Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 136- August 10)
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. Nearly 30% of VC deals are flat or down rounds
The pandemic-era highs are long gone, and for many startups that means finally coming to grips with a cut to their valuation.
The rate of down rounds for startups jumped from 7% in 2022 to 14% in 2023 after the market reset, and flat rounds followed a similar trajectory, from around 4% of deals in 2022 to nearly 10% in 2023. Those rates have only climbed in the first half of 2024.
The most high-flying of those companies have since managed to grow into their pandemic valuations. Expense management software startup , for example, took a roughly 30% valuation haircut in 2023 co-led by and Thrive Capital , but rebounded in April to a $7.65 billion valuation led by Sands Capital and . Khosla Ventures Founders Fund
Cybersecurity startup also took a down round last year: Its $150 million Series D, led by in 2023, came at a 12% drop from its previous valuation set by Generation Investment Management in its 2020 Series C.
2. Healthcare And AI Sectors Continue To Lead, While Funding Settles In July 2024
The largest funding in July went to 16-year-old Vancouver-based legal tech company . led the funding with participation from a host of growth-stage investors. The company reached $200 million in annual recurring revenue managing all processes from payments, client management and documentation for thousands of mid-sized law firms. This was a massive round for vertical SaaS, and the largest ever for a legal cloud technology company.$900 million
The leading sector for investment was healthcare and biotech companies which raised $6 billion. AI companies were close on its heels, and raised around $5.8 billion. Each of these leading sectors represent around 25% of all funding in July 2024.
Large AI rounds were raised by model developers Beijing-based Baichuan Intelligence with $687 million and Toronto-based at , and Berlin-based AI-defense company $500 million . raised $489 million
The next largest sectors for funding in July were hardware companies, raising $3.3 billion, and financial services at $2.6 billion. Financial services, the second-largest sector after healthcare and biotech in 2021 and into 2022 has dropped in rank, but since 2023 has stayed in the top five sectors.
The fifth cloud software company acquisition this year above $1 billion was cloud data storage company with a majority investment from and participation from Vista Equity Partners and valuing the company at $1.2 billion.
Biotech and healthcare companies have dominated billion-dollar exits this year. A further two were announced this past month; California-based Nerio Therapeutics was acquired by German-based pharmaceutical company and Boston-based Boehringer Ingelheim acquired by Japanese headquartered Jnana Therapeutics . Otsuka Pharmaceuticals
The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Aug. 5, 2024.
Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.
Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.
Glossary of funding terms
As of January 2023, we have made a change to how we include corporate funding rounds in our reporting. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.
Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.
Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.
Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.
3. Flint Capital raises a $160M through an unusual fund-raising strategy
The firm is over a decade old, founded by partner Dmitry Smirnov, who was previously CEO of Russia-based investment firm FINAM Global. He immediately made an unorthodox decision: instead of pursuing traditional LPs like pension funds or endowments, he sought out IT entrepreneurs, believing they would want a front row seat to the next generation of technology.
Sergey Gribov, one of Flint’s three partners, said the firm also has a global mandate and invests strongly in Europe and Israel — as long as the startup has its eyes on expanding into the US. “We don’t really care where physically the team is located, as long as we go off to the US market,” he said.
That’s been a good strategy for Flint: the firm has backed identity verification startup Socure , last valued at $4.5 billion, , which was acquired by SAP for $1.5 billion, and Flo, the women’s health app recently valued at adoption platform WalkMe over $1 billion.
For this latest fund, partner Andrew Gershfeld highlighted that several investors were actually founders that Flint backed years ago. He gave the example of Nir Giller and Omer Schneider, the founders of CyberX, a cybersecurity company that Microsoft acquired in 2020. For Gershfeld, founders like these reinvesting their profits into Flint was a sign “that we were doing something right.”
It took the Flint partners 18 months to fundraise and, while the fund was anchored by previous investors, they felt the sluggishness of the current market. “The conversion from that first conversation into becoming a limited partner dropped during this year,” Gershfeld said. “It’s a fact — we can’t say that it is not the case.”
The fundraise is particularly impressive as the partners have spent the last year helping their Israeli startups, like Cynomi and , fundraise throughout the war in Gaza. Gribov, who regularly travels to Israel, recalled video-chatting with founders decked out in combat gear, or coaching companies who had portions of their workforce pulled into the military. His efforts paid off: , a digital health startup, in late June. closed its $31 million Series B
4. CloudPay, a payroll services provider, lands $120M in new funding\
It’s still growing, CFO Andy Thomson assures TechCrunch.
Thomson claims that CloudPay is handling the payroll processes of 280 firms including Visa, Wayfair, Wells Fargo, Expedia and The London Stock Exchange, processing more than 3 million pay slips a year in over 130 countries.
Now, the company has landed a new $120 million funding round led by Blue Owl Capital to continue accelerating that growth. Bringing its total raised to $228 million, the round values CloudPay “significantly higher” than the company’s last round in October 2022, Thomson said.
“In an environment of constant change, customer expectations are shifting, too,” he said. “They expect more. In the world’s on-demand culture, traditional payroll doesn’t always fit, so we’ve evolved payroll to fit new demands. Compliance and legislation have gotten more complex and varied country to country as well.”
Today, CloudPay offers a range of global payroll, salary payments and pay-on-demand services. Payroll professionals get real-time reports and customizable dashboards, while finance teams get a choice of funding and pay options localized to employees.
The competition for payroll software hasn’t gotten any less stiff. There are startups like Y Combinator-backed , , Symmetrical.ai and Skuad, which was just this week acquired by fintech . Indeed, my colleague Mary Ann has Payroll Integrations about how it seems that practically every startup these days wants to help people get paid.
5. Anduril raises $1.5B at a $14B valuation
Defense tech startup Anduril has closed what will almost certainly end up being one of the largest funding rounds of the year: a $1.5 billion deal that values the company at $14 billion.
Anduril has ambitions of becoming the next great American defense contractor, joining a class of companies that has shrunk to just five major firms: Lockheed Martin, RTX, Northrop Grumman, Boeing, and General Dynamics. These companies pull in billions in revenue from business with the U.S. Department of Defense, and their stranglehold on defense production is nearly absolute.
This latest round is a massive step up from Anduril’s prior $8.5 billion valuation set in December 2022. The company reportedly told investors that it had doubled revenue to around $500 million last year, which would mean the current valuation is set at a 28x multiple. This is high by many standards for late-stage startups, but especially so for traditional defense companies: Lockheed Martin’s revenue multiple is about 1.9x, based on its current valuation and last year’s revenues, while Boeing’s is 1.3x. Albeit those lower multiples are on revenues that are billions of dollars higher: Lockheed Martin in 2023, and Boeing’s revenues were brought in $67.6 billion for 2023. nearly $78 billion
Anduril’s new funding round was co-led by Founders Fund, which led Anduril’s seed round in August 2017 and its Series A, and Sands Capital, which has participated in multiple IPOs since Visa’s public offering in 2008. Founders Fund’s participation is hardly a surprise, though, given the firm’s long-standing bet on Anduril. The company’s co-founder and executive chairman, Trae Stephens, is also a Founders Fund partner. The round also saw new participation from some major institutional investors, like Fidelity Management & Research Company, and Baillie Gifford.
7. Delft-based VSParticle raises €6.5 million for next-generation material discovery printers
VSParticle (VSP), a leading supplier of nanoparticle synthesis and deposition tools, has raised a €6.5 million A2 extension r ound led by NordicNinja and previous investor Plural to continue its mission to unlock a century of material innovation in the next 10 years.
VSP’s technology enables materials to be broken down to the size of nanoparticles and produced at the push of a button, allowing university researchers and commercial R&D teams to experiment to create new materials that will power next-generation products. It can take up to 10 years to discover new materials in a lab and a further five to bring them to mass production, but VSP’s technology is supporting teams to reduce the overall time of material discovery down to only one year.
The new funding, which also included participation from previous investor Hermann Hauser Investment, brings the total raised by VSParticle to €24.5 million. The fresh capital will be used to further the development of the startup’s technology so its next-generation printers have up to 100 times higher output and will also support the company in expanding to Japan and doubling down in the US and Europe.
VSParticle has shipped its flagship product, the VSP-P1 Nanoprinter, to teams across Asia, the Middle East, Europe, and North America including the Sorbonne University Abu Dhabi, the San Francisco-based Lawrence Livermore National Laboratory, the Materials Discovery Research Institute (MDRI) in the Chicago area, and the Dutch Institute for Fundamental Energy Research over the past year, who are using it to accelerate material development for innovative industrial solutions.
In particular, VSP’s technology is enabling the mass production of catalyst-coated Porous Transport Layers (PTLs), which are the key components in electrolyzers and are essential to the production of green hydrogen. Green hydrogen is essential to reduce dependence on fossil fuels and power a more sustainable future for industries such as shipping, transport, heating, and aviation, yet the process currently relies on using scarce resources including platinum and iridium.
Customers are using VSP printers to develop new material combinations for PTLs, with a predicted 10x savings in scarce metals, such as iridium, and introduce new products faster and cheaper. By 2027, the first components that have been developed using VSP’s technology should be in the market, creating the end product that will support green hydrogen production.
Rainer Sternfeld, Partner at NordicNinja, commented: “VSParticle’s technology is transforming material innovation and, combined with AI, this will be the basis of world-changing discovery and synthesis over the next decades.”
8. Stockholm-based Impactpool raises €3.6 million to accelerate AI job-matching in the impact sector
Impactpool , a global leading AI-enabled career platform, announced it has raised €3.6 million in Series A funding , led by Mediahuis and Fort Knox. With its commitment to diversity and advanced AI matching capabilities, Impactpool will use the new funding to enhance its technology and further its goal of placing one billion professionals with organizations dedicated to meaningful change.
Since its inception in 2015, Impactpool has managed to register nearly one million candidates from 195 countries and support over 2,500 organizations worldwide. The funding allows Impactpool to further emphasize diversity and inclusion, providing a sector-specific platform where Impact employers can strategically manage their recruitment processes.
The platform is designed to help organizations in the impact-driven sector connect with talent across the full job-spectrum and make it more accessible to everyone, regardless of socioeconomic background.
Impactpool has partnered with major UN organizations, including UNICEF, UNHCR, and UNESCO. It has expanded its reach to connect talent with international organizations such as OECD, the World Health Organization, and the Green Climate Fund, as well as for-profit companies committed to social impact.
9. Cambridge-based Riverlane nabs €68.6 million Series C to deliver quantum error correction roadmap
a global leader in quantum error correction technology, announced that it has raised €68.6 million in Series C funding to deliver its groundbreaking quantum error correction (QEC) roadmap.
The round was led by Planet First Partners, the European growth equity sustainable investment platform, with participation from sustainability venture capital investors ETF Partners and Singapore-based global investor, EDBI. Existing investors Cambridge Innovation Capital (CIC), Amadeus Capital Partners, the UK’s National Security Strategic Investment Fund (NSSIF), and global leader in computational intelligence Altair also participated in the Series C round.
Demand for quantum error correction technology has grown dramatically over the past year. Driven by a series of technical breakthroughs, improvements in qubit quality and a global shift towards building error-corrected quantum systems, the quantum computing industry is now looking beyond today’s small, error-prone machines to a new generation of ‘fault-tolerant’ quantum computers with integrated QEC technology.
The funding will enable Riverlane to expand operations to meet surging global market demand for QEC technology, with the goal of achieving one million error-free quantum computer operations by 2026.
Riverlane’s Founder & CEO, Steve Brierley, said: “ Quantum error correction is the critical enabler for the industry’s next huge wave of progress, from today’s small error-prone machines to large and reliable quantum computers that will start a new age of human progress as significant as the digital revolution. Our partners recognise the value in working with Riverlane to deliver a solution that fits their needs — we are building the right product at the right time to seize this opportunity.”
Riverlane has built the world’s largest dedicated quantum error correction team with close to a hundred interdisciplinary experts working on its core product, Deltaflow™. Applicable to quantum computers using all major qubit types, Deltaflow™ comprises proprietary QEC chips, hardware and software technologies working in unison to correct billions of errors per second.
Today’s best quantum computers can perform only a few hundred quantum operations before failure. Deltaflow™ will help this increase to millions and, ultimately, trillions of error-free quantum operations. Achieving this scale will unlock transformative applications in industries such as pharmaceuticals, chemicals, material science and transportation.
10. Vilnius-based Biomatter raises €6.5 million to unlock new horizons for protein design
Biomatter, a synthetic biology company that creates new proteins for health and sustainable manufacturing applications, secured €6.5 million in a seed financing round. The round was led by UVC Partners and Inventure VC. Practica Capital, Metaplanet and several business angels and industry experts also invested. Biomatter plans to use the new capital to further expand its generative AI platform for the development of new enzymes
Enzymes are indispensable in many branches of industry. They are used in diagnostics, gene therapy, biofuel production and agriculture. Each new application requires a specific enzyme, the design of which has so far been complex and expensive. The process can take months or years and is often based on a trial-and-error approach. Biomatter uses generative AI to overcome these challenges.
Biomatter develops customized enzymes for chemical bioproduction, agriculture, food industry and medicine. Customers include companies such as Thermo Fisher Scientific, BASF and Neogen. Kirin, a leading nutrition and health company, achieved a breakthrough in infant nutrition with Biomatter. Together they produced human milk oligosaccharides (HMOs) on an industrial scale. These are important for the health of infants and strengthen the immune system.
Back in 2019, Biomatter published a key study showing that its AI tool can analyze large amounts of enzyme data and design new enzymes. This was a major breakthrough. The Intelligent Architecture™ platform is the result of years of research. With this technology, enzymes can be designed from scratch or existing protein scaffolds can be redesigned. Generative AI and physical models make it possible to develop and continuously improve tailor-made molecules.
