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The Big One: The state of defense-tech startups
Top startup accelerator Y Combinator recently updated its request for startups, noting its specific interest in backing defense-tech startups. Silicon Valley was born as a research-and-development area for the U.S. military in the early 20th century, and now is the "the time to return Silicon Valley to these roots," YC wrote in a blog post.
YC's increasing focus on defense tech follows venture-capital giant Andreessen Horowitz's investment thesis of "American Dynamism," which involves backing founders and companies that "support the national interest," like defense. Over the past three years, venture-capital firms have invested more than $100 billion in defense-tech startups, with Andreessen Horowitz writing more checks than any other investor.
"Broadly speaking, there’s definitely a lot of energy," in defense-tech startups, said Ali Javaheri, an analyst for VC data firm PitchBook. "There's a big cultural shift."
Last year, investors pumped $33 billion into defense-tech startups, according to PitchBook, roughly the same amount of capital invested in the sector in 2022 and 22% below the record-high numbers in 2021.
PitchBook keeps a broad definition of defense-tech startups. It includes firms like Anduril, which makes advanced defense technologies, but it also includes companies like OpenAI. The ChatGPT maker isn't a defense-focused firm, but it does have a contract with the U.S. Department of Defense to apply its artificial-intelligence technology for cybersecurity.
READ MORE: Some VC firms look to bolster investment in defense-tech startups
Startups to Watch
- Nashville, Tennessee, startup WavMaker recently launched with $5 million in seed funding to connect video producers to a catalog of songs cleared for commercial use. Led by a group of music industry veterans and Grammy winners, including CEO Matt Arcaini, WavMaker helps creators find affordable, quality music for video content, Nashville Inno reports.
- Portland, Oregon-based apparel startup Oros Labs raised more than $21 million in its latest funding round. Oros makes jackets and outerwear insulated with technology used in astronaut suits and on spacecraft, Portland Inno reports.
- Sacramento, California-based generative artificial-intelligence processing company Unstructured has raised a $40 million round of venture capital, led by Menlo Ventures and including Vivek Ranadivé, owner and chairman of the Sacramento Kings. The startup's technology allows artificial intelligence to access data from difficult-to-use formats such as HTML and PDFs, Sacramento Inno reports.
- Antithesis Operations, a Washington, D.C.-area software startup founded by a cohort of former Apple engineers, has emerged from stealth mode after landing $47 million in fresh funding. The startup develops a technology that can automatically find bugs in software used across companies or organizations, DC Inno reports.
- Cocoa-bar maker Honey Mama’s raised $8.7 million in a round led by the investing arm of King’s Hawaiian Bakery's parent company. The startup makes sweet bars compatible with a range of food allergies or other dietary restrictions. They are in 6,500 stores across the country, Portland Inno reports.
Tech downturn hits the office market
The tech sector is still correcting from the pandemic highs of 2021, and office markets across the country continue to feel the impact.
Approximately 9 million square feet of tech office space was leased nationally in 2023, down from 16.6 million square feet in 2022 and 22.6 million square feet in 2021, according to a new report from Savills.
One piece of good news, however, is that of the leases completed in 2023, nearly 43% were signed in the fourth quarter, suggesting the sector could be poised for a rebound in 2024.
READ MORE: How the tech sector's downturn has hurt the office market
Microsoft poaches founders from $4B AI startup
Microsoft has poached Inflection AI's co-founders, along with "several" of the startup's employees, to lead the tech giant's artificial-intelligence efforts from a newly formed division called Microsoft AI.
Inflection CEO Mustafa Suleyman and chief scientist Karén Simonyan are joining Microsoft amid a heated race to dominate the AI sector.
Microsoft was one of several investors that led Inflection's $1.3 billion Series B round last year, which valued the startup at $4 billion and brought the Palo Alto, California, company's total funding to just under $1.6 billion.
READ MORE: Microsoft poaches Inflection AI co-founders
Weird and Wired: This startup wants to mine the moon
Seattle-based space-resources company Interlune hopes to see you on the dark side of the moon.
Last week, Interlune launched out of stealth with a total of $18 million in funding. The startup's initial goal is to extract helium-3, which is rare on Earth but plentiful on the moon, and bring it back to Earth to sell, Seattle Inno reports. Interlune's larger ambitions, however, include selling goods like water and rocket propellant as part of an in-space economy.
READ MORE: With $18 million in funding, this Seattle startup aims to mine the moon
