Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 112- December 9)

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. Where could VC funding be going into in 2024?

Crunchbase data reveals that early-stage startup funding plunged 34% year-over-year in November. Lux Capital General Partner Bilal Zuberi joined Yahoo Finance’s Seana Smith at the Barclays Global Technology Conference to discuss implications for venture capital funding

Zuberi stated the last year has been a “downer” for VCs amid scarce liquidity events like IPOs. This forced startups to take on cost-saving strategies through layoffs and operational changes to achieve profitability. However, he sees areas like defense tech, AI, and human productivity enhancement as needed areas of investment, calling them “important for society” and venture returns.

Though strategies have shifted from purely top-line growth toward “building real, profitable businesses,” Zuberi argues sectors enriching lives and pushing boundaries still command capital

"A few years ago, start-ups used to be very narrative-driven. They've become very much metrics and operations-driven," Zuberi says.

2. European startup funding halved to $45B in 2023, says Atomico

The downturn in the technology sector — dragged by inflation, higher interest rates and geopolitical events — continues to persist, and one of the most acutely impacted areas has been VC funding for startups, particularly those outside the U.S. According to VC firm Atomico, companies in Europe are on track to raise just $45 billion this year — around half the $85 billion that startups in the region raised in 2022.

The figures come from Atomico’s big report on the state of European tech, which it publishes annually.

It also found that startups in the region are raising less at each stage of funding from Seed through to Series C (and beyond), with later stage and larger companies feeling a particular pinch: just 7 “unicorns” (startups with a valuation of more than $1 billion) are set to emerge this year in Europe, compared to 48 in 2022 and 108 in 2021.

But there is a silver lining in the story. While overall investment amounts are definitely down on the last two years, Atomico’s theory is that 2021 and 2022 were outliers in terms of activity — a consequence of lower interest rates, a surge of technology usage during the peak of the Covid-19 pandemic, and a pent-up amount of funding among investors — raising ever-larger from LPs keen to reap big returns from a buoyant industry — that needed to be deployed.

In other words, taking those two years out of the mix, it looks like figures are following a slower, and perhaps healthier, growth curve upwards.

Another positive sign is that the overall total value of the European tech ecosystem — that is, the combined equity value of all public and private tech companies in Europe — has returned to its 2021 record of $3 trillion after dropping $400 billion in value in 2022. That’s thanks to a steady stream of new startups raising money offsetting down rounds, with the majority of fundraises made as flat rounds or up rounds.

3. ContactMonkey lands $55M investment to grow its email software for internal comms

Email is quite profitable, as it turns out. Or rather, email communications software is.

Today, Toronto-based ContactMonkey, a platform that lets companies create, send and track internal comms from Outlook and more, announced that it raised $55 million in a Series A round led by Updata Partners.

It’s a sizable round from a single VC, so what warranted the hearty vote of confidence? Perhaps ContactMonkey’s profitability — or the fact that the company was bootstrapped up until recently.

Said Updata partner Braden Snyder in a statement: “As employers continue to seek ways to better engage and retain talent, ContactMonkey is filling a key void in the market with their robust and user-friendly solution. In the remote work era, we believe that companies must continue to find avenues to best engage with their employees and communicate with them in ways that truly resonate. ContactMonkey powers this type of communication.”

ContactMonkey founder and CEO Scott Pielsticker said that the new cash will be put toward expanding in international markets and doubling the size of ContactMonkey’s 80-person team, with a particular emphasis on building out ContactMonkey’s sales and marketing organizations.

“Our reason for raising money now is simple,” Pielsticker told TechCrunch in an email interview. “We see tremendous demand in the market and around the world for internal email platforms, as companies look to improve how they communicate with employees. We believe we’re well suited to meet this demand.”

4. Opal Security, which helps companies manage access and identities, raises $22M

VC investment trends in the cybersecurity market suggest a sector in decline — at least within the context of recent months. According to Crunchbase, cybersecurity deal count fell during Q3 to 153 deals from 181 in Q2. In a more detailed report, Crunchbase suggests that, with Q3 cybersecurity venture funding down 30% compared to the year-ago period, investment in the category could fall to its lowest level since 2019.

Some cybersecurity startups are escaping the industry downturn somehow, however — like Opal Security. Today, Opal, a vendor taking an automated approach to identity access management, announced that it raised $22 million in a Series B round led by Battery Ventures with participation from Greylock and Box Group.

Bringing Opal’s war chest to $32 million, the new tranche will be put toward doubling Opal’s 30-person team by the end of 2024, scaling its enterprise customer support org and ramping up product development, founder and CEO Umaimah Khan told TechCrunch in an email interview. The product ramp-up, she added, will include a new suite of visualization and AI-powered tools designed to remediate identity and access risk.

Khan founded Opal in 2020. Prior to it, she studied cryptography at MIT and worked in defense research as well as at startups, including Amplitude and Collective Health.

During her stints in the private and public sectors, where Khan was responsible for building internal authentication and authorization services, particularly on the policy layer, Khan said that she began to notice common issues around visibility and a lack of understanding of user access behavior.

“I saw firsthand how lack of good infrastructure and mundane issues like overblown access result in totally avoidable cascading failures,” Khan told TechCrunch in an email interview. “The reality is that most best-in-class security engineering teams understand this and have built these systems internally to the best of their abilities — but it’s a huge lift to scale and maintain these systems even for a large enterprise, and unrealistic for smaller organizations.”

To address what she perceived as a need for a more scalable access and identity orchestration platform, Khan founded Opal, a suite that offers companies a consolidated view and control of employee access to internal tools, apps, platforms and environments. Using Opal, customers with upwards of thousands of employees can create policy workflows to automate access policies and set approval flows for the access requests that can’t be automated.

5. YC-backed fintech Bujeti raises $2M for its corporate cards and spend management platform

African corporate cards and spend management platform Bujeti has raised $2 million in seed funding. The startup, involved with how African businesses, including SMBs, startups and enterprises, manage and handle finances, received this capital from lead investor Y Combinator and other backers, including Entrée Capital, Voltron Capital, Unpopular VC, Kima Ventures, Dropbox co-founder Arash Ferdowsi, Alan Rutledge, Tristan Walker of Heirloom VC and Mono CEO Abdul Hassan.

Bujeti targets businesses in sectors like healthcare, logistics, agriculture and construction, and facilitates the issuance of corporate cards to their employees and contractors, streamlining spending processes. The platform includes features that help these businesses control and manage expenses effectively by implementing spending limits, restrictions and approval flows for different stakeholders in the business chain, including executives, staff, contractors and vendors.

The startup, in a statement, expressed that the latest investment will accelerate its growth, expand its market presence and enhance its offerings. The roadmap for upcoming features includes introducing credit lines for SMBs and developing new products tailored for enterprises.?

The two-year-old fintech, led by founder and CEO Cossi Achille Arouko and COO Samy Chiba, was launched in April 2022. Prior to dedicating their full-time efforts to the YC W23 startup, both executives initiated the development of an MVP while in their previous roles. Chiba was a project manager with the French commercial launch service provider Ariane Space, while Arouko worked at the African payments startup Paystack. It was during his tenure as the tech lead of Paystack’s commerce, subscriptions and invoices team that Arouko conceived of the idea for Bujeti.

At a time when Paystack was considering the release of an API for card issuance, Arouko revealed in an interview with TechCrunch that he and his team, while managing subscriptions and collections, identified a crucial need to assist businesses in managing their expenses. This sparked the initial concept of Bujeti. Initially envisioned as a business-to-consumer platform, Bujeti aimed to enable users to generate cards using the Paystack API. Additionally, it sought to manage expenses, facilitate online remittance payments and automate remittance processes for individuals outside the continent. However, it made a pivot to service businesses months later.?

6. Amsterdam-based Rockstart launches €50 million second AgriFood fund to double down on early-stage startups

Rockstart, a global early-stage accelerator-VC, announced the launch of its second AgriFood fund. The new fund furthers the firm’s purpose to fund the transformation to a regenerative and sustainable future. Rockstart reinforces its commitment as the initial impact investor for early-stage startups with AgriFood Fund II, demonstrating its long-term dedication and support.?

The fund targets a final close at €50m and plans to invest in up to 50 startups within the coming 5 years. The fund is backed by The Export and Investment Fund of Denmark (EIFO), De Hoge Dennen, and Danish Agro, amongst other new and existing backers.

Rockstart AgriFood Fund II marks Rockstart’s fourth fund, following launches in AgriFood (2019), Energy (2020), and Emerging Tech (2022). Rockstart AgriFood Fund II will continue to fund early-stage purpose-driven founders scaling impactful solutions by leveraging emerging technologies and new business models that improve our food supply system from soil and ocean to gut.?

This fund is actively seeking investments in regenerative solutions that restore our soils and oceans to become CO2 capture powerhouses, in responsible and circular innovations that create value from wasted food while reducing food loss, and in quantifiable solutions and tools that provide consumers with better access to nutritious food that tastes good and does good.?

Selected startups receive an initial investment and gain access to Rockstart’s tailor-made AgriFood accelerator program, running biannually throughout spring and autumn. The customized program prepares startups for their next growth stages and helps them make a positive impact in the long term. The program includes custom early-stage sessions on fundraising, scaling, and ESG data collection and reporting, among other valuable resources preparing the founders to maximize their impact. Rockstart AgriFood Fund II will follow-on invest into its portfolio companies, aligning with the market up to series B.

“We are on a mission to empower purpose-driven founders on a global scale. Guiding startups through scaling and offering access to capital, especially in challenging markets, remains fundamental to our founder-focused ethos. We’re excited about our ongoing collaborations with partners, mentors, and stakeholders, forging impactful alliances that drive positive change across diverse domains,” said Rune Theill, CEO and Co-Founder, Rockstart?

7. Vast Data lands $118M to grow its data storage platform for AI workloads

Vast Data, to make an obvious pun, is raising vast sums of cash.

The New York-based startup, which provides a scale-out, unstructured data storage solution designed to eliminate tiered storage (i.e. setups that move data between high- and low-cost storage hardware), today announced that it secured $118 million in a Series E round led by Fidelity Ventures with participation from New Enterprise Associates, BOND Capital, Drive Capital, Nvidia, Dell,?Goldman Sachs, Tiger Global, Commonfund, Norwest, 83North, Greenfield and Next47.

The round values Vast at $9.1 billion post-money, and brings the startup’s total raised to $381 million.

“The explosion of interest in AI and the need for modern infrastructure that can support these workloads in the last year has been a boon for Vast’s business and positions the company for continued growth and adoption with the enterprise,” Vast co-founder and CEO Renen Hallak told TechCrunch in an email interview. “Given the future-proof nature of Vast’s offering, data-driven organizations see Vast as a valuable investment in the future of their business.”

Hallak co-founded Vast in 2016 with Jeff Denworth, Shachar Fienblit (who previously held leadership roles at Kaminario and IBM) and Alon Horev (formerly of Cisco and IBM). The way Hallak tells it, the co-founders shared a vision of creating a next-gen data management platform — one that leveraged commodity hardware to deliver faster access to bigger datasets for AI workloads.

Vast’s founding team subsequently designed a new storage architecture and software infrastructure layer, operating in stealth until 2019, when the company began selling to customers.

Today, Vast unifies storage, database and compute engine services in a platform built to power AI and GPU-accelerated workloads across datacenters and clouds. Customers can use Vast to manage unstructured and structured data across their preferred private, public or hybrid clouds — data ranging from videos and images to text, data streams and edge device data.

8. Mitsubishi launches $1bn decarbonisation fund for startups

Mitsubishi Corp is launching one of Japan's largest decarbonisation funds with a US$1bn investment plan targeting emerging technology startups

Mitsubishi Corp. is set to launch one of the largest decarbonisation funds in Japan, alongside MUFG bank and other organisations.?

The investment fund is planning to allocate US$1bn towards budding technology startup companies, specifically in the areas of floating offshore wind turbines and sustainable aviation fuel.?

It will primarily focus on European and US startups that are at the forefront of these sectors. In addition, the trading house aims to foster partnerships between these tech startups and Japanese or other Asian companies through its global business network, with the ultimate goal of advancing decarbonisation efforts among these companies.

Investing in start-ups

In its partnership with MUFG bank and South Korean private equity fund Pavilion Private Equity, Mitsubishi will establish a management company for the Marunouchi Climate Tech Growth Fund.?

The fund will make approximately 20 investments in startups by April 2029, with individual investments ranging from US$20mn to US$100mn. The start-ups will mainly be projects that are yet to be commercialised.?

Mitsubishi will provide the fund with several hundred million dollars of investment, expecting the fund to increase to US$1bn by April 2024. If this milestone is achieved, it will?

make the fund one of the largest in Japan led by an operating company.?

An estimate stated that an average annual investment of US$2tn will be required from 2022 to 2025, in order to achieve net-zero CO2 emissions by 2050. This will rise by US$4tn each year from 2026 to 2030.?

In addition to investing in floating offshore wind turbines and technologies that directly capture carbon dioxide from the air, Mitsubishi will provide opportunities for collaboration with other investing companies.

Mitsubishi intends to allocate ￥2tn (US$15bn) towards decarbonisation initiatives by the fiscal year 2030. In 2022, the company invested US$100mn in Breakthrough Energy Catalyst, a decarbonisation fund established by Microsoft co-founder Bill Gates, to support this objective.

9. Berlin-based Milano Vice snaps €8.3 million to expand its digitally-powered, delivery-first pizza restaurant model

Berlin-based food technology company Milano Vice has raised a €8.3 million Series A round to expand its innovative, new restaurant model. The funding round was led by Coefficient Capital, with participation from True, Geschwister Oetker and Speedinvest.?

The company also received investments from notable food technology and delivery entrepreneurs, including Ole Strohschnieder, Co-Founder of Just Spices; David Brunier, Co-Founder of Flash Coffee; Christian Gaiser, Co-Founder of Numa and founding investor Fabian Wittleben CG Partners. The investment will scale operations and expand the business across Germany and internationally.

Milano Vice was founded in 2021 by Rudolf Donauer, CEO, and Dennis Murselovic, MD, after working together at Delivery Hero, the global food delivery company based in Berlin. Together, they set out to build Milano Vice, the world’s first and only digitally-powered, delivery-first pizza restaurant concept. Since its launch in January 2022, Milano Vice has sold over 1M pizzas in Berlin, Hamburg, Frankfurt am Main and North Rhine-Westphalia. They currently partner with over 60 businesses in Germany.?

Rudolf Donauer, Co-Founder & CEO of Milano Vice, said: “We always wanted to create something that would have a positive impact on food entrepreneurs, and the work we’ve been doing with Milano Vice is in service of this vision. We are building the restaurant of the future with a pizza brand that has a best-in-class delivery system, tastes great, and also helps small food businesses and restaurants grow their income.”

Many food businesses and restaurants in Germany struggle to cover their initial investments because of underutilised kitchens, growing inflation, and rising rents and food prices. While restaurant owners have to put down large amounts up-front to build the infrastructure of their restaurants, most kitchens only utilise 40 per cent of the day (based on Milano Vice’s calculations) and take many years to pay back.

Milano Vice is revolutionising the industry by redesigning the restaurant business model for the modern consumer in the digital age. The company partners with professional kitchens, leveraging their underutilised potential to prepare and deliver elevated pizzas to their consumers’ homes, enabling small business owners to more than quadruple their sales. One bakery in Berlin, for example, went from generating €20K in monthly sales to €95K through the partnership with Milano Vice.

The company is building a category-defining lifestyle pizza brand for the modern consumer, Millennials and GenZ. Milano Vice already has some of the highest reviews of any chain restaurant in Germany and industry-leading repeat rates. The brand is further bolstered through local events, creator collaborations, and streetwear partnerships.

The company built proprietary technology across the value chain to drive a superior partner and consumer experience. For example, the company uses artificial intelligence and computer vision technology to track the quality of freshly prepared pizzas and make sure the product is meeting the company’s high standards. Milano Vice also recently launched a new online ordering platform providing a direct-to-consumer experience for the consumer and will leverage gamification to drive loyalty.

Arpon Ray, Partner at Coefficient Capital, commented: “We have been looking for innovative models in food delivery and were immediately impressed with the capital-efficient business model Rudolf and Dennis created.? We think their focus on using proprietary technology will be a major differentiator, and their approach to brand building will resonate with today’s consumer.”?

10.London-based Sunsave bags €6.3 million to launch solar subscription service in the UK

Sunsave, a UK solar subscription service, announced a €6.3 million seed round to fund its mission to make solar power accessible to all UK households. The seed round was led by Europe’s leading impact venture capital fund Norrsken VC (Northvolt, Olio, 1KOMMA5) alongside previous investors IPGL (Elvie, Klarna), Plug and Play (PayPal, Dropbox) and angel investors Stuart Rose (Chairman of Asda), Michael Spencer (Founder of Nex Group/ICAP), Roland Rudd (Founder of Finsbury) and renowned industry leader Bill Nussey (Author of ‘Freeing Energy’), bringing the total amount raised to ￡9.2 million in the 18 months since inception.?

The funds are being used for both product development – commercialising of the solar subscription model and product development allowing additional savings to be generated from demand flexibility – as well as growing the Sunsave team with experienced experts from the energy and personal finance sector. Recent hires include marketing director Russell Smith (previously at Monzo and Wise), chief of staff Alfie Ireland (formerly OVO Energy) and Helen Taylour (one of Bulb’s early team) as product manager.

Alick Dru, co-founder at Sunsave, said: “We’re demonstrating to UK consumers that being green doesn’t have to be a choice between doing what’s right for the environment or doing what’s best for your pocket. With Sunsave’s solar subscription you can go green and save money immediately. With energy prices expected to remain elevated for the foreseeable future, this is more important than ever.”?

Ben Graves, co-founder at Sunsave, added: “We have an enormous ambition to help the country get to net zero through revolutionising green finance and making the power of solar accessible to all UK households. This significant investment round, combined with our recent FCA approval, provide a strong platform for our mission.”

Founded in 2022 by two friends who met at Oxford University, Alick Dru and Ben Graves, Sunsave aims to demystify the overcomplicated and expensive solar industry amidst soaring energy prices and the ongoing cost-of-living crisis. The business is now authorised and regulated by the Financial Conduct Authority (FCA) to provide solar panels and batteries on a subscription model, without subscribers needing to pay a hefty lump sum upfront – a major milestone in Sunsave’s mission.?

With long term energy forecasts predicting energy prices to remain elevated until late 2030s, and Ofgem’s recent 5% increase to the January price cap, the need for alternate, cheaper sources of energy is clear. A recent Bloomberg Intelligence report found that solar is the energy sector’s fastest-growing sub-segment, with demand set to soar by up to 40% this year. But while 70% of UK households say they’d like to install solar, only 4% actually have, thanks to a combination of high upfront costs and a complex, hard to navigate market.?

Agate Freimane, founding General Partner at impact investor Norrsken VC, added: “Sunsave’s new offering removes the biggest barrier to entry for people in the green transition: cost. This FCA-approved subscription service is a gamechanger, enabling thousands more homeowners to unlock the potential of renewable, cost-efficient solar energy every year. We’re thrilled to back Alick, Ben and the team as they help build the UK’s path to a cleaner, more sustainable future.”