Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 116- January 13)

Welcome to Startup Monday, my weekly newsletter that recaps the week in the global startup ecosystem. To have this newsletter emailed to you, you can sign up here.

Top startup news to follow this week:

1. US startup funding drops 30% in 2023 despite AI frenzy

The latest data, from a year in which megadeals in artificial intelligence captured the imagination of investors, shows a persistent decline from the peak of U.S. venture funding in 2021 when startups raised $348 billion.

AI startups attracted one out of every three dollars invested in the U.S. last year, reflecting a surge in investor interest after OpenAI’s ChatGPT grabbed the spotlight and startups raced to develop AI technology.

AI labs that train large language models, an expensive endeavor given the amount of computational power required, made noteworthy contributions to an otherwise cautious investment year. The outsized investments in AI frontrunners OpenAI and Anthropic accounted for 10% of the total deal value in 2023, PitchBook data showed.

There was a modest uptick in deal activity in the fourth quarter, with 3,934 deals completed, sparking hopes for a potential stabilization in the market.

Instances in which startups raised funding at a lower valuation than in their previous rounds jumped from 8% in 2022 to 20% in 2023 — suggesting a broad reset of valuations among late-stage companies.

“AI names are trading at a premium. Some software names are trading at a premium. Meanwhile, food and grocery delivery and crappy consumer concepts are all trading down 95% from their last round,” said Ken Smythe, founder of Next Round Capital which invests in the private market.

2. Illumina Ventures launches refreshed genomics startup accelerator program

Illumina’s independently managed venture capital firm has opened up the doors to the new evolution of its startup incubator dubbed Illumina Ventures Labs.

Illumina Ventures has invested in more than 30 U.S. and European startups since 2016, while the larger Illumina has served as a limited anchor partner in its fund. The Accelerator program for seed-stage companies previously helped launch 74 companies, supported by $1.2 billion in third-party investments.

The program is currently taking applications for early-stage genomics startups, from company formation through series A financing. Labs-based companies will be incubated for up to 18 months and will connect with Illumina’s R&D teams through virtual and hybrid formats.

“We applaud the significant progress made by Illumina Ventures Labs to launch a company creation engine providing early-stage companies access to enabling technologies to reach value creation milestones, and we look forward to continuing to work closely with companies pioneering breakthrough applications in genomics,” Ashley Van Zeeland, Illumina’s VP of corporate development, said in a statement.

3. Andreessen Horowitz backs British insurance startup in $73 mln funding round

Founded in 2017, Hyperexponential provides insurance companies with mathematical modeling software, allowing them to price policies based on a wide range of data. The funding round was led by Battery Ventures.

“There is still appetite for businesses that are doing very well, that are self-sustaining, and are growing. We are fortunate enough to fall into that group,” Hyperexponential’s cofounder and CEO Amrit Santhirasenan said.

Last week, U.S. investment firm Coatue confirmed plans to wind down its London office two years after it opened, with an internal memo stating the company aimed to streamline operations.

Asked about Hyperexponential’s success amid a downturn in investor sentiment in Europe, Santhirasenan said: “In the past, companies have been dependent on external capital, grown as quickly as possible, raised more money, and then seen what happened. That era seems very far behind us.”

Angela Strange, general partner at Andreessen Horowitz, said: “Insurance is one of the largest industries in the world, but many companies don’t have a modern data stack. They’re working with very old tools.

4. Only 6% of Funding Goes to Female-Led Blockchain Startups

A recent Bitget study has revealed the predominance of gender bias within the crypto industry, particularly in blockchain startup funding, where over 90% of funding goes to male-led projects.

Conducted over two years, the study highlights that while male-led startups attracted $27.85 billion, female-led blockchain startups only raised $1.77 billion, approximately 6.34% of the overall amount.

Investor bias is the primary contributing factor to the disparities in funding for female-led startups, general investing trends, and overall crypto market sentiment. Female-led blockchain startups have also been impacted by sensitivity to negative shifts over-optimistic trends, resulting in a 45.2% decline in initiatives since 2022.

Bitget Managing Director Gracy Chen asserted the importance of fostering gender balance within the industry

5. UK-based Blockchain startup Bitfinity coins $7M funding to incorporate Ethereum and Bitcoin

-based Bitfinity, a blockchain startup building a Bitcoin Layer 2 network, has secured . This total investment came in two parts — $1 million in 2021 and the recent round of $6 million, which values the company at $130 million. The round was led by prominent investors — Polychain Capital and ParaFi Capital. It also saw participation from Warburg Serres, Dokia Capital, and Draft Ventures. $7 million in funding

The funds will bolster Bitfinity’s efforts to integrate Ethereum Virtual Machine (EVM) capabilities with Bitcoin, potentially enabling faster and cheaper Bitcoin-enabled decentralised finance (DeFi) services. Also, it comes at a time when the mainnet launch is slated for either late January or early February.

6. Vintage investment partners close $200 million growth-stage venture fund

The firm is focusing on supporting growth-stage technology startups in Israel, Europe, and the US.

Vintage Investment Partners, a well-established global venture capital platform , has confirmed the completion of its 4th Growth-Stage Venture Fund (Growth IV), with a total capital commitment of , surpassing its initial target. $200 million

As the firm marks its 20th anniversary, it navigates the dynamic landscape of venture capital investment, characterized by ongoing innovation and disruption across various sectors.

The fund will collaborate with trusted tier-one venture capital funds within Vintage’s extensive network. The closing of Growth IV increases Vintage’s total assets under management to approximately $4 billion.

Success in spite of tough fundraising environment

Abe Finkelstein, general partner at Vintage, expressed appreciation for the strong support from limited partners in a challenging fundraising environment. “We are entering one of the most exciting periods the firm has witnessed in venture capital investing, with innovation and disruption still occurring at a breathtaking pace across a wide variety of sectors, all the while valuations are becoming attractive after the recent bubble years,” he said.

7. UK insurtech Hyperexponential raises $73M and eyes US expansion

Hyperexponential , a London-based insurance technology (insurtech) startup that serves the property-casualty (P&C) insurance industry with “decision intelligence” for pricing, has raised $73 million in a Series B e quity round of funding.

Boston-based venture capital firm Battery Ventures led the round, with participation from existing investor Highland Europe and Andreessen Horowitz (a16z).

Founded in 2017, Hyperexponential helps insurers and reinsurers make better-informed pricing decisions using predictive data and insights gleaned from a broader array of sources — including where this data might be niche, sparse and hugely fragmented.

And this latest investment does tend to support these claims. A $73 million equity-based funding round stands out like a sore thumb in the current economic climate, suggesting that the target startup would have an attractive balance sheet and solid growth trajectory to warrant such a cash injection.

8. Norwegian robotics company 1X bags €91 million Series B to produce androids to meet the world’s labor demand

Moss-based , an AI and robotics company producing androids to benefit society and meet the world’s labor demand, announced it has raised in Series B funding with participation from EQT Ventures and other notable global investors. €91 million

The company intends to utilize the new capital to bring to market its second generation android NEO. Designed as a bipedal humanoid, NEO is tailored for everyday home assistance, offering versatile support for a wide range of domestic tasks in the consumer market. The funds will also support 1X’s existing enterprise clients in logistics and guarding. With 1X offering a android safe to work among people and a new approach to embodied learning for data collection, the company stands at the forefront of AI robotics.

“We are thrilled that these leading investors are supporting 1X’s mission of safely deploying Androids with Smart Behavior into new markets. Our next milestone will be scaling our data collection strategy for Embodied AI and offering NEO to consumers,” said Bernt Øivind Børnich, CEO of 1X.

After successfully completing a Series A funding round led by OpenAI and Tiger Global in March 2023, 1X has now raised over $125 million in less than 12 months. This funding will support their mission to produce safe and advanced androids at a commercial scale, aiming to meet global labor demands and build an abundant society.

Founded in 2014, 1X also facilitated a significant secondary transaction as part of the round, where existing shareholders Sandwater and Skagerak Capital participated. New investors in the secondary transaction consist of Samsung NEXT and the Nistad group, to ensure the liquidity of stock options for its long-term employees.

9. Zurich-based payment fintech Rivero bags €6.3 million Series A to fill a gap in the market for fraud recovery

, a European fintech specialising in digitalisation and automation of payment processes, announced today that it has raised €6.3 million in a Series A round. The round was led by 6 Degrees Capital and Inference Partners, with participation from PostFinance’s Venture Arm, Kraken Ventures, Seed X Liechtenstein, and angel investor and former COO of Adyen, Robert Kraal, together with a long list of payment executives.

The investment will help Rivero accelerate its growth across new markets and boost its product development and workforce.

Thomas Müller, co-founder and CEO of Rivero, said: “We’re thrilled to share the news of our Series A round. Especially given the current challenging market conditions. We take this as confirmation of our strong business model and clear market demand for our products.”

Fatemeh Nikayin, co-founder, added: “This funding represents more than financial support; it’s a partnership with investors who understand and resonate with our vision and global ambitions.”

Founded in 2019, Rivero is a fast-growing European fintech. Headquartered in Switzerland, Rivero is aimed at simplifying payment operations for the highly regulated payments industry, filling a gap in the market for fraud recovery, dispute management and payment scheme compliance solutions. Leveraging the benefits of SaaS, Rivero’s products cater to all players in the payment ecosystem, but in particular towards issuing banks.

The fintech’s competitive edge is reflected in its two unique SaaS product offerings, which are focused on making costly and manual payment operations seamless. Kajo, the first product, is the only solution on the market for payment scheme compliance and enables all licensees of payment networks to minimise the effort and the risks involved in this process.

10.Novo Nordisk spends up to $1.64bn on US biotech startups

Novo Nordisk taps Flagship Pioneering portfolio companies Omega Therapeutics and Cellarity as obesity drugs competition intensifies.

Novo Nordisk has entered into research collaborations with two US biotech startups as it aims to maintain its dominant position in the cardiometabolic disease market.

After a joint preclinical development phase, Novo Nordisk can decide to advance the programmes into clinical studies.

The two deals are the first announced under the framework collaboration between Novo Nordisk and the venture capital firm Flagship Pioneering to advance breakthrough medicines in cardiometabolic diseases signed in May 2022. Massachusetts, US-based Flagship Pioneering founded both Omega and Cellarity in 2017.

Messenger RNA specialist Omega will focus its work on developing an epigenomic controller designed to enhance metabolic activity by thermogenesis. Omega will aim to reduce weight loss by precisely targeting and modulating gene expression, unlike many of the current drugs that rely on regulating appetite.

Expand the reach of your business to a larger audience, by becoming a sponsor for StartUp Monday just $99 a month. It will give you an opportunity to showcase your brand and products to a wide range of potential customers.

Send a request at funding@ifundlab.com