Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 122- March 2)
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.
-Narine-
Top startup news to follow this week:
1. VC Funding To Black-Founded US Startups Reportedly Hit $705M In 2023 — The First Time The Number Fell Short Of $1B Since 2016
According to insights from Crunchbase, Black-founded startups pulled in a mere $705 million in venture funding in 2023, barely scratching the surface (0.5%) of the colossal $140.4 billion VC pot feeding all U.S.-based startups last year. For the first time since 2016, this drop is below the billion-dollar mark, though still higher than that year’s total of $582 million raised by Black-founded startups. This is particularly striking considering that 13.6% of the U.S. population identifies as Black or African-American, per the United States Census Bureau.
Paul Judge, Ph.D., an entrepreneur and investor who took over as chairman of the Open Opportunity Fund from SoftBank in 2023, highlighted the glaring disparity, noting that in light of these numbers, funding for Black owners should ideally equal around $18 billion, per Crunchbase.
As AFROTECH™ previously reported, when Judge was named chairman and managing partner of the Open Opportunity Fund, he also acquired an ownership stake. He says he knows how challenging it is for Black startups to find funding opportunities and aims to help them showcase their value.
“…Minority entrepreneurs know how to be scrappy, know how to build high-growth businesses, they know how to outperform the markets, and oftentimes, they’re identifying problems that others have overlooked,” Judge told AFROTECH™ at the time.
Since 2021, when Black-owned businesses raked in around $4.9 billion in VC, the downturn has infiltrated all stages of startup growth. Angel and seed rounds, critical for laying the foundation for burgeoning businesses, dropped by 51%, according to Crunchbase.
Funding during a company’s inception can be make-or-break, with these rounds helping early-stage startups develop their product, validate business models, and attract further investment.
2. Qatar plots a $1B pipeline to VCs
The Qatar Investment Authority (QIA) is launching a $1 billion venture capital fund of funds for international and regional venture capital funds, the sovereign wealth fund announced on Monday at the Web Summit.
The program, according to QIA, seeks to attract international VC funds and startups to Qatar and the wider Gulf Cooperation Council (GCC) region, with a particular focus on the fintech, edtech, and healthcare sectors.
Similar to typical fund-of-funds structures, QIA’s initiative will invest indirectly through other VC funds but also make targeted co-investments with participating funds. The sovereign wealth fund wants to bolster the number of startups and enhance the availability of VC funding within Qatar as it attempts to narrow the gap with more established ecosystems in neighboring countries such as Saudi Arabia and the United Arab Emirates (UAE).
Gulf sovereign wealth funds (SWFs) like the Abu Dhabi Investment Authority, ADQ, Mubadala, Saudi Arabia’s Public Investment Fund, and Qatar’s QIA collectively invested over $73 billion across various asset classes in 2022, according to Global SWF, an online tracker.
Recently, these funds, aiming to reduce reliance on oil, have increasingly poured money into tech startups in the GCC region, hoping to nurture thriving venture capital industries. The strategy has seen some success. In 2023, Saudi Arabian startups alone raised $1.3 billion. Additionally, data from Magnitt reveals that only 45% of investors came from outside the MENA region, indicating growing maturity in the local venture capital ecosystem, which received $2.6 billion in funding last year.
So far, Saudi Arabia has led the charge in establishing dedicated funds for tech firms. Initiatives like Jada, the Public Investment Fund’s (PIF) $1 billion fund of funds, and Saudi Venture Capital have actively invested in venture capital funds, including notable names like China’s MSA Capital and Endeavor Catalyst. However, unlike these initiatives, which also target private equity funds, QIA’s fund of funds is exclusively focused on venture capital funds (similar to Dubai’s $200 million Future District Fund), marking the first of its kind in the region for a country.
“There is currently no dedicated pool of capital in Qatar for companies that are past seed funding and are ready for Series A to Series C funding rounds. Building a well-connected startup ecosystem network in Qatar is fundamental to diversifying the country’s economic base in the long term,” said QIA CEO Mansoor Ebrahim Al-Mahmoud in a statement. “QIA is launching this program to help ensure that innovative businesses can readily access capital and support from VC funds, enabling them to scale operations and expand market presence in Qatar, across the GCC, and ultimately onto the international stage.”
3. Former Twitter engineers are building Particle, an AI-powered news reader, backed by $4.4M
A team led by former Twitter engineers is rethinking how AI can be used to help people process news and information. Particle.news, which entered into private beta over the weekend, is a new startup offering a personalized, “multi-perspective” news reading experience that not only leverages AI to summarize the news, but also aims to do so in a way that fairly compensates authors and publishers — or so is the claim.
While Particle hasn’t yet shared its business model, it arrives at a time when there’s a growing concern about the impact of AI on a rapidly shrinking news ecosystem. News that is summarized by AI could limit clicks to publishers’ websites, which means their ability to monetize via advertising would also be reduced.
The startup was founded last year by former Senior Director of Product Management at Twitter, Sara Beykpour, who worked on products like Twitter Blue, Twitter Video, and conversations, and who spearheaded the experimental app, twttr. She had been at Twitter from 2015 through 2021, growing her position from software engineering to that of a senior director of product management. Her co-founder is a former senior engineer at both Twitter and Tesla, Marcel Molina.
The premise behind Particle, as Beykpour explained last month, is to make it easier to keep up with news using AI.
“Sometimes it feels like headlines are all we have time for. We also want to understand more, but faster,” she wrote in an introduction to the startup on Threads. “We’re in the early stages of using AI to transform the way we interact with news.”
Using Particle, news readers are offered a quick, bulleted summary of the story, with information pulled from a variety of sources. However, when announcing the private beta, Beykpour noted that readers can either use the summary to get up to speed or can choose to go deeper to “learn about how a story has unfolded over time.”
The venture-backed startup has raised a total of $4.4 million in seed funding from Kindred Ventures and Adverb Ventures, as well as various angel investors, including Twitter and Medium co-founder Ev Williams and Behance founder, Scott Belsky. The round closed in April 2023.
4. Robotics startup Figure raises $675 mln from Microsoft, Nvidia, OpenAI
Feb 29 (Reuters) — Robotics startup Figure said on Thursday it raised $675 million in a funding round from investors including Nvidia (NVDA.O), opens new tab, Microsoft (MSFT.O), opens new tab and Amazon.com (AMZN.O), opens new tab founder Jeff Bezos at a valuation of $2.6 billion.
Sunnyvale, California-based Figure also said it signed a collaboration with OpenAI to develop generative artificial intelligence for its humanoid robots.
The launch of ChatGPT by OpenAI has generated interest in AI, with companies investing million of dollars to cash in on the trend.
Other companies involved in the Figure funding include OpenAI Startup Fund, Amazon Industrial Innovation Fund, Parkway Venture Capital, Intel Capital, Align Ventures and ARK Invest.
Brett Adcock, Figure’s founder and CEO, said the company will use the funding to develop large language models for robotics, ramp up manufacturing and hire more people.
The startup will also move to Microsoft Azure for AI infrastructure and training, Adcock said.
The AI models Figure develops will be based on OpenAI’s latest GPT models, and specifically trained on robotics actions data that Figure has collected so that its humanoid robots can talk with people, see things and perform physical tasks, according to Adcock.
“We’ve always planned to come back to robotics and we see a path with Figure to explore what humanoid robots can achieve when powered by highly capable multimodal models,” said Peter Welinder, vice president of product and partnerships at OpenAI.
5. Inspired Capital secures $330M fund to take venture capital ‘back to the studs’
Inspired Capital is celebrating its fifth birthday with the closing of its Inspired Capital Fund III with $330 million in capital commitments. This new amount brings the firm’s total assets under management to nearly $900 million.
The New York-based early-stage venture firm was founded in 2019 by entrepreneurs Alexa von Tobel and Penny Pritzker. They went on to raise $200 million for a debut fund and then $281 million for its second fund in 2021. General partners Lucy Deland and Mark Batsiyan are also co-founders.
Fund III is backed by institutional investors, including leading endowments, pensions and foundations.
“For me it’s sort of a real ‘pinch me moment,’ because I decided to devote the next many decades of my career toward finding the entrepreneurs that want to completely change what’s possible,” von Tobel told TechCrunch. “Venture capital, when properly deployed is actually the most powerful economic engine that the world has ever seen. And as true stewards of venture deployed properly, it is one of the most powerful ways to change the world.”
Inspired Capital leads investments of pre-seed to Series A into what von Tobel, managing partner, described as “fearless founders who are solving the hardest challenges facing humanity.” The firm writes checks between $1 million and $15 million.
It has amassed a portfolio of more than 50 companies that have gone on to raise a cumulative $1.5 billion in follow-on capital. Notable investments include property tech startup Habi, now valued at $1 billion; employee ownership company Teamshares; business banking company Rho; and Paytient, which has developed a system for making healthcare payments over time.
6. Inspired Capital secures $330M fund to take venture capital ‘back to the studs’
Groq Inc., a well-funded maker of artificial intelligence inference chips, has acquired fellow startup Definitive Intelligence Inc. for an undisclosed sum.
The companies announced the transaction today. The deal will help Groq enhance the capabilities of its newest offering, a cloud platform called GroqCloud that provides on-demand access to its AI chips.
Groq was founded in 2016 by Chief Executive Officer Jonathan Ross, a former Google LLC engineer who invented the search giant’s TPU machine learning processors. The company is backed by more than $360 million in funding. It raised the bulk of that capital through a Series C round co-led by Tiger Global Management and D1 Capital in early 2021.
Groq’s flagship product is an AI chip known as the LPU Inference Engine. It’s optimized to power large language models with a focus on inference, or the task of running an AI in production after it has been trained. In a November benchmark test, Groq’s LPU set an inference speed record while running Meta Platform Inc.’s popular Llama 2 70B LLM.
The LPU consists of cores dubbed TSPs that each include about 230 megabytes of memory. According to Groq, the TSPs are linked together by an on-chip network that provides detailed information on how much time it takes data to travel between the different cores. This information helps speed up LLM response times.
The faster a piece of data reaches a chip core via the onboard network, the sooner processing can begin. The information that the LPU provides about its onboard network allows LLMs to identify the fastest data travel routes and use them to speed up computations. Groq claims its chip can perform inference up to 10 times faster than competing products.
Definitive Intelligence, the company has acquired, is a Palo Alto, California-based analytics provider that previously raised more than $10 million in funding. It offers an AI-powered application that enables users to query datasets with natural language instructions. The software also lends itself to related tasks such as creating data visualizations.
Groq detailed on occasion of the acquisition that Definitive Intelligence had helped it build GroqCloud, a recently launched platform through which it provides on-demand access to LPUs. Developers can use the platform to familiarize themselves with the company’s chips and build applications optimized for their architecture. A built-in library of learning resources promises to ease the onboarding process.
Following the acquisition, Definitive Intelligence co-founder and CEO Sunny Madra will join Groq to lead the business unit in charge of GroqCloud. The unit’s initial priorities include expanding the platform’s capacity and growing its user base. Groq said that the acquisition will also support the launch of a second division, Groq Systems, that will focus on helping organizations such as government agencies deploy the company’s LPUs.
7. London-based Heat Geek secures €4.3 million to fuel a heat pump revolution in the UK
Heat Geek, a sustainable energy startup, has announced a €4.3 million seed funding round, bringing the total raised in 2023 to €4.9 million to power its mission to decarbonise homes via heat pump technology on a national scale. The round was led by Transition, with participation from Triple Point Ventures. Other investors include angels Ed Broussard, Rob Harris, Jeff Twentyman, Akta Raja and Stewart Seigel plus 15 of the most experienced Heat Geeks from across the country.
Nearly half the gas consumed in the UK each year goes on heating. Electric heat pumps use electricity rather than burning gas or oil. They are also highly efficient and consume around a fifth of the energy of a gas boiler for the same heat output.
Just 25,000 heat pumps were fitted in private homes last year, but with a government ambition of 250,000 a year by 2025 the issue of insufficient qualified installers needs to be addressed. Currently, there are 120,000 qualified gas engineers in the UK, yet only 3,000 qualified heat pump installers and experts calculate the country will need 27,000 by 2028 to hit current government targets.
Founded in 2022 by Adam Chapman (Heat Geek’s original founder and Chief Geek), Aadil Qureshi (ex Apple and IBM) and Matthew Gunn (ex JP Morgan), Heat Geek’s new digital platform provides heating engineers with a “business-in-a-box”, empowering them with award-winning training, innovative technology and a pipeline of paying customers that have been pre-qualified using Heat Geek’s proprietary property intelligence algorithms.
Co-founder and CEO Aadil Qureshi said: “At the heart of our business is a shared obsession with empowering everyone in the UK to upgrade their home and save money every month. But one of the biggest issues facing mass uptake of heat pumps is a lack of skilled installers. Our solution is simple — train thousands of existing heating engineers and give them the skills, knowledge and tools to unlock the support for thousands of homeowners wanting to decarbonise their homes and save money on their energy bills.”
A key factor in Heat Geek’s proposition and success to date is the creation and growth of the community of installers, which has 80,000 social media subscribers and 1,000 trained installers across the UK. All Heat Geek certified installers will soon be given access to the digital platform, featuring unique tools such as a digital surveying and system design process, a training and community hub, MSC certification, plus an end-to-end digital journey for homeowner — all of which ensures the company continues to offer the highest efficiency Heat Pump installations in the country.
The Heat Geek community is deeply involved with the development of the digital platform, ensuring the technology is built in absolute consideration of their needs as engineers and business owners. This co-development culminated in bringing on-board 15 of the community as shareholders of the company, ensuring the voice of the most important stakeholder is continuously integrated as the organisation scales.
Heat Geek has already established a number of significant partnerships; a partnership with OVO Energy was launched in September and Heat Geek has now also partnered with Resi, a digital-first renovation and extension service, to provide their homeowners with heat pumps as they renovate their homes.
8. Frankfurt-based ENVIRIA secures €185 million to offer decentralized energy via rooftop solar at scale
ENVIRIA, Germany’s leading commercial and industrial (C&I) decentralized energy solutions provider, announced it has entered into a definitive agreement on an equity investment of over €185 million from BlackRock, through its Global Renewable Power IV (GRP IV) fund. The additional capital will support the expansion of the already existing 500 C&I solar projects across Germany as part of the company’s growth plan.
With this investment, ENVIRIA and BlackRock are leveraging one of the greatest growth areas in the energy transition: offering decentralized energy via rooftop solar and adjacent services at scale. It is estimated that German companies consume around 70 percent of the total national electricity usage,1 while only around 10 percent of suitable company roofs are equipped with a solar system.2 This leaves a potential of several hundred GW of renewable energy capacity untapped. With rooftop sizes across the C&I sector being on average significantly larger than residential buildings, renewable energy capacities can be rapidly deployed.
Melchior Schulze Brock, Founder and CEO of ENVIRIA, said: “We are delighted to have found such a strong partner in BlackRock, who so enthusiastically supports our vision of empowering companies to harness the potential of solar. BlackRock brings exactly the resources we need to continue our growth both financially and in terms of knowledge. Understanding the complex, capital intense nature of our business, BlackRock is able to support us in realizing the full potential of the C&I sector across Germany. BlackRock’s experience in working with companies in our sector globally, especially in Asia and America, has impressively shown what a successful collaboration can look like.”
ENVIRIA is challenging traditional ‘grey’ power plants and gradually reduces dependence on fossil fuels by feeding electricity directly into the grid from its powerful solar systems. Supported by its Series A investors Galileo Green Energy, Redalpine, Alter Equity and BNP Paribas Développement, the company has built a portfolio of 500 C&I solar projects across Germany. Its development pipeline includes approx. 2,000 C&I projects totalling more than 2.3GW, with a plan to realize 1.7GW by 2029, thus enabling a successful energy transition.
Founded in 2017, ENVIRIA’s strong track record in C&I solar development demonstrates the efficacy of its pioneering end-to-end business approach. By covering the entire solar value chain — from installation and maintenance to asset management — the company offers customized solutions to reliably overcome some of the biggest challenges in the industry. Thereby, ENVIRIA showcases the potential for growth for attractive infrastructure solutions in an economic environment that will continue to create demand for renewable energy.
BlackRock’s Climate Infrastructure team were first movers in the space and have been investing in renewable power since the late 90s, with investments in over 15 companies and the first investment in solar PV in 2013. Today, they manage US$11 billion in client assets. GRP IV is the fourth vintage of the flagship climate infrastructure franchise and the fund’s LPs include significant capital from German asset owners. This investment is GRP IV’s second, following the fund’s investment in Recurrent Energy in January.
Keith Mangan, Head of EMEA for Climate Infrastructure at BlackRock, commented: “Our investment in ENVIRIA adds to our strong track record of staying ahead of the curve in investing into infrastructure assets that are aligned with the energy transition, an investment theme that continues to show its growth and scalability. ENVIRIA’s unique value proposition as a full-chain PV provider is a stellar example of the deployment of scalable innovation in this sector, making this an attractive exposure for our clients.”
Dirk Schmitz, Country Head of BlackRock in Germany, Austria, and Eastern Europe, added: “Germany’s shift to a low-carbon economy requires significant investment in renewable power infrastructure. We are pleased to provide our clients access to this investment in a promising macro-economic environment for climate infrastructure in Germany. With a strong German investor presence on our Climate infrastructure platform, I am excited that we will be put our clients’ money to work through ENVIRIA locally.”
9. Paris-based cybertech Filigran raises €15 million Series A to expand its open source threat intelligence platform
European cybertech Filigran announced a €15 million Series A fundraising led by global venture capital firm Accel, just six months after its initial €5 million seed round. Existing investors Moonfire Ventures and Motier Ventures also participated in the round.
Filigran, founded in France in October 2022 by Samuel Hassine and Julien Richard, is building a next generation open source threat intelligence management platform. It is already being used by more than 4,200 organisations worldwide.
“In a difficult environment for tech fundraising, completing two significant rounds of financing in less than a year demonstrates Filgran’s ability to develop and execute a strong platform for anticipating and analysing cyber threats,” said Filigran CEO Samuel Hassine. “This Series A will enable us to accelerate the development of our XTM portfolio and accelerate the business. With a strong international focus and an open-source vision of the future of cybertech, we have the resources to achieve our mission more quickly.”
Threat intelligence is now more important than ever due to AI threats and faster exploitations. However, it has historically been constrained by customers’ ability to afford, absorb, contextualise and incorporate data in real-time. It is due for a refresh.
Filigran helps enterprises unlock threat intelligence and fully realise its benefits, enabling them to better prioritise alerts, investigate threats and optimise their existing cybersecurity stack. Thanks to its open source and easy-to-use offering, Filigran is reducing the barriers to threat intelligence adoption and harnessing the open source community to create a network of enterprises, governments and researchers who contribute to threat intelligence and other cyber data.
Filigran will use the funding to accelerate its global expansion and product development in key areas. It will open offices in the United States and Australia in 2024 with a focus on securing new strategic partnerships, accelerating adoption of Filigran’s solutions by organisations in North America and Asia-Pacific, and providing local customer support. Also, Filigran will continue to grow its XTM portfolio with OpenCTI -A threat intelligence platform designed to help cybersecurity teams organise, store and operationalise threat intelligence information at a technical, operational and strategic level- and OpenBAS -An attack simulation platform that uses OpenCTI’st Threat intelligence to create attack simulations, stress tests, and threat management exercises. Finally, Filigran will develop its Big Data and Artificial Intelligence teams, recruiting new talent and enriching its XTM solutions.
“The Filigran team has achieved a huge amount since launch and we believe that their open source community and platform approach will enable organisations to upscale their threat intelligence efforts,” added Andrei Brasoveanu, Partner at Accel. “With Sam and Julien’s deep sector expertise and a large number of government and enterprise customers already using Filigran, there’s a significant global opportunity ahead for the company and we look forward to joining their journey!”
Filigran’s clients include global companies such as Marriott, Thales, Hermès, Airbus, Novartis, Bouygues Telecom as well as public sector entities including the NYC Cyber Command, the FBI, the European Commission, ENISA, and the Dutch police. Filigran has built a strong ecosystem of partners including Deloitte, Orange Cyberdefense, Deepwatch, Arctic Wolf, Atos, Wavestone and Intrinsec.
10. Amazon to spend $1 billion on startups that combine AI with robots
Amazon’s $1 billion industrial innovation fund is to step up investments in companies that combine artificial intelligence and robotics, as the ecommerce giant seeks to drive efficiencies across its logistics network.
Franziska Bossart, head of the corporate venture capital arm that was set up in 2022, told the Financial Times that “generative AI holds a lot of promise for robotics and automation” and is an area “we are going to focus on this year.”
She added that the fund’s pace of investment would “absolutely” accelerate in 2024. It made its first investment in a generative AI company last year, the details of which have not been disclosed.
The Amazon industrial innovation fund has made 12 investments in total, including in Mantis Robotics, which is developing a robotic arm that uses sensors to work alongside humans.
The fund’s search for new investments in generative AI groups comes as Big Tech companies pour billions into developing the technology, which can produce humanlike text, images, and code in seconds.
Microsoft has committed up to $13 billion to OpenAI, incorporating the ChatGPT-maker’s technology into its Office suite of productivity apps and Bing search engine. On Monday, Microsoft announced it has made an investment in French AI startup Mistral. Separate from its innovation fund, Amazon has committed up to $4 billion to generative AI start-up Anthropic.
Amazon has innovated in robotics before: in 2022, the company said it had invested more than 400 million euros in technologies that include industrial robotics and sorting systems in its European warehouses. It has deployed 750,000 mobile robots across its operations network.
