Startup Monday: Latest tech trends & news happening in the global startup ecosystem (Issue 102- September 8)

Welcome to the Startup Monday, my weekly newsletter that recaps the week in the global startup ecosystem. To have this newsletter emailed to you, you can sign up here.

-Narine-

Top startup news to follow this week:

1. Exclusive: Cendana Capital closes on $470M more to back seed-stage fund managers

Michael Kim of Cendana Capital is often a first call for emerging seed-stage fund managers. Cendana has invested in many VC teams that have gone on to enjoy great success – like Forerunner Ventures, K9 Ventures, and IA Ventures. Thanks to its own backers, Cendana keeps replenishing its supply of investing capital, too.

Indeed, Kim tells us that 13-year-old Cendana just closed on $470 million across several new funds that bring the firm’s total assets under management to roughly $2 billion. The biggest pool, $340 million, will be funneled into U.S.-based investors. Another $67 million will flow to managers outside the United States. Cendana also has $30 million in capital commitments to invest directly in startups and $30 million from the University of Texas, whose positions will reflect that bigger, $340 million fund.

We talked with Kim earlier today about the current market, where exits are few and far between. We also talked about seed-stage managers who happen also to run companies and are, in some cases, currently preoccupied with making sure those companies survive this topsy-turvy market. Kim called us from his home in the Bay Area ahead of a trip next week to Singapore, where many institutional investors are expected to gather for a summit hosted by the Milken Institute, as well as a Formula 1 race.

2. 500 Global closes $143M fund for Southeast Asia startups

500 Global, the venture firm and seed accelerator, has closed $143 million in financing for what it claims is its largest Southeast Asia early-stage fund to date.

The new tranche, 500 Southeast Asia III, or “500 SEA III” for short, counts a sovereign wealth fund, public and private pension funds, a university endowment and 500 Global portfolio companies valued at over $1 billion among its cohort of limited partners. Originally targeted for $75 million, 500 SEA III is 500 Global’s third Southeast Asia-focused early-stage fund.

To clarify, 500 SEA III closed at $100 million. The remaining funds — $43 million — were closed for the growth vehicle, not early stage.

500 Global says that 500 SEA III will primarily invest in businesses and “AI-enabled technologies” that advance rural digitalization, sustainable cities, human and machine productivity, healthcare, food security and financial inclusivity. 500 SEA III aims to back 100 pre-seed, seed and Series A startups in total, providing first checks between $250,000 and $500,000 across Malaysia, the Philippines, Vietnam, Thailand, Singapore and Indonesia.

Southeast Asia is a hot region for startups. It’s expected to be one of the leading sources of growth for the global economy over the next few years, driven by increased urbanization, trade, diversifying supply chains, real estate and pushes for sustainability.

VCs made 393 investments in Southeast Asia startups in the first half of 2021, according to Cento Ventures. And startup funding in the region could exceed $14 billion by 2023, per a Golden Gate Ventures report.

3. AI reading coach startup Ello raises $15M to bolster child literacy

Ello aims to eradicate childhood illiteracy by leveraging artificial intelligence and child speech recognition technology. The startup announced today that it secured $15 million in Series A financing to help it do so, and the funding will go toward product development and expanding access to consumers.

“Ello is one of those great companies,” Coddy Johnson, partner at lead investor Goodwater Capital told TechCrunch. “We were drawn to the proprietary and radical leaps that the Ello team has made — and continues to make — in AI technology to enable 1:1 tutoring for kids, which research has long shown to be the most effective learning approach.”

Ello is a subscription-based service aimed at kids from kindergarten through Grade 3 that delivers five books every month for $24.99. Parents download the Ello app, which determines the child’s reading level through a series of questions. It also asks about their interests — including animals, arts & crafts, sports and science. Reading experts then hand-select books for each child. Additional kids can be added to a family account at $12.49 per month per child. While it’s exclusively a tablet app for now, the startup is working on bringing it to smartphones, too.

Using its proprietary technology, Ello listens to the child read out loud and analyzes their speech to correct mispronunciations and missed words. Like a real teacher, the AI reading coach waits until the child has finished reading the page before using phonics-based strategies to teach them critical reading skills. Kids can also tap on the question mark icon if they want extra help.

“Ello is the patient reading companion that every parent wishes they could be — even in those moments of frustration,” co-founder and Chief Experience Officer Dr. Elizabeth Adams told us. Adams is a clinical psychologist who specializes in child development and child behavior.

The app also features gamification mechanics, so that as the child progresses each month, the app collects points, which can be exchanged for toys and prizes.

4. Imbue raises $200M to build AI models that can ‘robustly reason’

Imbue, the AI research lab formerly known as Generally Intelligent, has raised $200 million in a Series B funding round that values the company at over $1 billion. Among those participating are the Astera Institute, Nvidia, Cruise CEO Kyle Vogt and Notion co-founder Simon Last.

The new tranche takes Imbue’s total raised to $220 million, placing it among the better-funded AI startups in recent months. It’s only slightly behind AI21 Labs ($283 million), the Tel Aviv-based firm developing a range of text-generating AI tools, as well as generative AI vendors like Cohere ($445 million) and Adept ($415 million).

“This latest funding will accelerate our development of AI systems that can reason and code, so they can help us accomplish larger goals in the world,” Imbue wrote in a blog post published this morning. “Our goal remains the same: to build practical AI agents that can accomplish larger goals and safely work for us in the real world.”

Imbue launched out of stealth last October with an ambitious goal: to research the fundamentals of human intelligence that machines currently lack. Its plan, as presented to TechCrunch back then, was to turn “fundamentals” into an array of tasks to be solved, and to design different AI models and test their ability to learn to solve these tasks in complex 3D worlds built by the Imbue team.

The company’s approach seems to have shifted somewhat since then. Rather than unleash AI on 3D worlds, Imbue says that it’s developing models it finds “internally useful” to start, including models that can code (à la GitHub Copilot and Amazon CodeWhisperer).

5. Pantera Capital Leads $16.5M Investment in ZK-Powered DEX Brine Fi at $100M Valuation

The investment comes at a time when crypto venture capital has mostly dried up and trading volumes have plunged.

Decentralized exchange (DEX) Brine Fi has raised $16.5 million at a valuation of $100 million in an investment round led by Pantera Capital, the company said Thursday in a press release.

Elevation Capital, StarkWare Ltd, Spartan Group, Goodwater Capital, Upsparks Ventures, Protofund Ventures were among those also participating in the fundraising round.

The fresh funding is notable given that venture capital for digital asset firms has mostly dried up, with cryptocurrency and blockchain startups receiving 76% less investment in Q2 2023 than the same period one year earlier, Crunchbase reported in July.

Trading volumes have also plummeted to multi-year lows during the summer as the crypto bear market has moved into the apathy stage thanks to a lack of catalysts to attract investors. After enjoying a brief increase in the spring this year, volumes on DEXs have since sharply dropped and averaged at just above $1 billion per day recently, according to DefiLlama data. Most of the trading volume is still concentrated on centralized platforms such as Binance and Coinbase, executing near $11 billion daily trading volume, data by The Block shows.

Brine Fi, powered by Ethereum scaling system StarkWare, is a non-custodial, decentralized orderbook that allows privacy for trading positions via so-called zero-knowledge proofs. Traders can thus place large orders without worrying about front-running or spooking others. The platform also boasts high-speed trade execution. It opened for traders in May, and recently executed $3 million - $4 million daily trading volume.

6. How Pitango VC Is Planning to Invest Its New $175M Health Tech Fund

Pitango Venture Capital, one of the largest venture capital firms in Israel, announced the first closing of a new $175 million healthcare technology fund. With the new fund, the firm plans to build a portfolio of approximately 15 new companies over a period of three to four years.

Pitango Venture Capital, one of the largest venture capital firms in Israel, announced on Wednesday the closing of a new $175 million healthcare fund. 

The fund, named Pitango HealthTech II, is a sequel to Pitango’s first healthcare-dedicated fund — which launched in 2019 and stopped making investments at the end of last year, though it continues to make follow-up investments in its portfolio companies. With Pitango HealthTech II, the firm plans to build a portfolio of approximately 15 new companies over a period of three to four years, Managing Partner Ittai Harel said in an interview.

The new fund is focused primarily on seed and Series A-stage startups, though it may make some investments in companies that are at Series B or commercial stages. 

“We have a broad healthcare view, and invest in digital health and tech-enabled healthcare service companies. Our major focus is the use and integration of AI in healthcare, which we see as only at its infancy. We invest in areas of convergence of data science and AI with life sciences — proteomics, genomics, immunology and such,” Harel explained.

He also said that Pitango is not shying away from medical devices, as the firm believes “innovation has declined in the area.” 

7. Compliance and risk management startup Certa raises $35M

Certa, a compliance, governance and risk management platform for enterprises, today announced that it raised $35 million in a Series B round co-led by Fin Capital and Vertex Ventures, with participation from Tru Arrow Partners, Point72 Ventures, BDMI, The Chainsmokers-backed Mantis VC and GOAT Capital.

The tranche brings Certa’s total capital raised to “just over” $50 million, according to founder and CEO Jag Lamba, who wouldn’t reveal the valuation — saying only that it was the “standard Series B valuation for a round of this size.”

“Every relationship with a third party introduces new risks to a business, and even one bad relationship can be catastrophic,” Lamba told TechCrunch in an email interview. “Risks range everywhere from data privacy and finance to climate, environmental and regulatory risk types … Certa’s vision is to make it easier for firms to work with third parties globally.”

Lamba, a Wharton alumnus who spent 10 years at McKinsey, says he was inspired to found Certa after running into issues with procurement teams working with new, unvetted third parties.

“As organizations expand their global footprints, they’re exposed to diverse compliance requirements and increased security risks,” Lamba said. “With disparate systems, data silos can become a major challenge.”

That certainly appears to be the case. According to MetricStream, 48% of organizations have difficulty tracking third-party compliance. Moreover, 58% of compliance teams report that gauging vendor responsiveness is their top challenge with third-party risk management.

8. Budapest-based EIT InnoEnergy secures €140 million private placement to boost impact on European unicorns

The European Institute of Innovation & Technology (EIT) recently announced a €140 million private placement of one its Knowledge and Innovation Communities (KICs). With its latest investment round, EIT InnoEnergy, created by the EIT in 2010, will boost growth for its portfolio companies which include 3 European unicorns, aiming to generate €110 billion in revenue by 2030.

The EIT, as Europe’s largest innovation ecosystem has pioneered a new, and to date well-proven innovation model, delivering tangible impact for Europe. Created in 2010 following a call for an EIT Knowledge and Innovation Community, EIT InnoEnergy was designed to accelerate Europe’s sustainable energy transition. Partners from the latest investment round include new and existing shareholders such as Societe Generale, Santander CIB, Renault Group, Stena Recycling, Siemens Financial Services, Schneider Electric, Capgemini, Volkswagen Group, ING, Koolen Industries, and Engie among others.

Diego Pavia, CEO of EIT InnoEnergy, said: “The objectives of the private placement have been delivered. New strategic players have joined InnoEnergy’s outstanding cap table, several shareholders have reinvested, and altogether we have secured sufficient fresh financial resources to double our ongoing impact. The accelerated energy transition in Europe and in the world, and an increased re-industrialization ambition in the western world are unique opportunities for InnoEnergy, its portfolio companies and our trusted ecosystem partners. We have geared up for the journey ahead. We are in a mission since 2010, and we continue delivering”.

According to EIT, the latest investment round, including top companies from industrial, financial, training and digital sectors, validates the sustainable application of its model. The EIT model facilitates public-private partnerships that generate significant returns on investments over a fifteen-year period. The EIT’s unique approach brings together research, academia and business in nine thematic areas to power innovation for a more sustainable Europe.

To date, EIT InnoEnergy has supported thousands of students and startups, launched more than 300 products to market and overseen its portfolio companies filing 370 plus patents while creating close to 40,000 jobs (directly and indirectly). In addition, the EIT Knowledge and Innovation Community has leveraged its network to coordinate strategic industrial value-chain alliances mandated by the European Commission in the fields of batteries, green hydrogen and solar photovoltaics. With EIT InnoEnergy’s growing sustainable investment portfolio, its supported innovations have the potential to save 2.1 gigatonnes of CO2 by 2030, and deliver 831TWh of clean energy over the same period, directly delivering on targets set by the European Green Deal.

9. Berlin-based Ostrom picks up extra €7.5 million in order to advance Europe’s green energy transition

After closing its €9.3 million Series A in December 2022, Ostrom has raised an additional €7.5 million in an investment round led by SE Ventures, a Silicon Valley-based venture fund backed by Schneider Electric. Existing investors Union Square Ventures, Adjacent, J12, and Übermorgen also participated in the financing, extending its Series A to €16.8 million and bringing the company’s total funding to over €21.5 million.

As one of the most active investors in the energy transition software stack, SE Ventures will help further accelerate Ostrom’s vision, which aims to reduce the friction of full home electrification and broader decarbonization through a uniquely positioned consumer-facing energy optimization experience. SE Ventures can drive unparalleled commercial acceleration for its portfolio companies and help navigate discussions for collaboration with Schneider Electric.

“With our healthy unit economics from our relentless focus on automation and efficiency, we were really yet to allocate any of our Series A funding. Our new partnership with SE Ventures is much more than about the capital. With so many potential synergies, it truly represents a fusion of our shared expertise and vision,  bolstering our ambition to redefine the energy market in Germany and Europe,” said Matthias Martensen, Co-Founder & CEO of Ostrom.

Founded in 2021, Ostrom will use the additional funding to further expand its product offerings — most notably in home storage and solar solutions. This also sets the stage for our virtual power plant (VPP) ambitions through asset steering in the near future, aiding demand-side grid load balancing.

“As SE Ventures expands its portfolio in Europe, we are thrilled to invest in Ostrom, the new leading green energy provider in Germany. We are impressed by the execution bias and data-driven acumen of the management team. Their variable and dynamic tariff contracts bring both transparency and cheaper green electricity to German households and we are looking forward to partnering with them,” commented Julien Cristiani, General Partner of SE Ventures.

10.Stockholm-based fintech Treyd secures €11.2 million in extension of Series A to achieve profitability

Treyd, a Stockholm-headquartered fintech that pays suppliers upfront on behalf of growing retail businesses, announced the completion of a €11.2 million extension of its March 2022 Series A funding. The extension funding brings total investment in Treyd to €23.3 million. The round is led by Swedish investment company Nineyards Equity, which also led Treyd’s Series A round, together with Antler, Zenith VC, and J12 Ventures. The new capital will be used to grow existing markets, invest in the core product offering, and work towards achieving profitability.

Peter Beckman, CEO and Co-Founder of Treyd, commented: “Since launching the “sell first, pay suppliers later” category three years ago, we’ve had an overwhelming response from the brand and retail community. Today, we’re helping the growth of hundreds of the most exciting fast-growing SMEs across the UK and Nordics. With this latest investment, we will be able to yet further improve our support of these and many more companies, by fundamentally upgrading our platform and product offering.”

Founded in 2019, Treyd is a fintech that helps growing businesses thrive by letting them sell products first and pay suppliers later. In the 15 months since Treyd’s initial €9.3 million Series A investment, the company has expanded into the UK and throughout the Nordics, increased its customers sixfold to 600+, increased its team size threefold to 60+, and financed $149 million (£117 million) of purchases for fast-growing SMEs in Northern Europe.

Stefan Nordahl, Founder and CEO of Nineyards Equity, said: “We’re impressed by what the team has achieved in this short period of time, especially in this market environment. Treyd’s ability to deliver cost-effective triple-digit growth while maintaining best-in-class default rates, is a proof point of their ability to navigate and execute, and also the true value-add Treyd brings to SMEs worldwide.”

Oscar S. Westergård, Partner at Antler, added: “Treyd is meeting real and urgent demand from brand and retail customers, and scaling rapidly in the Nordics and across Europe as a result. The success of Treyd demonstrates the continued growth potential for fintech companies to transform outdated financial practices and drive efficiencies and reduced costs for SMEs. Antler is proud to have backed Treyd founders Peter and Sameh from day zero. They are outstanding entrepreneurs, building world-class technology and a first-rate team to realise their vision.”