Startups Weekly: Contrarian Bets, Funding Rounds, and VC Insights

Riley King

Riley King

December 13, 2024 · 3 min read
Startups Weekly: Contrarian Bets, Funding Rounds, and VC Insights

This week in startup news, we've seen a mix of contrarian bets, funding rounds from around the world, new VC funds, and a warning from a seasoned investor. From desalination startups to AI-enabled drug discovery, the startup ecosystem is buzzing with innovative ideas and investments.

One of the most interesting startup stories this week is the emergence of a new wave of desalination startups working on deep-sea reverse osmosis technology. This technology has the potential to produce water using 30% to 50% less energy than onshore reverse osmosis, making it a promising solution for water-scarce regions. Another notable development is the rise of local accelerators in Africa, backed by African YC alumni, which are filling the gap left by Y Combinator's reduced focus on developing markets.

In the AI space, WaveForms AI, a new audio large language model company, is working on making AI more personable with its own foundational models. The company's founder, Alexis Conneau, is determined to avoid creating a dystopian future, unlike the company in the movie "Her." Meanwhile, WPAI, a startup that builds AI solutions for WordPress, has been acquired by Automattic, and its team will lead WordPress' AI efforts.

The funding landscape has been active, with several notable rounds. Archer Aviation, a startup building vertical takeoff and landing aircraft, raised $430 million in fresh equity funding, bringing its total financing to nearly $2 billion. Berlin-based startup Upvest, which makes a stock-trading API, raised a €100 million Series C round led by Hedosophia. Other notable funding rounds include Swiss robotics company Anybotics, Canadian threat exposure management startup Flare, French AI-enabled drug discovery startup Aqemia, and Argentine customer interaction data startup Numia.

In the VC space, the OpenAI Startup Fund raised over $44 million for its fifth special purpose vehicle, which will be used to support existing portfolio companies and make new investments. Dimension Capital raised an oversubscribed $500 million fund to invest at the intersection of tech and life sciences. However, not all VC funds are performing well, with Tiger's 15th fund experiencing paper losses of over 15%.

In an interview, Lead Edge Capital founder and managing partner Mitchell Green expressed his concerns about the current startup landscape. He believes that there is "too much money chasing too few companies that are overvalued," leading his firm to steer away from typical venture capital deals and toward buyout-like "control deals" more commonly associated with private equity. Green warned that investing in companies at 100 times or 200 times or 500 times revenue is a recipe for disaster.

As the startup ecosystem continues to evolve, it's clear that there are opportunities for innovation and growth, but also risks and challenges. With contrarian bets, funding rounds, and VC insights, this week's startup news offers a glimpse into the complexities of the industry and the need for a balanced perspective.

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