Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 86- April 15)

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Top startups news to follow this week:

1. AI chatbot Character.AI, with no revenue, raises $150 mln led by Andreessen Horowitz

March 23 (Reuters) - Character.AI has raised $150 million in a new funding round led by Andreessen Horowitz that valued the AI chatbot startup at $1 billion, and it's in talks with cloud providers for more strategic investment, the company told Reuters.

The billion-dollar valuation for a company with zero revenue is another example of the continued AI funding boom since OpenAI's ChatGPT became a widely recognized name. It came amid the recent shockwaves caused by the collapse of Silicon Valley Bank.

AI investment in 2023 to date has surpassed the full-year amount in 2020 of $1.5 billion, according to PitchBook data.

Character.AI will use the funding to train its self-built models and expand the 22-person team.

Since its launch six months ago, Character.AI, which enables users to create customized AI companions with specific personalities and values, already has 100 million monthly site visits, the company said, marking a similar trajectory to ChatGPT, which set a record for the fastest-growing user base when it reached 100 million monthly users in two months.

Of the users who sent a message, their average time spent on the site is more than two hours a day, according to Character.AI.

The Menlo Park, Calif.-based company is launching a new model that adds more productivity capabilities, including drafting emails and assisting with test prep, on top of its current use cases such as entertainment, roleplay and emotional support.

"We started the company because we want to get this technology in the hands of everybody on Earth, A billion people can invent a billion use cases," said Noam Shazeer, CEO at Character.AI.

While not currently generating any revenue, Character.AI plans to launch a paid subscription "in the not distant future", while keeping the current free version available, Shazeer said. He didn't rule out an ad-supported model.

Replika, another AI chatbot creator, charges $69.99 the annual fee for 250,000 paying subscribers.

2. Edtech venture capital firm Reach Capital raises $215 million for its largest fund ever and has its sights set on backing more generative AI startups

San Francisco-based Reach Capital has closed $215 million in fresh capital for its fourth fund, the largest in the firm's history. Consistent with the previous fund, Reach IV will focus on education and future of work investments in the earlier stages, such as seed to Series B, and in companies based both in the US and abroad. 

Reach plans to double down on its plan to invest in education and education support startups for K-12, higher education, and career upskilling and reskilling, including an interest in companies that can support teachers dealing with shortages and burnout. The team is also looking to back more companies using generative AI in education, Reach Capital founding partner Esteban Sosnik told Insider. 

"I think overall at the growth stage, some activity has slowed, but we're actually seeing some really unique opportunities on this side from companies who are coming back or thinking about some more conservative round goals," said Reach Capital founding partner Wayee Chu. 

Edtech investing hit a high in 2021 during the post-COVID lockdown boom with $16.8 billion in funding going to startups, according to PitchBook data. But just as the venture capital industry experienced a record-breaking year for fundraising and investments, the market wavered in 2022, and so did edtech investing. Near the end of 2022, edtech investing had just reached $8.89 billion in 2022, according to PitchBook. 

3.Elevate lands $28M to help employers better manage benefits

Elevate, a consumer benefits administration platform, today announced that it raised $28 million in a funding round led by Anthemis with participation from Fin Capital Norwest Venture Partners, Greycroft, Bowery Capital and Firebolt Ventures.

The new cash, which brings Elevate’s total raised to $43 million, will be put toward product development, hiring and customer acquisition, according to CEO Brian Cosgray.

“Having worked at legacy benefits companies, Elevate’s founding team all saw what the industry lacked — flexible and scalable technology that met the needs of the changing workforce,” he told TechCrunch in an email interview. “These legacy company platforms were built using the best practices twenty years ago, but a lot has changed in two decades. Elevate started from scratch using the best technologies of today, like AI, keeping employee’s needs at its core and delivering on their expectations of a modern experience.”

Cosgray, whose background is in private wealth management, co-founded Elevate after selling his previous startup, DoubleNet Pay, to Purchasing Power in 2018. With Elevate, he sought to address some of the major pain points in employee benefits processing, like the long turnaround time for claims.

Using Elevate, employees can view, plan and manage pre-tax benefits from a dashboard on the web or mobile. Elevate offers real-time reimbursement for benefits such as health savings accounts and flexible spending accounts and a contactless card that supports popular mobile payment providers (e.g. Apple Pay).

4. LMS365, a learning management system built into Microsoft 365 and Teams, raises $20M

Danish company LMS365, an online learning management system (LMS) built for use inside Microsoft products, has raised $20 million in its first institutional round of funding.

Used by companies including logistics giant Hellmann and soda bottling franchise G&J Pepsi, LMS365 allows users to create their own courses from scratch or import them from a third-party such as Go1 or LinkedIn Learning, which LMS365 announced a partnership with just last month.

Embedding a learning management system directly into workers’ core everyday tools is one of LMS365’s core selling points versus incumbents in the LMS space such as Workday, Eloomi or TalentLMS.

“LMS365 does not invent a technology problem, but meets the professionals where they are,” CEO Rasmus Holst explained to TechCrunch.

Under the hood

With the LMS365 course creator and learning module builder, users can drag-and-drop elements from existing content housed in Microsoft Office software, including PowerPoint, Word, and Stream. Or they can import pre-existing courses or quizzes constructed elsewhere and stored in the SCORM or AICC format, which can be useful for general industry-specific training for cybersecurity, or regulatory compliance. 

From the end-user perspective, all this means that new hires can be onboarded directly through Microsoft Teams, or receive ongoing training in all manner of disciplines from customer service to managing mental health.

5. General Atlantic invests another $100 million in PhonePe

General Atlantic has poured another $100 million into PhonePe, three months after leading a $350 million investment in the Indian fintech startup that has so far raised $750 million in an ongoing financing round.

Walmart-backed PhonePe disclosed the investment in a filing with the local regulator on Wednesday. A company spokesperson confirmed the investment. The ongoing round values the Bengaluru-headquartered startup at $12 billion. PhonePe is eyeing to raise as much as another $250 million in the ongoing round.

At a $12 billion valuation, PhonePe is India’s most valuable fintech startup. It competes with Google Pay and Paytm, the latter of which is currently valued at nearly $5 billion.

PhonePe, which completed a full separation from the e-commerce giant Flipkart last year, dominates transactions on UPI, a network built by a coalition of retail banks in India. UPI is the most popular way Indians transact online — it processes more than 8 billion transactions a month. Google’s GPay and PhonePe currently process more than 80% of all UPI transactions.

Seven-year-old PhonePe commands about 50% of all these transactions by value and it’s not slowing down. The company said earlier this year that it was on pace to process transactions worth $1 trillion annually.

Walmart, which also owns a majority share in e-commerce giant Flipkart, said earlier this year that the separation of Flipkart and PhonePe was “very analogous to eBay and PayPal, where each of them operating independently can pursue their own initiatives.”

General Atlantic, which has backed a number of Indian firms including Jio, BillDesk, Byju’s, Amagi, NoBroker and Unacademy over the past decade, plans to deploy at least $2 billion to $3 billion in India over the next five to seven years, according to people familiar with the New York-headquartered growth equity investor’s plans.

6. Wellington Management Raises $476 Million for Second Biotech Venture Fund

Boston-based Wellington, which manages more than $1.1 trillion, has secured $476 million for its second biotech venture fund, topping its first such pool, which closed at $394 million in 2019. Boston-based money manager aims to be a larger player in life-sciences venture capital.

Wellington Management ("Wellington" or the "Firm"), one of the world’s largest independent investment management firms, today announced the close of Wellington Biomedical Innovation II ("Biomed" or "Biomed II"), with approximately US$476 million in commitments. Led by Wellington’s dedicated private market biotech investing team, the Fund invests in private biotech companies that are developing the next generation of treatments that seek to improve the standard of care in medicine.

In addition to the lifesaving potential of these innovations, global demand for high-impact drugs and therapies is spurred by demographic trends such as the rapidly aging population of developed markets, economic growth, and demand among emerging markets for modern biopharma and medical devices. The Biomed investment team is led by experienced biotech investors I-Hung Shih, PhD and Nilesh Kumar, Ph.D. and includes Irina Margine, Ph.D. and Ross Castillo, MD. The team leverages the Wellington platform, collaborating closely with Wellington’s global healthcare team, which manages more than $67 billion in assets. In 2019, Biomed I closed at approximately $394 million in commitments.

I-Hung Shih, Co-Head, of Biotech Private Investments at Wellington Management, said, "We think there is an accelerated pace of innovation underway within biotech and life sciences companies across developed and emerging markets. The rise of new and changing global demographics coupled with breakthrough drugs, therapies and preventative care are driving secular long-term growth. We see an exciting set of investment opportunities with the potential to become industry leaders capable of transforming the standard of medicine as we know it."

Nilesh Kumar, Co-Head, of Biotech Private Investments at Wellington Management, added, "As part of one of the world’s largest healthcare investors, we have exposure to some of the most innovative companies in life sciences. We share a wide perspective on the cycle of innovation and drug development in biotech and biopharma when evaluating our opportunity set. Further, our private and public platforms aim to foster long-term relationships with our portfolio companies as we seek to generate value for both our companies and investors."

7. LabCentral 2022 Impact Report: Companies Raised $6.05 Billion in Funding Including 21% of All Early-Stage Funding Nationwide, Granted 56 Patents and Dosed 4,504 Participants in 37 Clinical Trials

CAMBRIDGE, Mass., April 11, 2023 /PRNewswire/ -- LabCentral, the first-of-its-kind network of shared laboratory spaces designed as launchpads for high-potential biotech startups, today announced its annual Impact Report detailing the influence of its 81 resident and 166 alumni companies on the local and national life sciences and biotech industry. The impact was measured in terms of funding, patents, clinical trials, job creation as well as LabCentral's expanded facilities and programs from the past year.

Key statistics from the LabCentral 2022 Impact Report include:

• Funding – LabCentral companies have raised a total of $22.95 billion in funding since 2013. In 2022 alone, LabCentral resident and alumni companies secured $6.05 billion in total funding and acquisition proceeds from all sources. Underscoring the quality of their scientific research, LabCentral companies secured 35% of all early-stage (seed and Series A) bio-pharma financing for the state of Massachusetts and represent 21% of all early-stage financing nationwide.
• Patents – Highlighting the success of accelerating new research into intellectual property, LabCentral resident and alumni companies were granted 56 patents in 2022 – a full 35% of the total number of patents (160) residents have been granted since 2013.
• Clinical Research – Resident and alumni companies have started 116 clinical trials since 2013, including 37 last year researching unique indications with various technologies. As part of those trials over the past 10 years, 11,421 participants have been dosed.
• Economic Development – Since its opening in 2013, LabCentral has supported 247 early-stage companies that have added 5,892 new jobs to the economy. In 2022, the companies added 1,284 new jobs.

Additionally, LabCentral significantly expanded its lab capacity in 2022 and started to see impactful results from its LabCentral Ignite initiative that is designed to expand and diversify the biotech and life sciences industry:

• LabCentral 238 & The Blavatnik Harvard Life Lab Longwood – To continue meeting the growing demand of biotech startups through different phases of their growth, LabCentral added 60,000 square feet of operational lab space with the opening of the second half of LabCentral 238 as well as the The Blavatnik Harvard Life Lab Longwood – expanding capacity for companies needing scale-up biomanufacturing as well as early-stage bench science opportunities.
• LabCentral Ignite – The bold initiative to expand diversity, equity and inclusion in biotech and life sciences expanded its platform, partners and programming and began to show real impact in the market. The inaugural winners of LabCentral Ignite Golden Tickets both closed significant rounds of funding in 2022, including a $10 million Series A for Nanopath and a $6 million seed round for Harmony Baby Nutrition. In addition, the Career Forge training program graduated two cohorts with more than 50% of them already in jobs earning an average salary of $75,000. 

8. Vilnius-based SME Finance extends funding facility to €240 million with fresh backing from Fasanara

SME Finance has secured a new €100 million credit facility to fuel its mission of reinventing financing for Europe’s SMEs. The Vilnius-based team now takes one step closer to its 2023 goal of establishing an EU-wide fintech marketplace. 

Small and Medium-sized enterprises (SMEs) are the backbone of Europe’s economy, accounting for approximately 99% of all businesses and making up 50-75% of the continent’s GDP.

Whilst these businesses are a pillar of society, they are under increasing pressure and surmounting challenges as economic uncertainty and societal instability hit. Legacy banking institutions have continued to follow a more conventional approach to financing, more suited to large enterprises. As a result, SMEs are suffering from a lack of banking and finance partners who are flexible and cater specifically to the rapidly changing landscape of SME reality: disrupted supply chains, warfare, shifting labour markets, a down economy, and rising costs.

SME Finance is offering a solution. The Vilnius-based fintech has now secured a new €100 million credit line from Fasanara Capital. It brings the total commitments from Fasanara to €240 million.

Mindaugas Mikalajūnas, CEO of SME Finance: “SMEs are a highly attractive credit market for major asset managers, like Fasanara, and we are excited to deepen our partnership. Our mission is to be the number one banking and finance partner for SMEs in Europe, and this extension of our credit facility will help us greatly in making finance accessible for every business. We believe strongly that this sector is one of the cornerstones of our economy, and there is a lot of demand right now for finance partners that speak the language of small- and medium-sized business.”

Founded in 2016, the fintech has already reached more than €1.3 billion in loan volume and invoice financing with over 2,500 growing businesses, using a digital-first approach that uses machine learning and open banking.

The Lithuanian company leverages AI, open banking and automation in its loan decision-making, financing, and customer onboarding. This shortens the process, simplifies it, and makes it more accessible to SMEs.

The aim is to become an EU-wide fintech marketplace where any business can access financial services ranging from traditional business loans to revenue-based financing to embedded finance solutions.

With offices in three Baltic countries plus Finland, in 2023 the company will expand its presence into The Netherlands and Spain, with further European offices planned.

9. Quantica secures €14 million to fuel the growth of 3D printing technology

Berlin-based Quantica has closed €14 million for its additive manufacturing tech. The startup, which has teams in Berlin, Barcelona and Cambridge now plans to ramp up commercialization plans. 

Additive manufacturing is a fast-growing tech vertical. It’s an area that has the potential to impact the future of how societies develop, offering more sustainable and efficient ways to manufacture, recycle and more.

Founded in Berlin, Quantica specializes in the design and development of its flagship NovoJet? advanced, multi-material 3D printing technology. The startup has just closed €14 million in a Series A round. The investment round was spearheaded by a family office with ties to the dental industry, and saw participation from existing venture capital firms by Founders and Scale Capital, as well as key employees and management.

Claus Moseholm, CEO of Quantica: “Our team has been dedicated to developing this groundbreaking technology for several years now, and this funding represents a significant milestone in our journey to change how things are manufactured. We are excited to take our technology to the next level and empower designers, developers, and manufacturers to create better, faster, and more efficiently. With this investment, we are confident that we can continue to drive innovation and growth.”

Quantica’s innovative technology is based on an ultra-high viscosity, multi-material printhead technology called NovoJet. The tech opens up a novel application space and is able to combine multiple high-performance materials into a single object for a richer appearance or function. It also takes away the need for extensive post-processing which allows for the creation of functional, high-performance parts and products.

The firm plans to ship its first 3D printer by the end of 2023. The first product will be sold as an open application development platform, to allow customers to develop their own industrial-grade, multi-material fluids and applications. So far, the company has already captured the interest of numerous research institutes, universities, and industrial R&D teams – the dental industry, for example, is showing interest.

This latest investment will be used to industrialize and manufacture the first products as well as bolster marketing efforts when bringing the products to market. Funding will also allow further investment in human capital, bringing top talent to both technical and market functions.

10. Danish startup Teton.ai raises €4.8 million to support nurses with optimized workflows

Healthtech startup Teton.ai is on a mission to overcome a major healthcare crisis: the overwhelming burden resting on nurses’ shoulders. The Danish team has just scored about €4.8 million ($5.3 million) to scale its AI-based solution. 

Nursing shortages are hitting countries right around the world, with up to 13 million vacancies predicted by 2030. Last year, the International College of Nurses called the lack of available nurses in the workforce a new “global health crisis”, and the situation is spiraling.

While nurses deal with short-staffed wards, they are faced with demanding shifts, surmounting patients care, and a growing amount of admin work to keep up with.

Through digital transformation, new tech-based solutions are being developed to help remove some of the burdens. Healthtech is a rapidly growing market and startups are certainly leading the way when it comes to impactful innovation in this space.

Aiming to tap into this market, Teton.ai acts as an AI companion for nurses to help monitor patients and optimise workflows. The Danish healthtech has just secured €4.8 million ($5.3 million) in a new funding round led by Plural. Strategic angels including Finn Murphy, formerly at Frontline Ventures, also joined Plural in investing in Teton.

Founded in 2020 by Mikkel Wad Thorsen (CEO) and Esben Klint Thorius (CTO), Teton.ai was born from a realisation that the healthcare technology revolution was overlooking the needs and workflows of key caregivers including nurses and care assistants.

Mikkel Wad Thorsen, co-founder and CEO of Teton.ai: “Countries across the world are facing problems with staff shortages in both hospitals and the wider care sector. This problem is only getting bigger with pressures mounting to provide high-quality care to a growing ageing population. Our AI solution, which has privacy integrated into the design, gives nurses more time to take care of patients and residents, without burdening their workload. We’re excited about the impact this will have globally and look forward to working with the Plural team to help us scale up and expand in the next few years.”

Its AI assistant gives an overview of what is happening on the ward, giving nurses and caregivers an extra set of eyes. It alerts nurses when care is needed, is capable of monitoring sleep and gives fall warnings. Smart cameras are installed onwards which can scan the room for updates and patient activity.

The system was trained using hospital data sets as well as feedback from nurses to provide the right support for clinicians facing high volumes of work.

The cameras use computer vision to understand the patient’s status and communicate relevant information back to staff. This will include sleep tracking to minimise having to wake a patient, bed sore or ulcer warnings and mobilisation reminders to move patients regularly, fall warnings with alerts for high-risk situations and regular documentation of activities to reduce the administrative pressure on nurses. To ensure patient confidentiality and privacy, analysis takes place within a closed system and no personal data is uploaded to a central server.

The startup aims to use technology to eliminate unnecessary and sometimes false alarms by providing real-time alerts for nurses when a patient’s behaviour requires direct or critical care.

In Denmark, Teton.ai is already working with hospitals including Nyk?bing Falster Hospital and N?stved Hospital. It’s proving a particularly useful piece of the night shift, where there are often only one or two staff present on the ward and more pressure on a solo carer. In early trials of the technology at hospitals and care homes across Denmark, Teton’s nurse assistant has helped to reduce the night shift workload by 25% giving nurses more control and more time for their patients.

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