Startups need to be smart when competing with bigger rivals

You won’t find any Founder Mode discourse on this week’s newsletter, although the memes still appear. Instead, here’s your usual dose of startup news, from big rounds to pivots to recent product launches.

This week’s top startup stories

When facing larger rivals, startups often have to be smart in regards to the fight. There isn’t any one right answer, which explains why many change their minds along the best way when they’re unlucky.

Brighter sky: The closure of X in Brazil is a profit for rival social network Bluesky, which has seen an enormous influx of latest users since last weekend. This was especially noticeable since it remains to be significantly smaller than Threads Meta and its 200 million monthly lively users.

Chat Battle: Anthropic has launched Claude Enterprise, a subscription plan for firms curious about using its AI chatbot, but with administrative tools and more safety features. It will compete with OpenAI’s ChatGPT Enterprise.

Throw within the towel:Shortly after raising $500 million in Series B funding, German AI startup Aleph Alpha is moving away from LLM competition to AI support with the launch of a brand new product called PhariaAI.

Still kicking: NightCafe doesn’t have the identical buzz as rival Midjourney, but its AI-powered art tools have over 25 million users. That also translates into profits; a source told TechCrunch that NightCafe is doing $4 million in annual revenue.

Piggyback: HR and payroll software company Paylocity has agreed to acquire enterprise startup Airbase for $325 million, nearly half its 2021 valuation of $600 million. Founder Thejo Kote said Paylocity’s size and scale will help Airbase reach a much larger audience.

This week’s top fundraisers

Another way to get ahead of the competition is to increase funding, but differentiation, innovation and reaching recent markets are equally essential.

Three months later:Safe Superintelligence (SSI), a startup founded just a couple of months ago by OpenAI founder Ilya Sutskever, has raised over $1 billion in funding, with the corporate reportedly being valued at $5 billion.

AI Agents:With $50 million in recent funding, You.com is narrowing its focus—hoping to turn its AI right into a productivity engine that solves complex search queries.

Hospital at home:Doccla, a British virtual hospital ward startup that helps hospitals manage patients remotely, has raised $46 million to expand into Europe.

Microcapsules:French cleantech startup Calyxia, a B Corp, has raised $35 million in a Series B funding round that may help it develop alternatives to microplastics, that are a growing pollution problem.

Fintech MENA:Ziina, a YC alum from Dubai, has raised $22 million in Series A funding to proceed growing her P2P payments app, which already has 50,000 retail and business customers.

The hottest news from the VC and fund industry this week

Proven: PruVen Capital, the fintech and insurtech enterprise capital firm founded by Ramneek Gupta, formerly of Battery Ventures and Citi Ventures VC, has closed its second fund at $378.5 million. Unlike the primary fund, which had Prudential Financial as its lead LP, this new-vintage fund can be backed by others.

Mainstream climate:The fourth climate-focused fund raised by Dutch firm SET Ventures has closed at €200 million, twice as large as its previous one. It will be deployed to 20-25 early-stage European startups which might be making renewable energy more mainstream.

AI Incubator:VC firm Mayfield Fund has committed $100 million to the newly launched AI Garage, an incubator for idea-stage founders curious about constructing “AI-powered” firms.

No less essential

Palantir CTO Shyam Sankar has develop into “the secret weapon for Valley defense tech startups,” reports TechCrunch’s Margaux MacColl. He was considered one of the primary hires of 2023 to launch a program called First Breakfast, which doesn’t provide breakfast but offers a set of software tools that can provide recent defense tech startups a bonus.