinn was the first author of the NeurIPS 2023 paper Reflexion, a co-developer of the τ-bench benchmark, and an early researcher at the AI customer service company Sierra.

In the primary market over the same period, a practice known as "two-tier financing" has been used repeatedly. The method works as follows: in the same funding round, the lead investor puts most of the capital in at a lower valuation while investing a small portion at a much higher valuation, and only the higher valuation is disclosed publicly. In June 2026, Mercor co-founder Brendan Foody named Sequoia Capital on X, saying that over the previous six months he had seen six cases of Sequoia investing at two tiers, a low valuation and a high valuation. Sequoia partner Shaun Maguire responded that calling this a "Sequoia scam" was unfair, but acknowledged that it had indeed happened. Foody later added that Sequoia was not alone in doing this and that top-tier firms across the industry generally operate this way.

Corporate filings show that Ineffable Intelligence, founded by former DeepMind scientist David Silver, received USD 11 million in its first fundraising tranche from Sequoia Capital and other institutions, at a pre-money valuation of about USD 55 million. Only about a month later, the company raised an additional USD 1.1 billion, with the pre-money valuation rising to USD 4 billion and the post-money valuation reaching USD 5.1 billion; Lightspeed, Index Ventures, DST Global and Sequoia Capital all invested at that valuation. Within weeks, the entry price for the same company differed by more than 70 times.

Similar high-valuation cases include several AI companies founded only recently. Mercor's three founders are 22 years old; the company is two years old and its valuation has risen from zero to 20 billion. Reflection AI, founded just over a year ago by former Google DeepMind researchers, has no substantive revenue and a valuation of 25 billion. Cognition's valuation rose from 26 billion to 48 billion in four months, with annual cash burn of USD 800 million. Perplexity, founded by three founders born in the 1990s, has a valuation of more than 30 billion. Cursor, founded by four MIT dropouts, was sold to SpaceX for USD 60 billion.

Over the past 12 months, the combined valuation of ten unprofitable AI startups worldwide has increased by nearly USD 1 trillion. In the first quarter of 2026, global venture capital investment reached a record USD 297 billion, with AI companies receiving 81% of the funds. China's embodied intelligence sector added 19 companies valued at more than RMB 10 billion within half a year. At the same time, MiniMax's market value fell sharply from a peak of more than HKD 410 billion after listing, evaporating more than 80%; Zhipu lost nearly HKD 1 trillion from its high point; and CloudMinds' valuation once exceeded RMB 20 billion before collapsing rapidly. In 2024, Character. AI disclosed a USD 5 billion valuation, and Google ultimately acquired its investors' shares for about USD 2.5 billion.

As capital concentrates in top AI startups, a large number of small and mid-sized venture capital funds face difficulties raising funds, declining performance and narrowing exit channels. Many limited partners face liquidity pressure and are more inclined to demand returns from existing investments rather than commit new capital. In the computing power segment, Nvidia led Reflection AI's round and invested USD 2 billion each in cloud providers CoreWeave and Nebius during 2026; both companies purchase Nvidia chips in large quantities.