Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 121- February 25)

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. Industry Veterans Launch $310M VC Fund for Biotech Startups

Led by three biotech veterans, New York City-based venture capital firm Scion Life Sciences launched on Wednesday with an oversubscribed $310 million fund to form companies working on potentially transformational and curative therapies.

According to the announcement, the firm’s mission is to create and build companies developing innovative treatments that could “cure or transform the clinical management” of life-threatening diseases. Scion Life Sciences, an affiliate of Petrichor, intends to “support its most promising portfolio companies through to maturity as late- or commercial-stage biopharmaceutical enterprises.”

The firm will make small investments—as low as “a few thousand dollars” for early-stage efforts—but can also provide $60 million or more in funding throughout the life of its portfolio companies, supporting them from pre-seed through to a public offering.

Scion is helmed by three industry veterans: Samuel Hall, who was previously a partner at Apple Tree Partners, where he contributed to several biotechs, including Stoke Therapeutics, Marengo Therapeutics and the Novartis-bought Chinook Therapeutics.

Aaron Kantoff is also managing partner at Scion. Previously, he was a venture partner at Medicxi and before that he served as co-founder and board member of Rayzebio, which in December 2023 was acquired by Bristol Myers Squibb for $3.6 billion.

Joining Hall and Kantoff is Tadd Wessel, a managing partner at private healthcare investment firm Petrichor. Wessel was previously a partner at OrbiMed Advisors and was vice president of Fortress Investment Group.

The trio’s depth of experience is contained in the three pillars of its asset selection strategy, which they contend is designed to minimize risk while maximizing the chances of producing transformational medicines.

First, Scion will focus on mature modalities and technologies that area likely to yield drugs “today or in the near term.” Second, the firm will invest its resources in therapeutic areas and disease targets with well-understood underlying mechanisms, allowing for effective interventions. Finally, Scion says it will be pragmatic by choosing to focus on conditions that can be addressed by independent biotech companies.

So far, Scion has established four companies. The firm said that details will be “disclosed subsequently” as the entities mature.

Scion has also formed an in-house team of scientific, medical and technology experts to guide the founding and building of its portfolio companies, while also providing internal R&D capabilities. The team will help the venture firm ensure that it will only support programs with “exceptional potential” to mature into full-scale companies.

“We build companies with the primary objective of creating important new medicines, not exits,” Kantoff said in a statement, adding that Scion’s approach is designed to “yield real medicines that change the lives of patients and caregivers.”

2. Novo Nordisk spends up to $1.64bn on US biotech startups

Novo Nordisk taps Flagship Pioneering portfolio companies Omega Therapeutics and Cellarity as obesity drugs competition intensifies.

Novo Nordisk has entered into research collaborations with two US biotech startups as it aims to maintain its dominant position in the cardiometabolic disease market.

The Danish pharma company has invested separately in two companies in the cell and gene therapy sector—Omega Therapeutics and Cellarity. Each agreement could be worth $532m in upfront, development, and commercial milestone payments. Tiered royalties on annual net sales of a licensed product have also been included. Novo Nordisk stated it will cover R&D costs, according to a 4 January press release.

After a joint preclinical development phase, Novo Nordisk can decide to advance the programmes into clinical studies.

The two deals are the first announced under the framework collaboration between Novo Nordisk and the venture capital firm Flagship Pioneering to advance breakthrough medicines in cardiometabolic diseases signed in May 2022. Massachusetts, US-based Flagship Pioneering founded both Omega and Cellarity in 2017.

Flagship Pioneering is also working with Pfizer under a deal announced in 2022 that included up to $700m in milestone and royalty payments.

3. French startup Bioptimus raises $35m seed

rench AI startup Bioptimus, which intends to build a large language model (LLM) for biotechnology, has raised a $35m seed round just a few months after it was created, confirming previous reporting by Sifted.

The company was created by top executives from French unicorn Owkin, which uses AI to understand and improve the effect of drugs and treatments on different patient groups.?

Bioptimus, which was incubated at Owkin, was founded by the unicorn’s current chief R&D officer and ex-Google researcher Jean-Philippe Vert. Vert will not have an operational role at Bioptimus and will keep his role at Owkin.

The seed round was led by French life sciences VC Sofinnova Partners and public bank Bpifrance Large Ventures. French VCs Frst and Cathay Innovation, US investor Headline, Owkin and billionaire entrepreneur Xavier Niel also participated in the round.

What will Bioptimus do?

LLMs — the same technology that powers ChatGPT — which can generate human language, images, sounds or software, are AI models trained on huge datasets.?

Bioptimus wants to create a model that will be trained on data that’s necessary to understand biological processes on various levels. It is called a “multiscale” model because it will account for many different scales of biology — including organs, tissues, cells, molecules and atoms.??

Until now, AI models have not been trained on data that represents these different levels of biology, meaning that they cannot represent the full complexity of organisms. Simulations of biological processes, for example an organism’s reaction to a drug, are therefore not as accurate as they could be.

“By harnessing the power of foundation models and advanced algorithms trained on massive amounts of biological and multimodal data across scales, we aim to capture the laws of biology that have hitherto remained too complex to be properly understood,” says Vert.

4. Cybersecurity Startup Funding Hits 5-Year Low, Drops 50% From 2022

Just two years ago venture funding to cybersecurity was on fire, with more than $23 billion flooding the sector.

In 2023, cyber startups saw only about a third of that, as venture funding dipped to its lowest total since 2018. Security companies raised $8.2 billion in 692 venture capital deals last year — per Crunchbase numbers — compared to $16.3 billion in 941 deals in 2022.

The drop was exacerbated by Q4 numbers, as startups locked up $1.6 billion — marking the lowest quarter since Q3 2018 when cyber firms raised just $1.3 billion. Only three cyber startups raised rounds above $100 million:

• Managed detection and response startup BlueVoyant closed a $140 million-plus Series E led by Liberty Strategic Capital.
• Dallas-based cybersecurity startup Island announced a $100 million Series C led by Prysm Capital and valuing it at $1.5 billion.
• San Mateo, California-based Verkada closed a large $100 million round led by Alkeon Capital.

“What we saw in terms of cybersecurity funding in 2023 were the ramifications of the exceptional surge of 2021, with bloated valuations and off-the-charts funding rounds, as well as the wariness of investors in light of market conditions,” said Ofer Schreiber, senior partner and head of the Israel office for cyber venture firm YL Ventures.

New reality

Indeed, most investors agree poor decisions and bad judgment from a couple of years ago still haunt the sector charged with keeping people safe from bad actors on networks, the cloud and their devices.

Security firms are still struggling to grow into big valuations garnered just a few years ago when money was cheap and fundraising for both startups and VCs across most sectors was easy.

Startups that raised funding rounds in 2021 will have no choice but to raise follow-on funding this year — or try to sell themselves — as they are approaching the end of their runway, Schreiber added.

“That being said, startups have sobered up and understand that they need to lay their foundations more responsibly today, in light of investor appetite and market conditions,” he said.

“Investors remain interested in funding groundbreaking cybersecurity startups, especially in the early stages, and data supports this trend.”

Interest remains

Few in the industry doubt investors will abandon the sector. Cybersecurity continues to be a top concern for nearly every company and government, and attack vectors and tensions are only growing.

“The widespread adoption of generative AI technologies, coupled with recent geopolitical conflicts like the Russia-Ukraine and Israel-Gaza wars, has escalated the frequency and sophistication of cyber attacks,” said Gili Raanan, founder and partner at Cyberstarts.

“The economic crisis further contributes to this situation, as hackers often take advantage of market downturns to carry out malicious attacks,” he added.

Those challenges could strengthen spending in cyber.

“Despite macroeconomic challenges, the demand for digital transformation in the cyber realm remains,” said Nadav Zafrir, co-founder and managing partner at Israel-based incubator and investment firm Team8 which has a security focus.

“As global conflicts persist and intensify, the threat of cyber attacks remains high, and therefore, the need to strengthen cybersecurity measures through technology investments will remain paramount,” he added.

There constantly are new attack vectors that will need to be stopped, agreed Umesh Padval, a venture partner at Thomvest Ventures who specializes in cyber, cloud and AI infrastructure.

“AI will make it worse, war will make it worse,” said Padval, adding areas such as DevOpsSec (the integration of security in software development) and cloud security will grow.

“The last few years have created some bad behaviors. This investment level is the right level for this area,” he said.

5. Pittsburgh AI Startup Secures $150M to Revolutionize Healthcare Documentation

A Pittsburgh-based artificial intelligence startup, Abridge AI Inc., has secured a staggering $150 million in Series C funding, positioning the company to compete against tech giants like Microsoft in the development of automated clinical note-taking technology. The hefty investment is a clear indication of Abridge's potential to transform healthcare documentation, boosting efficiency in clinical settings.

Investment Boost for Abridge AI

The generous funding round was led by Lightspeed Venture Partners, Redpoint Ventures, IVP, Spark Capital, among others. This investment will be crucial for Abridge AI to develop new AI models and expand their product offerings. Notably, the company is focusing on medical transcription and clinical documentation technology.

Having secured this significant funding, Abridge AI's market valuation has reached an impressive $850 million. The company's CEO, John Smith, expressed enthusiasm about the firm's growth trajectory and its unwavering commitment to revolutionizing the AI industry, particularly within the healthcare sector.

Automating Clinical Documentation

Abridge AI offers an innovative AI tool that swiftly transcribes and summarizes doctors' conversations with patients, integrating this data directly into a hospital's electronic health record software. This technology reduces the documentation burden on clinicians, potentially easing provider burnout and allowing doctors to focus more on patient care. Consequently, the technology aims to enhance the doctor-patient relationship and the overall quality of care.

Competing with Tech Giants

With its innovative approach, Abridge AI is taking on Microsoft's clinical note-taking business. Microsoft is a formidable competitor in the market, but Abridge AI's recent funding boost is set to level the playing field.

Partnership with Yale-New Haven Health System

In addition to its funding success, Abridge AI has announced a strategic partnership with the Yale-New Haven Health System. This collaboration aims to implement Abridge's generative AI technology within the health system. Such partnerships exemplify the growing acceptance and implementation of AI within the healthcare sector.

Looking Ahead

The funding will also aid Abridge AI in expanding their operations and workforce. The company plans to use the investment for hiring and training purpose-built medical AI models. As AI continues to revolutionize various industries, Abridge AI's focus on healthcare documentation presents an innovative solution to an age-old problem. The company's progress will undoubtedly be closely watched as they continue to challenge established tech giants and strive to transform healthcare with AI.

6. Radiology AI startup AZmed raises $16M in series A financing

Radiology artificial intelligence startup AZmed has raised nearly $16.2 million in series A financing, leaders announced Tuesday.

Founded in 2018, the Paris-based company specializes in software that helps providers pinpoint various abnormalities on standard X-rays. About 1,000 healthcare facilities across 40 countries now use Rayvolve, which the U.S. Food and Drug Administration cleared in 2022.

Investment firms Maison Worms, Techstars and Tempact Ventures were among those contributing. AZmed said it plans to use the money to strengthen its presence in Europe and extend operations in the U.S., Middle East, Africa and Asia.

“The AZmed team has demonstrated unmatched commitment and creativity in tackling the pressing issues that affect healthcare practitioners,” Arnaud Decrulle, managing director of Luxembourg-based Maison Worms, which is the investment arm of the Worms family, said in a Feb. 20 announcement. “With this investment, AZmed will be in a strong position to enhance the care that is provided to patients.”

Current users of the company’s AI software—also CE-marked in Europe—include SimonMed Imaging, UH Cleveland Medical Center and England’s National Health Service. Following the funding news, AZmed plans to double its workforce in the next 18 months and “substantially” increase investment in research and development, hoping to expand its line of imaging AI offerings.

7. Bezos, Nvidia join OpenAI in funding humanoid robot startup, Bloomberg reports

Feb 23 (Reuters) - Amazon.com (AMZN.O), opens new tab founder Jeff Bezos, Nvidia (NVDA.O), opens new tab and other big technology names are investing in startup Figure AI that develops human-like robots, Bloomberg News reported on Friday, citing people with knowledge of the situation.

Figure AI, also backed by ChatGPT-maker OpenAI and Microsoft (MSFT.O), opens new tab, is raising about $675 million in a funding round that carries a pre-money valuation of about $2 billion, according to the report.

Bezos had committed $100 million through his firm Explore Investments LLC and Microsoft is investing $95 million, while Nvidia and an Amazon-affiliated fund are each providing $50 million, the report added.

Investments in artificial intelligence startups have sparked after the launch of OpenAI's viral chatbot ChatGPT in November 2022, as investors sense an opportunity, betting on these startups that they might outpace bigger rivals.

OpenAI, which at one point considered acquiring Figure, is investing $5 million, the report added.

Backers include Intel's (INTC.O), opens new tab venture capital arm, LG Innotek, Samsung's investment group, as well as venture firms Parkway Venture Capital and Align Ventures, the report added.

ARK Venture Fund, Aliya Capital Partners and Tamarack are also among investors in the startup, according to the report.

Amazon, Nvidia, Microsoft and Intel declined to comment, while other names mentioned in the report, including Figure AI, did not immediately respond to Reuters' requests for comment.

8. Darmstadt-based Threedy secures €9.6 million to fulfill industrial 3D visualization across devices

Darmstadt-based Threedy, a company offering a unique infrastructure component that allows companies to meet the ever-growing need for highly available 3D data in responsive and interactive 3D applications, announced a €9.6 million Series A investment, backed by the new investors LBBW Venture Capital, TRUMPF VENTURE, Futury Capital, and EquityPitcher Ventures. Existing investors Matterwave Ventures, Fraunhofer and High-Tech Gründerfonds (HTGF) renewed their commitment by participating in the Series A investment.?

Over the first three years, Threedy successfully transformed from a Fraunhofer department to an independent company. Since its foundation in late 2020, Threedy has experienced significant growth, almost tripling its staff to build up a team of more than 50 highly skilled professionals from around the world. The company has not only maintained its strong customer relationships, but also experienced remarkable growth, especially in the Automotive and Manufacturing sectors. Threedy’ s cutting-edge technology is valued by numerous industry leaders, including the top-tier German car Manufacturers. Furthermore, Threedy has successfully broadened its network of partnerships, expanding beyond the initial focus areas of Automotive and the German market.

Threedy will continue its commitment to the commercialization of its innovative spatial computing infrastructure, accelerating the adoption across industries and application scenarios. The investment will further enable Threedy to drive the evolution of its product portfolio. Threedy’s expansion plans include further internationalization, while remaining dedicated to excellence and innovation, and making a lasting impact in serving their partners’ digital transformation. Threedy is now actively looking for new people in different roles to join its team, individuals who want to shape the future of the industrial digital twin space.

Patrick Herlinger, Investment Manager at LBBW Venture Capital, said: “Threedy caught our immediate interest with their cutting-edge technology and enormous growth potential. Their advanced spatial computing platform matches our investment strategy to support groundbreaking digital innovations that transform the backbone of key industries in the DACH area such as manufacturing or automotive. Threedy’ s instant3Dhub empowers companies to effortlessly access their most valuable assets – 3D Data – in real-time, on any device, at any given moment. We are excited to lead this investment and support Threedy’ s great team on their future journey.”

Jens Ortgiese, Principal at TRUMPF VENTURE, commented: “Threedy has successfully built a strong customer network of leading automotive and manufacturing companies for its revolutionary spatial computing technology, demonstrating the potential to become a market leader. As one of Threedy’ s most esteemed customers, TRUMPF builds on instant3Dhub to support Field Service workers with 3D visualization. We are more than excited to support Threedy’ s next growth step with our investment.”

Threedy allows its customers to establish a modern software architecture which reduces dependency on the monolithic and closed stacks of incumbent software vendors and opens the door to the agile development and scalable roll-out of a modern lightweight application layer. With a wide range of features for digital engineering, advanced collaboration, and seamless Mixed Reality, Threedy’ s software provides a strong foundation for industrial digital transformation.

Working with 3D data becomes as simple as sharing a link, simply by referencing it from arbitrary sources e.g., existing PDM/PLM solutions, and without any preparation or simplification efforts. Threedy’ s technology enables new, scalable applications over the entire product life cycle, from engineering to after sales – web-based and with zero-footprint on the client. By streamlining their 3D data utilization and communication, companies can also reduce their ecological footprint: business travel can be largely replaced by virtual exchanges, saving resources and time.

Benjamin Krahmer, Managing Director at Futury Capital, added: “We are excited about the opportunity to support the Hessian deep tech company Threedy in a strong investor consortium to drive the digitalization of manufacturing enterprises globally.”

9. Golden Ventures secures another $100M to invest in Canada’s tech ecosystem

Golden Ventures, a Canada-based venture capital firm, closed on over $100 million in capital commitments for its fifth fund targeting high-potential, seed-stage founders working across technologies, including AI, climate, blockchain and quantum.

Matt Golden, founder and managing partner, started the Toronto-based firm in 2011 and amassed a team, including Ameet Shah, general partner, and new principal Nick Chen.

“This is a continuation of our core thesis and created to be super founder-aligned,” Golden told TechCrunch. “Ameet and I are both ex-founders. Our first fund was more mobile-focused, which was more a function of our domain expertise in 2011.”

Since then, the firm shifted to being sector agnostic and later more focused on the Canadian tech ecosystem, which Golden described as having “great trajectory.” A majority of Golden Ventures’ investments have been in this ecosystem with the remaining in other areas.

The firm makes both core investments and those that lean more on the angel side. In previous funds, the firm invested in 25 core deals and Golden expects to make more like 30 core deals with the fifth fund.

Over 13 years, Golden Ventures has backed over 100 companies at the seed stage. The firm has also worked to invest in talent, mentorship and building relationships with later-stage funds so that portfolio companies can have access to downstream funding.

10. Eindhoven-based Scinvivo secures €4.7 million to radically improve bladder cancer diagnostics

Scinvivo, a medtech startup based in Eindhoven set to revolutionize cancer diagnostics, has closed an investment round of €4.7 million from Santec OIS Corporation, The NLC Health Impact fund, current shareholders, and an “Innovatiekrediet” (Innovation credit) loan of the? Netherlands Enterprise Agency (RvO).?

With this investment, Scinvivo will improve the catheter, OCT system, and software such that it can be used in the clinic and is appealing to urologists. They will perform clinical trials to prove the clinical benefits of the product, and will prepare the necessary documentation to obtain CE certification. They will also work on the go-to-market strategy, to successfully launch the OCT imaging platform on the market and make it a commercial success.

Scinvivo is on a mission to make cancer diagnostics faster and more accurate, enabling the reduction of unnecessary surgeries and improving the quality of patients’ lives. They are developing an imaging platform based on a forward-looking OCT catheter to visualize the human morphological tissue structure a few mm’s deep with a high resolution.?

This approach fills the gap of the current image modalities, enables more precise minimal invasive surgeries, and will significantly improve the diagnosis of cancer resulting in a precise personalized treatment.?

Marijn van Os, CEO of Scinvivo, said: “I am very pleased with this investment round. With Santec we strengthen our supply chain and get a foot hole in the Japanese market. With NLCs HIF, the biggest investor in Europe for Medical start-ups, we have an investor on board who understands the specific dynamics in the medical venturing world.”

Maaike de Jong, CMO of Scinvivo, commented: “This investment brings us a step closer to the market introduction of our OCT imaging platform. We are looking forward to a close collaboration with Santec, and to obtaining the first in vivo clinical results.”

Bladder cancer is chosen as the first field for the imaging platform. The urologists who reviewed the technology see this as a likely game changer in their diagnostic routine with the potential to become the gold standard.

Lars Olthof, Investment Manager at NLC Health Ventures, added: “This investment will enable Scinvivo to further develop their technology and get their first clinical results. It is a vote of confidence of all parties involved, that we truly believe that this innovation has the potential to improve patient lives at scale.”

RVO represented by Bibi van Gijzel and Iris Eefsting, commented: “As the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland ((RVO)), we are proud to announce our support for Scinvivo through the Innovation Credit program (Innovatiekrediet). This partnership exemplifies our commitment to fostering innovation with tangible benefits for the Netherlands. Scinvivo’s pioneering photonic technology holds great promise in revolutionizing early diagnosis for bladder cancer patients, potentially reducing the need for invasive surgeries and significantly impacting the healthcare system. We are excited to collaborate with Scinvivo in driving forward this transformative project, ultimately aiming to improve patient outcomes and advancing healthcare innovation in our country.”