Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 95- July 8)

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 startups news to follow this week:

1. VC funding drops 49% in Q2 while AI boom mints new unicorns

Some 6,000 startups raised money in the second quarter, down from 9,500 in the same period last year.

Though we’ve seen a number of high-profile investments in AI companies, the slowdown in VC funding has proven sticky, leaving many potential startups out in the cold, according to recent Crunchbase data.

In the second quarter of 2023, global VC funding fell 49% from the prior year, falling $65 billion in the second quarter from $127 billion in the same period last year. This also marked an 18% drop from the first quarter of the year.

For the first half of 2023, funding fell 51% to $144 billion from $293 billion a year ago.

VCs and startups have run headfirst into a high-interest environment that may be here to stay, while also grappling with a tech industry that has faced a reckoning after hiring rapidly during the pandemic boom.

“We anticipate that funding will continue to slow, but not by such a high proportion,” said Crunchbase senior data editor Gené Teare. “The steepest drop has been for late-stage funding, which will take longer to recover since large late-stage private companies generally were valued at multiples much too high compared to values for high-growth public tech companies.”

2. Sienna VC raising $250 million to invest in Israeli startups

The European venture capital fund, Sienna VC, is raising $250 million to invest in Israeli technology companies. Headed by Isabelle Amiel Azoulai, the fund will focus on early-stage startup companies. Unlike other European funds, Sienna VC will utilize the new fund to exclusively invest in Israeli companies.

To date, the fund has reached an initial closing of $100 million and has already made three significant investments. It is in advanced negotiations to finalize the raising of additional funds in the coming months. Partners in the fund include Thomas Visan and Mikaël Pereira.

Belgian holding company Groupe Bruxelles Lambert (GBL), one of Europe’s largest and leading companies in its field, is the main investor in the fund. The fund plans to invest between $5–15 million in each funding round. The areas of focus for investment include AI, cybersecurity, fintech, digital health, foodtech, agritech, and more.

In a conversation with Calcalist, Amiel Azoulai, the founder of the fund, explained why Sienna has chosen to exclusively invest in Israeli companies: “This is actually our third fund and our first independent one. Our experience with Israeli companies has been very positive, with investments in companies like Taboola. We believe that the best way to access leading technology companies is not only through Silicon Valley or the United States in general, where American funds dominate, but also through Israel, which is the second-largest technological hub in the world.

3. In-space propulsion developer Benchmark Space Systems closes $33M in new funding

Benchmark Space Systems, a Vermont-based developer of in-space propulsion products, has raised $33.2 million in new funding, according to a filing with the U.S. Securities and Exchange Committee.

The Series B capital will be used to help the company manufacture at-scale and deliver on the more than 220 propulsion systems in its backlog, Benchmark CEO Ryan McDevitt told TechCrunch.

“[The funding] was really around, how do we set ourselves up so that we have the capital that we need to go deliver on these contracts?” he said. He added that the scale-up will help attract new customers, satellite manufacturers or owner-operators that are also ramping up manufacturing and are looking for partners that can match that output.

“If our customers are going out and building new factories and ramping up so that they can go from 10 units a year to 100 units a year, we have to do the same,” he said.

To further boost its manufacturing capabilities, Benchmark also just moved into a new 40,000-square-foot office, testing and production space in Burlington, Vermont. It’s a considerable upgrade from its previous headquarters, which was 8,000 square-feet divided between three offices, McDevitt said.

The news comes just a few weeks after the company announced that it had reduced its 100-person workforce by around 15%. At the time, McDevitt told CNBC in a statement that the layoffs were due to the company “transitioning from research and development to a production-focused team.”

4. Bluu Seafood reels in $17.5M to bring cultivated fish products to market

Bluu Seafood, a German company creating cultivated (i.e. “lab-grown”) fish products, today announced it has raised €16 million ($17.5 million) in a Series A round of funding.

Founded out of Berlin in 2020 originally as Bluu Biosciences, Bluu Seafood starts with a “one-time” fish biopsy — which, it says, doesn’t require killing any fish — and then uses stem-cell technology to grow entire cell lines (i.e. fish species) inside a lab.

The company unveiled its first products last August, including a line of fish sticks (or “fish fingers”) and fish balls. These are made from cultivated fish cells that are enriched with plant proteins, a process it says helps make their mouth-feel and cooking process more realistic.

Production problems

Bluu Seafood is one of numerous biotech startups that are setting out to address the world’s seafood production problems, which includes overfishing, contamination and cruelty. But the movement is not limited to marine animals, with countless companies raising bucketloads of VC cash to reproduce everything from bacon to burgers and chicken and beyond.

Bluu Seafood, for its part, had raised €7.1 million in funding so far, and with another €16 million in the bank it’s now gearing up to attain regulatory approval in various markets, including Singapore, which is currently the only market in the world where cultured meat (chicken) is available to buy. However, the Food and Drug Association (FDA) also started rubberstamping such edibles as being safe for human consumption, and just this week it approved two companies to begin selling their lab-grown chicken products — so we can expect some commercial activity in the U.S. in the very near future.

First up, Bluu Seafood is aiming to enter Singapore, where it says it expects to receive approval sometime in 2024, while it says it has also kickstarted the approval process with the FDA, and will then set about targeting the European market.

5. Exeliom Biosciences closes €24M financing for lead candidate

Exeliom Biosciences has completed a €24 million ($26 million) Series A to progress the clinical development of its therapeutic pipeline. This includes several clinical trials of EXL01, a novel immunotherapy with applications in cancer and in infectious diseases.

This follows on from the initial closing of €7 million ($7.6 million) in 2018, a first extension of €3 million ($3.3 million) in 2021 and the €6 million ($6.6 million) non-dilutive funding secured over the period. New international VC investor, CE-Ventures, the corporate venture capital platform of Crescent Enterprises, led the €8 million ($8.7 million) Series A extension, joined by existing investors including VCs Auriga Partners and UI Investissement, and Biocodex, an independent multinational pharmaceutical company.

The proceeds will be used primarily to progress the clinical development of Exeliom Biosciences’ lead candidate, EXL01, into two new therapeutic areas: immuno-oncology and infectious diseases. EXL01 is a once daily, potentially first-in-class, microbiome-based immunotherapy containing a single-strain of the major dominant commensal bacterium Faecalibacterium prausnitzii.

This species of the human intestinal microbiota has demonstrated promising immunomodulatory properties that can enhance immune system activation in the context of existing standard treatments. Through this activation, F. prausnitzii improves patients’ ability to respond to these treatments. EXL01, an innovative, off-the-shelf, candidate, is already being evaluated in the clinic in the field of chronic inflammatory bowel diseases, as part of a phase 1 trial in Crohn’s disease patients initiated at the end of 2022.

New clinical trials for Exeliom Biosciences

In the first half of 2024, Exeliom Biosciences plans to initiate three phase 1/2 clinical trials evaluating the combination of EXL01 with standard-of-care treatments (including immune checkpoint inhibitors) in three different cancers: gastric cancer, non-small cell lung cancer and hepatocellular carcinoma.

Exeliom Biosciences also plans to launch, in parallel, a phase 1/2 study evaluating EXL01 as an alternative to the current standard treatment (fecal transplantation) for recurrent Clostridium difficile infection.

Benjamin Hadida, chief executive officer of Exeliom Biosiences, said: “We are very pleased to receive the funding and strong support from our current financial partners and a new investor, CE-Ventures, who recognized our ability to open a new chapter in microbiome-based immunotherapy.

6. Agritech firm N-Drip raises $44 million in Liechtenstein-led funding round

Israel’s N-Drip, the developer of smart irrigation systems helping farmers save water and boost yields at lower costs, has raised $44 million from a Series C financing round to help expand its global footprint.

The funding was led by the Liechtenstein Group, an asset manager and investor in food and agriculture owned by Liechtenstein’s royal family, with the participation of US investment management firm Hamilton Lane and water tech investor Natural Ventures.

Existing investors, including Granot Group, Bridges Israel Impact Fund, Kibbutz Ein Harod Ihud and a group of US-based investors, also joined the financing round. The financing round may be extended in response to investor demand, N-Drip said.

To date, N-Drip’s has raised about $80 million from strategic and financial investors in the US, Europe and Israel.

Founded in 2015 by Prof. Uri Shani, a former director of Israel’s Water Authority, with Ariel Halperin and Ran Ben-Or, N-Drip has developed what it says is a system that allows areas that use water flooding for irrigation to use the more precise drip irrigation instead.

7. UAE announces plans to invest $54B in energy and triple renewable sources

DUBAI, United Arab Emirates (AP) — The United Arab Emirates plans to triple its supply of renewable energy and invest up to $54 billion over the next seven years to meet its growing energy demands.

Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s vice president and ruler of Dubai, announced the plans on Monday following a Cabinet meeting. They also include investments in low-emission hydrogen fuel and developing infrastructure for electric vehicles.

He said the updated national energy strategy “aims to triple the contribution of renewable energy over the next seven years and invest 150 billion to 200 billion dirhams ($40 billion to $54 billion) during the same period to meet the country’s growing demand for energy.”

The major oil-producing nation has pledged to be carbon-neutral by 2050, without fully explaining how, and is hosting the COP28 climate summit later this year.

The latest announcement included the formation of an Investment Ministry to be led by Mohamed Hassan Alsuwaidi. He currently serves as the deputy chairman of Masdar, a clean energy firm that has committed tens of billions of dollars to worldwide projects.

Sultan al-Jaber, the chairman of Masdar and CEO of the Abu Dhabi National Oil Co — a state-owned firm producing millions of barrels of crude oil daily — was appointed as president of the upcoming climate summit, which will be held in Dubai.

His appointment drew criticism from environmentalists, who fear the UAE will resist efforts to reduce fossil fuel sales. Organizers of the summit say they are hoping for big results but that oil producers must have a seat at the table.

The UAE’s oil wealth powered its transformation into a major hub for business and tourism, known for the futuristic cities of Dubai and Abu Dhabi. The country requires vast amounts of energy to power the desalination plants that irrigate its desert golf courses, air conditioners that cool its sprawling malls, and heavy industries such as aluminum smelters.

The UAE has a nuclear power plant, as well as a large solar park in Dubai that met 15% of the city’s needs last year, leaving it mostly reliant on natural gas imported from Qatar.

8. Public Ventures launches $100M impact fund to invest in early-stage life science, clean tech

Climate change impacts women and communities of color disproportionately. Over 1.3 billion people in low- and middle-income countries across the globe live below the poverty line, with 70% of those being female.

Increased exposure to heat, poor air quality, flooding and wildfires have been connected to health problems like anemia, malnutrition and pregnancy complications. Research also finds that women and girls are at a higher risk of physical, sexual and domestic violence following climate disasters.

Zoey Dash McKenzie, founding partner at Public Ventures, wants to do something about this and has launched a $100 million impact fund that seeks out nascent life science and clean tech startups, particularly in Canada, that are focused on “improving health equity and supporting climate preparedness for underserved communities.”

“Beyond just being an impact fund, we are really breaking away from conventional structures and venture capital submitted in alignment with the needs of accelerating early-stage science,” Dash McKenzie told TechCrunch. “We’ve decided to employ a waterfall structuring, make assessments on a deal-by-deal basis and then return funds back to our LPs earlier on. We’re accelerating capital velocity at the early stage, when it’s needed most, so we really sit right in the middle of government grants and traditional venture capital.”

She’s not alone: In recent years, impact funds have attracted interest from venture capital firms. Public Ventures joins the likes of Planeteer, Salesforce Ventures, Positive Ventures, and Envisioning Partners recently closing on big and small funds aimed toward positively impacting the world.

Dash McKenzie described working on the fund as coming “full circle.” She studied health and environmental sciences in college and went on to model in New York before joining the entrepreneurial ranks with a communication SaaS platform.

9. European high-tech entities to invest nearly $1B in Korea

PARIS — Korea has drawn 1.2 trillion won ($940 million) worth of investment from six European high-tech companies in fields ranging from secondary battery to offshore wind power plants.

The investment was announced Wednesday in Paris with Korean President Yoon Suk Yeol in attendance. Yoon is visiting the city to attend the general assembly of the Bureau International des Expositions (BIE).

The investment plan includes building production and research and development (R&D) facilities and constructing an offshore wind power plant in Korea.

“Korea and Europe are partners that share universal values through mutual investment,” said President Yoon at the event.

“The Korean government is committed to forming the best investment landscape for foreign businesses to invest and create jobs to their full potential.”

Imerys, a French battery solution manufacturer, is considering black carbon production facilities in Korea. Black carbon is used in batteries to enhance their performance.

Umicore, a Belgian cathodes company, will build a production facility and an R&D center in Korea, expected to help Korea respond to the growing demand for battery-powered vehicles.

Auto components company Continental and high-performance polymer manufacturer Nylacast pledged to build respective manufacturing facilities.

10. Retail robotics startup Telexistence raises $170M

Telexistence Inc., a startup developing artificial intelligence-powered robots for the retail sector, today announced that it has raised $170 million in funding.

One of the investors in the Series B round was SoftBank Group Corp. Last month, SoftBank signaled that it plans to step up the pace of its AI investments following a year of limited venture capital activity. The company scaled back its participation in startup funding rounds last year to address market headwinds.

Besides SoftBank, Telexistence’s latest raise also included the participation of several other backers. Among them were Airbus Ventures, Monoful Partners, KDDI Open Innovation and Globis Capital Partners. Overall, Telexistence has raised more than $190 million since launch.

The investment comes about a year after Tokyo-based Telexistence won a contract to supply robots for FamilyMart Co. Ltd., one of Japan’s largest convenience store operators. At the center of the deal is the startup’s TX SCARA automated shelf stocking system. FamilyMart plans to deploy the robot at 300 of its retail locations.

In FamilyMart stores, the shelves that hold packaged goods are often embedded into the walls. Behind each shelf is a corridor accessible only to employees and a merchandise storage area. When a certain product runs out, employees enter the corridor, pick up new merchandise from the storage area and place it on the shelf.

Telexistence’s TX SCARA robot automates the task. It’s a mobile robot arm designed to operate in the employee-only corridor between a store shelf and the merchandise storage area. The TX SCARA can detect when a product is out of stock, pick up new merchandise from the storage area and place it on the relevant part of the shelf.

There are cases where a robot’s AI algorithms may struggle to process a certain item due to technical limitations. When such a situation emerges, a Telexistence employee can log into the TX SCARA using a virtual reality headset and manually steer the robot arm. The company says this approach reduces the amount of effort required on retailers’ part to troubleshoot errors.