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| Here's a look at today's Startups briefing. - 🦄 AI startup Perplexity set to enter the unicorn club with new funding round
- 📈 Scale VP observed a slight uptick in ARR growth rate in startups
- 🇳🇱 VC funding for Dutch chip startups surged for the fifth consecutive year
Thank you. Karan
p/karan-chafekar | |
| 1 | | AI startup Perplexity is in talks with investors to raise an undisclosed sum through a new funding round. The funding round is set to double the firm's valuation to $1B. Y Combinator's former partner, Daniel Gross, is reportedly leading the new funding round through his new investment fund. More: - Perplexity leverages AI to answer search queries raised by users instead of giving website links.
- The firm recently crossed the $10M mark in annual recurring revenue, sources informed the Wall Street Journal.
- About 50 million users used Perplexity's mobile and desktop app in February, up 8.6%, per Similarweb.
- News about the new fundraising comes just two months after it raised a $74M Series B funding round at a $520M valuation from Amazon.com founder Jeff Bezos and Institutional Venture Partners.
Zoom out: - Perplexity competitor Neeva shut down last year after failing to gain enough traction with users.
- Several competitors have tried and failed to make a dent in Google's search engine market dominance.
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| 2 | | Early-stage enterprise startup investor Scale VP observed a slight uptick in ARR and GAAP revenue in startups despite persistent market challenges. 
What happened: This positive trend is attributed to startups' efforts to stabilize churn rates, upsell additional products to existing customers, and increase operational efficiency. What the numbers say: The median churn rate hit a three-year high in Q2 2023. The churn rate improved by 3% in Q4 2023, in line with the long-term median of 13%. Startups started focusing on upselling additional products to existing customers due to a dearth of new customers. As a result, new customers contributed only 50% more to the company's overall growth than existing customers. With market conditions remaining volatile, companies also lowered the burn rates to the lowest level seen in the last few years. As a result of all the changes, companies now have higher operational efficiency than before. Where to see the impact: After learning from past mistakes, startups are now projecting modest growth in 2024. Tech startups are projecting a median growth of 33% in 2024. The growth rate expected is higher than 2023's growth rate of 20%. | | | |
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| 3 | | VCs invested €216M ($234M) in Dutch semiconductor startups, per a new report published by Techleap. Funding has surged for the fifth consecutive year in 2023. More: - The Netherlands is home to chip equipment maker ASML, chip manufacturer NXP, and equipment firms ASM International and BE Semiconductor.
- Despite this, Dutch firms have traditionally had difficulty scaling up and getting late-stage funding.
- Additionally, funding negotiations tend to take longer in the Netherlands compared to neighboring countries like Britain, Germany, and France.
- Dutch firms are also likely to be acquired before they reach unicorn status.
Zoom out: - The Economic Affairs Ministry urged the nation to bring more pension fund money into VC deals.
- The Ministry recommends offering tax breaks to VC and granting employees greater stock ownership.
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| 4 | | Cybersecurity giant CrowdStrike is set to acquire cloud data security solutions Flow Security. Sources pegged the deal value to be between $200M and $220M. This is CrowdStrike's fourth acquisition in Israel. More: - Flow Security improves an organization's data security posture by mapping and detecting data-related risks.
- The Israeli startup has raised $13M in total funding to date, the last of which came through a $10M seed round in August 2022 led by Amiti, with additional support from GFC and Amdocs Ventures.
- "With the acquisition of Flow Security, we're expanding our cloud leadership by protecting data in all states as it flows through the cloud, and are redefining the future of data protection by securing data from code to application, to device and cloud," said George Kurtz, co-founder and CEO of CrowdStrike.
- CrowdStrike will rope in all 30 of Flow's employees into its growing center in Israel.
Zoom out: - Six months ago, CrowdStrike acquired Israeli startup Bionic for $350M.
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| 5 | | HR startup Deel is acquiring payroll and HR software company PaySpace for an undisclosed sum. The acquisition, Deel's largest yet to date, comes one week after its acquisition of AI-based people development firm Zavvy. With the PaySpace acquisition, Deel will be able to strengthen its foothold in Africa. More: - PaySpace has 14,000 customers in 44 countries across Europe, Latin America, the Middle East, and Africa.
- Heineken, Coca-Cola, and Puma Sports are a few of its notable clients.
- The African startup has primarily run as a bootstrapped business, only getting an undisclosed financing round from payments solutions firm Netcash last year.
Zoom out: - Earlier this week, Deel disclosed that it had crossed $500M in annual recurring revenue, up from $290M at the end of December 2022.
- Deel, last valued at $12B, claims it has been EBITDA positive since September 2022 and has $600M left in the bank.
- The HR software provider can now provide full-stack HR services across six continents.
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| 6 | | Former Binance executives Gleb Kostarev and Vladimir Smerkis launched a new crypto exchange startup called Blum. The platform is set to launch later this month and will offer crypto trading services directly from third-party crypto wallets. More: - Blum participated in Binance's VC arm's accelerator program this month.
- The startup is initially targeting customers across Asia and plans to get a virtual asset service provider license in Georgia.
- The duo is in talks with investors to raise a funding round from external investors and expects to close the round later this month.
Zoom out: - Kostarev was Binance's regional head of Eastern Europe, Commonwealth of Independent States (CIS), Turkey, Australia, and New Zealand, while Smerkis was the general manager for the CIS region.
- Their departures were part of a string of senior leadership exits from Binance last year, as then-CEO Changpeng Zhao admitted to accusations of money laundering and sanctions violations in November.
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- Canadian AI chip startup Taalas emerged from stealth with $50M capital raised across two funding rounds led by Quiet Capital and Pierre Lamond. Ljubisa Bajic, the founder of Tenstorrent, founded Taalas along with Tenstorrent engineers Drago Ignjatovic and Lejla Bajic.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Aaron Crutchfield | |
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