Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 84- March 25)

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Top startups news to follow this week:

1. Ex-Google employees’ A.I. chatbot startup valued at $1 billion after Andreessen Horowitz funding

Character.AI, an artificial intelligence start-up founded by two former Google employees, is capitalizing on venture capitalists’ unquenchable thirst for deals in technology’s hottest space.

The two-year-old company said on Thursday that it raised $150 million at a $1 billion valuation in a funding round led by Andreessen Horowitz. Noam Shazeer and Daniel De Freitas, who helped created the architecture used in popular chatbots, left Google in 2021 and founded Character.AI the same year.

Character.AI said in a press release announcing the funding that its technology gives “users the ability to create a fully-customizable and personalized AI companion with a distinct personality and values.”

The financing round follows major efforts by Google and Microsoft to develop and embed chatbot software into key products, bringing AI-generated responses into things like searches, documents, and emails. Big tech companies and VCs are rushing into the market after Microsoft-backed OpenAI released ChatGPT to the public in November and saw the free experimental service go viral.

In January, Microsoft announced a ChatGPT-integrated Bing search engine. Earlier this week, Google launched a test version of its chatbot Bard.

2. Logistics startup Trax raises $3.7 million in seed funding

A delivery startup, Trax, on Friday announced that it has raised $3.7 million in funding in an early seed round as it seeks to benefit from growth in the South Asian country’s nascent e-commerce market, Bloomberg reported.

The company raised $3.7 million in a round led by US-based Amaana Capital and Tricap Investments of the United Arab Emirates. Trax, founded in 2017, is one of the pioneering logistics players in Pakistan’s e-commerce sector and got its start when venture funding was almost non-existent in the country.

The startup economy is showing signs of life, with multiple rounds backed by global venture investors taking place this year. Venture funding in the country was little changed at $350 million last year when a rout in tech valuations left a slew of startups globally in trouble.

Trax does a million deliveries each month and employs more than 2,000 people. It plans to expand into new business verticals including fintech to increase financial inclusion in Pakistan.

The company aims to use the investment to accelerate the growth of its logistics services alongside the introduction of new business verticals such as fintech and technology solutions for its customers.

3.Tel Aviv startup ecosystem ranks 2nd in Europe, Mideast and Africa, behind London

Tel Aviv nabbed second place as a tech hub for startups with the highest enterprise value behind London and ahead of Paris, turning the city into one of the fastest-growing ecosystems in the world, a new report compiled by Dealroom showed on Wednesday.

Tel Aviv tech startups boasted a combined enterprise value of $393 billion in 2022, second only to London among Europe, Middle East and African cities, fifth in Asia and Oceania, and seventh in the Americas. Since 2018, Tel Aviv’s startup ecosystem has grown 3.5 times in value, faster than the Bay Area, New York, Beijing, London, and Paris during the same period of time.

The report includes 2022 data from both startups founded in the greater Tel Aviv area that maintained their main center of business (HQ) there and those that relocated their HQ outside of Tel Aviv. As such, its findings predate the widespread social upheaval over the government’s judicial overhaul in recent weeks prompting a number of Israeli startups and tech firms to transfer their funds and investments abroad amid fears of economic and political fallout.

4. Character.AI Hits Unicorn Status With $150M Raise As AI Craze Continues

This week — like the last — the big round created a new unicorn as Character.AI closed a $150 million Series A at a $1 billion valuation led by Andreessen Horowitz. The round had been reported earlier this month.

The round also included participation from previous investors, including Nat Friedman — former GitHub CEO — Elad Gil, SV Angel and A Capital.

The Palo Alto, California-based AI startup allows people to create their own personalized AI chatbot using language models and deep-learning algorithms. The AI-created companions can help users draft emails, serve as a study buddy, brainstorm ideas or a variety of other activities.

Of course, Character.AI is far from the only AI startup this year to raise cash. Despite strong headwinds — like a drop in venture financing and the collapse of Silicon Valley Bank — VCs and large strategics including Microsoft, Google and Salesforce

all continue to show unabated interest in generative AI startups.The craze started in January with news of Microsoft’s massive $10 billion investment into OpenAI — creator of ChatGPT.

Earlier this month, San Francisco-based AI startup and rival to ChatGPT, Anthropic, was reported to be raising another $300 million round at a pre-investment valuation of $4.1 billion. Spark Capital is reportedly leading the round.

That came just about a month after Anthropic raised between $300 million and $400 million from Google.

5. Digital Health Market Size Worth USD 1.3 Trillion by 2030 at 23.7% CAGR — Report by Market Research Future (MRFR)

According to a Comprehensive Research Report by Market Research Future (MRFR), “Digital Health Market Information By Technology, Application, Delivery Mode, Components, End User and Region — Forecast till 2030”, the market size was valued USD 167 billion in 2021 and is expected to reach USD 1.3 trillion by 2030 at 23.7% CAGR during the forecast period 2022–2030.

Market Synopsis

The growing usage of big data in the healthcare sector, increased use of EHR and EMR systems, the assistance provided to maintain patients’ electronic health records, and regulatory obligations, to name a few factors, are all boosting the digital healthcare industry. Digital health is the term used to describe the remote management of chronic illnesses using communication and information technologies in the healthcare industry. The digital health market includes tailored medicines, wearable technologies, telemedicine and telehealth, mobile health (mHealth), and medical information technology (IT). It offers various services enabling clients access to chronic disease management and early diagnosis.

The primary drivers of the growth of the global digital health market are the rise in funding from both public and private entities for mHealth companies, the rise in the number of people suffering from chronic illnesses, and the development of technology for the medical sector. Another factor influencing the expansion of the digital medical sector is the older population, which is more prone to chronic diseases.

6. Virgin Orbit nears deal to raise $200M from venture capital investor

Billionaire Richard Branson’s Virgin Orbit Holdings is close to a deal for a $200 million investment from Texas-based venture capital investor Matthew Brown.

The capital injection for the cash-strapped aerospace company would come in the form of a private share placement, according to a term sheet seen by Reuters.

The company saw its market capitalization slump to a record low of $150 million on Tuesday from more than $3 billion two years ago when it went public through a blank-check deal.

Virgin Orbit paused all operations and furloughed most employees earlier this month, about two months after the aerospace company suffered a mid-flight rocket failure while trying to send several satellites into space.

Virgin Orbit had received about $35 million of capital injections from Branson’s Virgin Investments in recent months and is exploring strategic options. It was also in talks for fresh funding.

The deal involving Virgin Orbit and Matthew Brown reportedly could be completed by Friday, according to the term sheet, but is not binding.

7. Hex lands another $28M as data collaboration platform continues to gain traction

Many companies are struggling to get funding these days in an increasingly tight investment environment. It seems the days are gone when VC firms approach promising startups about funding instead of the other way around, but Hex, a data collaboration startup, has defied the odds.

Company co-founder and CEO Barry McCardel say he wasn’t looking for funding when Sequoia came knocking on his door. The company ended up landing another $28 million from Sequoia, with participation from existing investors Andreessen Horowitz, Amplify and Snowflake.

McCardel says he still hasn’t touched the $52 million he had in the bank from his previous funding round last year. “We weren’t raised, and didn’t need the money — we hadn’t touched a dime of the last round. But Matt Miller at Sequoia approached us preemptively with an offer that gave us very little dilution, and let us put another 2–3 years of runway in the bank,” McCardel told TechCrunch.

“This felt like a no-brainer coming into a time when we want to be investing deeply in our product and team, especially around the AI opportunity,” he said.

One of the reasons for the investor interest is that the company has been growing at a rapid clip since its funding last year. “We’ve been on a tear. I think from a top-line business perspective, we’ve grown revenue by 4x and the size of the business by 4x in one year, which has been great. We 10xed our user base because we launched a tier that just opened up access to a ton more people.”

“So just the raw number of people using the product in the last year has been great. And I think that obviously caught the eye of new investors,” he said.

The company now has 450 paying customers including Brex, Notion, Toast and Chegg. He believes that the collaborative approach to data and the growing recognition that AI is transforming workflows are the biggest reasons for the product’s growing popularity.

8.Dutch startup OneThird secures €2.75 million to address the global trillion-dollar food waste problem

FoodTech startup OneThird wants to tackle our globally inefficient and wasteful food supply system. The Dutch team has just secured €2.75 million to scale.

One-third of all food produced is lost due to spoilage, and it comes at both a human and economic cost. It’s estimated that this level of food waste comes at a cost of $1 trillion and about 40% of the food wasted is fresh, edible produce. While this wastage is happening, there are millions around the world suffering from a lack of food security, and facing famine.

Spurred on by the challenge to tackle this global issue is OneThird. The Dutch foodtech team are using AI to minimize food wastage. Now, the startup has secured €2.75 million in a late-seed funding round, bringing its total funding raised to €5.75 million.

Marco Snikkers, CEO and founder of OneThird: “Global food waste has an enormous environmental impact; reducing global food waste can help to reduce global greenhouse gas emissions and embolden global food security. One-third of global food produced annually is lost or wasted, which is an astronomical volume given the number of people worldwide who go to bed hungry. Global food waste is both inefficient and a major social justice issue — one that is compounded across multiple touchpoints in the supply chain — from agricultural production all the way to the landfill.”

The funding was led by impact investor Pymwymic, with participation from prior investors Halma Ventures Limited, SHIFT Invest and Oost NL.

Sophie Pickering, Investment Manager at Pymwymic: “Increasing food security is key to supporting a growing global population. We’re excited by the possibilities OneThird’s technology presents in tackling the alarming quantities of global food loss across the supply chain.”

Launched in 2019, OneThird’s AI-powered, near-infrared scanning technology enables growers, food distributors, retailers and consumers to accurately predict the shelf life of fresh produce and minimize food waste. Currently, it’s able to predict the shelf life of tomatoes, strawberries, blueberries and avocados. The plan to is extend to ten types of produce by the end of 2023.

The UN reports that one-third of food brought to market is currently wasted — and about 40% of that food is fresh produce. It’s a shocking statistic, and simply unsustainable. Food waste is now viewed as a major sustainable development challenge and we urgently need to take action.

Based in Enschede, OneThird wants to deliver a meaningful solution to improve sustainability efforts, feed those in need, and save customers money.

The tech has been proven to reduce up to 25% of food waste across the produce supply chain. It provides different stakeholders with real-time information to help them make smarter decisions, such as optimizing best-before codes, opting to ship locally or within a shorter trucking distance to maintain shelf-life, or choosing to divert produce that would otherwise spoil by turning it into smoothies, dry frozen products, soups and more.

With his new investment, the innovative team plan to scale its technology and operations to expand to new markets — notably growing within Europe and North America.

Marco Snikkers: “The latest seed funding we’ve received will allow us to accelerate the implementation of OneThird’s technology beyond our initial customer base, expand internationally and increase the impact we can create for our customers to help them generate higher ROI, and also meet their sustainability and ESG goals.”

9. Helsinki-based MVision AI raises €5.4 million to speed up cancer treatment

Finnish startup MVision AI has a vision where cancer treatment is accessible in a matter of hours, not weeks. The health tech team uses AI to supercharge treatment planning and has just secured €5.4 million to scale.

Cancer is a disease that touches millions around the world every single day. Currently, the predominant treatment course is radiotherapy — it’s estimated that the number of patients treated with radiotherapy will grow to 29 million by 2040. Whilst radiotherapy is the treatment of choice, patients find themselves waiting weeks for treatment to start as healthcare systems are overburdened and planning processes inefficient.

When it comes to cancer, the speed of treatment can make all the difference.

Founded in 2017 in Helsinki, MVision AI has developed an AI-based solution to change that outlook, offering same-day treatment planning software. The startup has just secured €5.4 million in post-seed financing from J12 Ventures and Voima Ventures.

Developed by Mahmudul Hasan, Jarkko Niemelä and Saad Ullah Akram, MVision AI provides a cloud-based SaaS solution for radiotherapy treatment planning. The tool automates cancer treatment with AI-powered automatic segmentation that helps to standardize contouring and streamline the planning workflow.

Founder and CEO Mahmudul Hasan: “The burden of cancer is growing for patients, hospitals, and carers. Our cloud-based AI-powered technology provides faster and more reliable clinical decision-making for cancer patients undergoing radiotherapy treatment. With our automation, we can speed up the entire treatment planning process while still delivering high-quality care.”

With manual treatment planning, patients often have to wait 2–3 weeks before beginning treatment. However, with MVision AI’s automation, the aim is to enable same-day treatment.

10. Munich-based IntegrityNext raises €100 million after bootstrapping to empower ESG compliance and transparency

IntegrityNext, a startup on a mission to make supply chains more sustainable with better ESG compliance and oversight, has just secured a massive €100 million in new investment. The Munich-based team now plans to scale across Europe.

ESG compliance is a hot topic. Businesses across verticals and geographies are increasingly under pressure to report on their ESG strategy, carbon footprint, and, to become more sustainable. It’s something we need to ensure happens for the health of our planet, society and economy, and it’s changing the face of business.

Becoming ESG complaint isn’t a simple task. It requires strategy reimagination and embedding ESG throughout the company. For many businesses, it can be overwhelming to know where to start. At the same time, with the rise of ESG and sustainability as buzzwords within the entrepreneurial space, there has been a growing prevalence of greenwashing. More transparency over ESG efforts is desperately needed.

Tasked with overcoming these challenges is IntegrityNext, a startup that has developed a sustainability software platform, dedicated to making supply chains more transparent and compliant.

Today, the Munich-based team has secured €100 million to fuel the next stage of its development. The investment was led by EQT Growth. Previously, the company had been bootstrapped and this marks its first outside investment.

Martin Berr-Sorokin, CEO and co-founder of IntegrityNext: “The critical importance of ESG is not a new concept to modern businesses. However, as a raft of regulatory frameworks — like Germany’s LkSG or the EU’s CSRD — begin to take effect, supply chain transparency and sustainability is evolving from a nice-to-have to a must-have. As more clients entrust us and we embark on our next stage of growth, we’re excited to be partnering with an experienced and hands-on investor with European roots and global scale like EQT Growth.”

Founded in 2016 by Martin Berr-Sorokin (CEO), Simon Jaehnig (CRO) and Nick Heine (COO), IntegrityNext offers a cloud-based platform that empowers businesses to meet regulatory ESG requirements, manage ESG risks and improve supply chain sustainability.

Across Europe, the demand for sustainability supply chain software solutions is growing as more and more regulations and reporting frameworks emerge. Current regulatory frameworks include the German Supply Chain Due Diligence Act (“LkSG”), the EU’s Green Deal and Corporate Sustainability Reporting Directive (“CSRD”). Pretty soon, every business will have to report on ESG measures — it’s now a de facto ‘license to operate’ to be compliant.

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