AI Founders Shuffle and Defense Tech Soars: A Tale of Two Industries

AI founders play musical chairs | TechCrunch

Welcome to Startups Weekly -- your weekly recap of everything you can't miss from the world of startups. Want it in your inbox every Friday? Sign up here. This week we are looking at AI founders who are playing musical chairs, a massive defense tech investment, and more issues at Techstars. Let's get into it. Founders and senior executives of the hottest AI startups have been leaping around this week. OpenAI shuffle: John Schulman, one of the co-founders of OpenAI, left the company for rival AI startup Anthropic, following in the footsteps of Ilya Sutskever, the former OpenAI chief scientist who left the company in May and launched a new startup a month later. In the meantime, OpenAI president and co-founder Greg Brockman announced this week that he decided not to find a new "chair," opting to take an extended leave to "relax and recharge" from his duties at the AI giant. Read more Character development: Founders of Character.AI also did some seat switching this week. The a16z chatbot startup's CEO, Noam Shazeer, has returned to Google to join the tech giant's DeepMind team. Character.AI co-founder Daniel De Freitas is also joining Google with some other employees. In a deal that resembles a pseudo-acquisition similar to the one Microsoft struck with Inflection in March, Google agreed to use Character.AI's technology on a non-exclusive basis. Read more Mega ammo: Defense tech startup Anduril has armed itself with $1.5 million in fresh capital at a massive $14 billion valuation. The 7-year-old company, building autonomous military systems, has its sights set on becoming a top-tier defense contractor, rivaling the likes of Lockheed Martin and General Dynamics. The deal was co-led by returning backers Founders Fund and Sands Capital and was joined by new participants, including Fidelity Management & Research Company and Baillie Gifford. Read more GrubMarket cracks Good Eggs: B2B produce and logistics company GrubMarket, which is now valued at $3.5 billion, has acquired 13-year-old Good Eggs, a fresh food delivery startup that was valued at $365 million in 2020. But the high-end grocery delivery startup that was backed by top investors, including Benchmark, Sequoia and Thrive, was marked down by 94% to $22 million after COVID-19 tailwinds faded. Read more Chipping away: Groq, a startup that is manufacturing chips for running AI models, has raised $640 million at a $2.8 billion valuation from investors, including BlackRock, Neuberger Berman and Cisco. The 8-year-old company competes with Nvidia, which is estimated to control 70% to 95% of the AI chip manufacturing market, as well as Amazon, Google and Microsoft, all of which are working on developing their own AI chips. Read more Location, location, a bump in valuation: The 13-year-old location analytics startup Placer.ai shows that knowing where the customers are is still very valuable for retailers, banks and healthcare companies. Placer quietly secured an additional $75 million in funding, valuing the company at $1.45 billion, a 50% increase from its previous valuation of $1 billion just 18 months ago. Read more why?! not: Maya Watson and Lexi Nisita, who met while working at Netflix and later moved to Clubhouse, where they were employees 13 and 20, decided that the world needs another social networking startup to help people combat loneliness. The duo started a new app called why?! that's part conversation app, part networking app and part dating app. why?! raised $1.65 million in a pre-seed round, led by Charles Hudson, managing partner and founder of Precursor Ventures. Read more AI for little ones: Tired of your child begging you to watch another cartoon? Perhaps you can interest them in playing with an AI bot instead. Heeyo, a startup that offers children between the ages of 3 and 11 an AI chatbot that offers over 2,000 interactive games and activities, has just raised a $3.5 million seed round from OpenAI Startup Fund, Alexa Fund, Pear VC and other investors. TechCrunch reporter Rebecca Bellan tried out Heeyo and found it to be perfectly safe for kids. Read more Falling stars: Techstars has been shining less brightly recently. The global startup accelerator laid off 17% of its workforce this week. Techstars will also wind down its $80 million Advancing Cities program by the end of the year. Launched in 2022 with J.P. Morgan's backing, the program aimed to support diverse founders in cities like Oakland, New York, Miami, and Washington, D.C., through accelerator programs. Read more Flint Capital sparks funding: Boston-based Flint Capital has raised a $160 million third fund. The 11-year-old firm's limited partners include primarily tech entrepreneurs, including successful founders that Flint backed previously. Flint's investments include identity verification startup Socure, last valued at $4.5 billion, and Flo Health, which was recently valued at $1 billion. Read more Funding may still be hard to secure, especially for late-stage startups, but it doesn't mean investors aren't minting new unicorns. In fact, we counted 38 new ones that were created this year. Find out who grew a horn in 2024.

The Week's 10 Biggest Funding Rounds: Anduril Industries Raises Big For Defense

Want to keep track of the largest startup funding deals in 2024 with our curated list of $100 million-plus venture deals to U.S.-based companies? Check out The Crunchbase Megadeals Board. This is a weekly feature that runs down the week's top 10 announced funding rounds in the U.S. Check out last week's biggest funding rounds here. The week saw the second-biggest raise of the year, as Anduril Industries' monster raise ranks behind only xAI's massive $6 billion in May. Aside from that, the week saw some big rounds from cybersecurity, travel and of course, biotech. 1. Anduril Industries, $1.5B, defense: Anduril Industries matched its own record for the largest defense tech round ever. The Costa Mesa, California-based startup locked up a $1.5 billion Series F that values the company at $14 billion -- a 69% jump from the $8.5 billion valuation it received after its massive $1.5 billion Series E in late 2022. The round was co-led by Founders Fund and Sands Capital. The company will use some of the new proceeds for the development of Arsenal-1 -- a more than 5 million-square-foot production space designed to produce tens of thousands of autonomous military systems annually. After a slow start to the year, funding to defense tech startups has picked up dramatically in the past few months. Just last month, Helsing, which develops artificial intelligence software for defense, raised approximately $489 million in funding led by General Catalyst that values the company at $5.4 billion. After Anduril's huge round, defense tech startups now have raised $2.5 billion in 2024, per Crunchbase data. Last year, such startups collected only $2 billion total. 2. Groq, $640M, semiconductor: AI semiconductor and software startup Groq started the week off with a bang when it announced it had locked up a $640 million Series D round at a valuation of $2.8 billion. The round was led by funds and accounts managed by BlackRock. The Mountain View, California-based firm is helping develop ways to optimize AI and lessen the vast amount of computing power that is currently needed to do that. The new round almost triples the company's valuation from its Series C in 2021. Founded in 2016, the company has raised $1 billion, per Crunchbase. 3. Abnormal Security, $250M, cybersecurity: Abnormal Security closed a $250 million Series D that now values the San Francisco-based cybersecurity startup at $5.1 billion. The new round was led by Wellington Management. The new valuation is a more than 28% uptick from the $4 billion valuation Abnormal got when it raised a $210 million Series C led by Insight Partners back in May 2022. Founded in 2018, Abnormal looks to stop attacks and find compromised accounts across email and connected applications through leveraging machine learning and AI to understand human behavior. The startup has raised nearly $546 million total, per the company. Abnormal also says it recently surpassed $200 million in annual recurring revenue. After a down 2023, cybersecurity startups are once again seeing the cash. In the second quarter of 2024, cyber startups saw a robust $4.4 billion invested, according to Crunchbase data. The dollar figure represents a 63% increase from Q1, which saw $2.7 billion roll to startups in 173 deals. It was the best quarter for funding in the sector since Q1 2022 and a 144% increase from Q2 2023. 4. Flyr, $225M, travel: Travel startup Flyr raised $225 million in equity and $70 million in debt in a new funding round. The equity portion was led by WestCap and reportedly values the startup at $900 million. The Santa Monica, California-based startup develops software for the travel industry, such as airlines. Founded in 2013, the company has raised $482 million, per Crunchbase. 5. IDRx, $120M, biotech: The big biotech raise this week went to a Plymouth, Massachusetts-based startup. IDRx, a clinical-stage biotech developing cancer treatment with precision therapies, raised a $120 million Series B led by Commodore Capital, RA Capital Management and Blackstone multiasset investing. Founded in 2022, the company has raised $242 million, per Crunchbase. 6. DevRev, $100M, artificial intelligence: Palo Alto, California-based DevRev, which develops AI for customer support and other uses, raised $100 million from Khosla Ventures and other investors. The round reportedly values the company at $1.15 billion. Founded in 2020, the company has raised $150 million, per Crunchbase. 7. Shinobi Therapeutics, $68M, biotech: Shinobi Therapeutics, a South San Francisco, California-based biotechnology company developing immune evasive iPS cell therapies, raised a $68 million Series A extension from Mitsubishi UFJ Capital and Yosemite. Founded in 2023, Shinobi says it has raised $119 million. 8. MBX Biosciences, $64M, biotech: MBX Biosciences, a clinical-stage biopharmaceutical company focused on the development of precision peptide therapies for the treatment of metabolic disorders, announced a $63.5 million Series C financing led by Deep Track Capital. Founded in 2019, the Carmel, Indiana-based company has raised more than $238 million, per Crunchbase. 9. Muon Space, $57M, space: Mountain View, California-based Muon Space, which designs and operates low-earth orbit satellite constellations, raised a $56.7 million Series B funding led by Activate Capital. Founded in 2021, the company has raised nearly $92 million, per Crunchbase. 10. Red Queen Therapeutics, $55M, biotech: Red Queen Therapeutics came out of stealth with a $55 million Series A from Apple Tree Partners. The Cambridge, Massachusetts-based biotechnology company develops antiviral treatments. While the biggest raises came from the U.S., there was a large AI round in Asia We tracked the largest announced rounds in the Crunchbase database that were raised by U.S.-based companies for the seven-day period of August 3 to August 9. Although most announced rounds are represented in the database, there could be a small time lag as some rounds are reported late in the week.