In a week marked by economic uncertainty, startups in various sectors have managed to secure significant funding rounds, defying the gloomy outlook. Security, artificial intelligence (AI), and fintech startups, in particular, have seen a surge in investments, with European defense and security tech startups reaching a record 10% of all venture capital (VC) funding in the region.

According to recent data, AI startups raised a staggering $110 billion in 2024, a 62% increase compared to 2023, while overall startup funding was down 12% year on year. This countercyclical trend suggests that investors are willing to bet on startups that offer innovative solutions in critical areas like security and AI.

In Europe, defense, security, and resilience tech startups raised a record $5.2 billion last year, accounting for 10% of all VC funding in the region. French champion Mistral AI, for instance, made headlines during the Paris AI Summit, with its AI assistant Le Chat becoming the most downloaded iOS app in France.

The security sector has also seen significant merger and acquisition (M&A) activity, with security compliance firm Data acquiring software security review startup SafeBase for $250 million. Additionally, CyberArk, an identity security company, bought startup Zilla Security for $165 million in cash, with an additional $10 million contingent on certain milestones.

Other notable funding rounds include Zeta, a Bengaluru-based provider of banking software, which raised $50 million from a strategic investor, valuing the company at $2 billion. Google-backed Boston quantum startup QuEra secured $230 million in debt via a convertible note, at an undisclosed valuation that its CEO described as "a very substantial increase" compared to its previous round.

Health tech startup Harrison.ai raised a $112 million Series C round for its AI-enabled medical diagnostic software, Annalise.ai, which focuses on radiology, and Franklin.ai, which focuses on pathology. Meanwhile, Carbon removal startup Chestnut Carbon closed a $160 million Series B round of financing to turn old farms into forests.

Founders Fund, a prominent venture capital firm, is also on track to close another $3 billion fund, according to sources. This will be the firm's third growth fund, further solidifying its position as a key player in the startup ecosystem.

In an interview with Mary Ann Azevedo, Sheel Mohnot, co-founder and general partner of Better Tomorrow Ventures, expressed his bullish outlook on AI and fintech. "I'm excited about a lot of the stuff that we always believed in, which is 'the everything is fintech' story, which persists today," he said.

As the startup landscape continues to evolve, one thing is clear: despite economic uncertainty, innovative startups in critical sectors like security, AI, and fintech are still managing to attract significant investments. This trend is likely to continue, with startups playing an increasingly important role in shaping the future of various industries.