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| Here's a look at today's Startups briefing. - 🕵🏻 FTC is investigating tech giants' relations with AI startups.
- 🚀 Middle market companies reported 12.4% revenue growth in 2023 despite fears of recession.
- 👥 German HR tech startup Personio laid off 100 employees.
We have also rounded up the top early-stage funding rounds of this week. Thank you. Karan
p/karan-chafekar | |
| 1 | | The Federal Trade Commission sent subpoenas to Alphabet, Amazon, and Microsoft to analyze the tech giants' relationship with AI startups they have backed and its impact on the overall competition in the tech industry. FTC Chair Lina Khan said, "Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition." More: - The three companies have 45 days to respond to the FTC inquiry.
- In an opinion column published in The New York Times last year, Khan warned large incumbent technology firms might be using their AI investments to maintain their market dominance.
- On the other hand, AI startups depend heavily on tech giants for their financing and infrastructure needs, creating a complex interdependent relationship.
- Last year, Microsoft invested about $13B in ChatGPT maker OpenAI, taking a 49% stake in the AI startup.
- Microsoft's president, Brad Smith, characterized the OpenAI investment as a mutually beneficial partnership that fosters innovation while preserving the independence of both organizations.
- Since the investment, Microsoft started incorporating AI into its Bing search engine, Windows, and Office products.
- Amazon and Alphabet invested $4B and $2B in Claude chatbot maker Anthropic, respectively.
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| 2 | | VCs deployed $670M in early-stage North American startups this week between Jan. 20 and Jan. 26, per Crunchbase data. AI startups raked in 25% of the funding this week. Healthcare, battery, and biotech sector startups nabbed 12%, 11%, and 11% of the financing, respectively. 
Here are the top five largest rounds announced this week: - AI startup ElevenLabs entered the unicorn club after raising a $80M Series B funding round. The firm was valued at $1.1B at the current round, which marks an 11x jump over its previous valuation of $100M from 2023. Andreessen Horowitz led the current round with additional support from GitHub CEO Nat Friedman, entrepreneur Daniel Gross, Smash Capital, SV Angel, and Sequoia Capital.
- EV battery maker Sion Power secured $75M in Series A funding led by LG Energy Solution. The round was supported by Euclidean Capital and Hillspire LLC.
- Commercial orbital imagery startup Albedo closed its Series A-1 funding round at $35M. The up round was led by Standard Investments and supported by Booz Allen Ventures, Cubit Capital, Y Combinator, Initialized Capital, Republic Capital, and others.
- Data quality monitoring startup Anomalo closed its Series B funding round at $33M. SignalFire led the round, joined by Databrick's VC arm, Norwest Venture Partners, Two Sigma Ventures, and Foundation Capital.
- Authentication solutions startup Clerk announced a Series B funding of $30M. CRV led the round, with additional support from Andreessen Horowitz, Stripe, and Madrona.
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| 3 | | U.S. middle market companies reported a 12.4% revenue growth in 2023, per an Ohio State University report that surveyed companies with $10M to $1B annual revenues. The revenue growth was the highest recorded since the Great Recession and came amidst growing recessionary fears, labor shortages, and heightened interest rates in 2023. In comparison, revenue growth for S&P companies stayed flat at 0.5% in 2023. More: - Seven out of 10 business owners participating in the survey expressed optimism about the global and U.S. economies.
- In 2023, 77% of middle-market business managers reported "high levels of performance improvement."
- Respondents reported a 9.6% staff growth in 2023.
- Last year, about one in three companies surveyed reported using or testing AI tools.
- OSU's National Center for Middle Market's managing director, Doug Farren, said, "These companies demonstrate a willingness to invest in expansion through new products and services or entering new markets, and are particularly curious about the benefits as well as risks of AI in their business."
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| 4 | | HR tech startup Personio laid off 100 employees from its product & technology (PTech) department. The layoffs reduced its 1,800 employee count by 5%. The German unicorn startup insists the layoffs are not a part of its cost-cutting measures. Instead, the decision stemmed from its strategy to increase specialist skills, functional depth, and experience within the business division. More: - Chief product and technology officer Maria Angelidou-Smith justified the layoffs as "crucial to continuing our strong position in the market and delivering on our exciting product roadmap."
- Angelidou-Smith confirmed that impacted employees will receive "generous" severance packages along with job support and career coaching.
- Since its founding in 2015, Personio has raised $725M in total VC funding, the last of which came in the form of a $470M Series E round led by Greenoaks Capital, which valued the company at $8.5B.
- Other notable investors that have supported the firm include Northzone, Accel, Index Ventures, Global Capital Partners, and Lightspeed Venture Partners.
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| 5 | | Genentech partnered with biotech startup GenEdit to resolve delivery challenges in new genetic treatments. The duo will work closely to develop nanoparticles used to develop nucleic-acid therapies to treat autoimmune diseases. The drugmaker will give GenEdit an upfront payment of $15M. GenEdit stands to make as much as $629M from milestone-based payments and royalties on sales of drugs. More: - GenEdit's co-founder and CEO Kunwoo Lee believes that while several industry leaders are working on exciting applications for mRNA, gene editing, and other genetic therapies, they are still struggling to deliver the treatments to the right locations in the body.
- Included among the companies studying new delivery mechanisms is vaccine maker Moderna, which is developing proprietary lipid nanoparticles that can deliver the drugs to various cell types.
- Instead of conventional delivery mechanisms such as lipid nanoparticles, GenEdit uses chemically distinct polymers, as each has unique properties that can target various tissues and cells.
- Crunchbase data shows that the San Francisco, Calif.-based startup has raised a total of $67.7M from Eli Lilly, DCVC Bio, Sequoia Capital, Qiming Venture Partners, and others.
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| 6 | | Krutim, founded by ride-hailing platform Ola's founder Bhavish Agarwal, claims to be India's first unicorn AI startup. The startup also claims to be the fastest to become a unicorn. Krutim has raised $50M in fresh funding led by Matrix Partners India. More: - The fundraising comes just a month after it debuted a large language model.
- Krutrim, which means artificial in the Sanskrit language, is among the few startups developing LLMs in Indian languages.
- The startup is planning to launch a voice-enabled conversational AI assistance that understands and speaks multiple languages.
- Krutrim plans to launch its chatbot in beta version next month.
- In addition, the firm will develop data centers to create servers and supercomputers for the AI ecosystem.
- Indian AI startups are building indigenous AI solutions to reduce their dependence on technology from the U.S. or China.
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- Elon Musk's AI startup xAI is reportedly planning to raise $6B in funding, sources informed Investing.com. The company has already approached family offices in Hong Kong, sovereign wealth funds in the Middle East, and wealthy individuals across Japan and South Korea to raise the capital.
- Alphabet's Google inked a deal with Hugging Face to host the latter's AI software on the Google Cloud platform. With the move, more developers should be able to use Hugging Face's platform to build their own AI applications.
- Cerebras Systems, a chipmaking startup last valued at $4B in 2021, is gearing up for an IPO listing in the second half of this year. The startup is also in talks with investors to raise a private funding round before the listing.
- Package delivery company Veho laid off 65 employees, or 19% of its workforce to "improve efficiencies, accelerate our path towards profitability, and be able to invest more in areas that directly impact our clients' needs and our growth," the company told TechCrunch. The layoffs occurred despite witnessing a 90% revenue growth in 2023.
- OpenAI chairman Bret Taylor is close to finalizing an $85M funding round led by Sequoia Capital for his enterprise-focused AI startup Sierra. The firm is poised to achieve unicorn status at the round.
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 | Analyst | | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | This newsletter was edited by Vibha Chapparike | |
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