Alexis Kestler
Hi friend! I‘ve got some fascinating updates to share today from the world of startups, funding, AI, and security. Let‘s dive right in!
Startup funding cratered in Q1 – a worrying sign for the tech industry
The startup world just experienced its toughest quarter in years for raising funds.
In Q1 2023, global venture funding dropped a staggering 80% year-over-year while deals fell 45%.
| Funding | Q1 2022 | Q1 2023 | Change |
|---|---|---|---|
| Global Venture Funding | $120 billion | $24 billion | -80% |
| Venture Deals | 5,684 | 3,144 | -45% |
This rapid decline signals dark times ahead for many startups desperate for capital according to economists I spoke with. Raising funds was already difficult in 2025 as investors grew cautious. But the severity of this drought came as a surprise.
"Many founders are struggling to adjust their valuations expectations as growth projections fail to materialize," said Michael Brown, VC investor at Ultra Capital. "This creates a standoff between investors and entrepreneurs."
The data shows investors driving harder bargains – down rounds made up 20% of deals, the highest since 2018. Many startups raised bridge financing just to stay alive.
Hiring freezes, layoffs, and cost cutting are likely in the cards for startups hoping to extend their runway. Without more funding, we may start to see consolidation and closures in the crowded startup market.
"Winter is always harsh, but this one feels different," warned Fiona Mack, startup advisor and angel investor. "Founders should plan conservatively and focus on sustainability over growth until the funding environment thaws."
AI startup Cohere hits $270 million funding jackpot
While times are tough for many startups, AI startup Cohere scored a massive $270 million Series C round.
The company provides large language models and natural language processing tools behind an easy-to-use API. Developers can tap into Cohere‘s AI to generate content, analyze text, enable chatbots, improve search, and more.
With this new round, Cohere has raised over $410 million to date from investors including Inovia Capital, NVIDIA, Salesforce, and Mirae Asset.
"We‘ve been impressed with Cohere‘s innovative application of large language models," said Harry Bougas of Inovia Capital, who led the round. "The demand for AI is growing exponentially across industries."
Indeed, AI startups focused on generative models and automation are still attracting substantial funding. Anthropic, Stability AI, and others in the space have raised hundreds of millions in recent months.
Cohere plans to use the capital to keep pace with surging demand. Their platform powers AI solutions for companies like Spotify, Intercom, and BMW across a range of industries.
The rest of the startup world may be facing a famine, but interest in AI remains white-hot.
ReadMe‘s fresh take on API documentation wins over investors
Speaking of hot startup categories, API and developer tools remain a bright spot despite the downturn.
ReadMe operates in this sector, offering modern tools for creating beautiful API documentation while connecting it to key workflows.
The platform helps developers rapidly build playgrounds, references, and portals directly from API specifications. Automated documentation stays in sync across updates while delivering analytics on usage and performance.
ReadMe counts major tech firms like IBM, Twilio, and Box among its customers. The intuitive platform has quickly won over developers at thousands of organizations.
This traction helped ReadMe raise an impressive $9 million over multiple rounds from top investors such as Y Combinator, Accel, and Eight Roads Ventures.
"ReadMe has tremendous momentum with developers and APIs are only increasing in importance," said Bilal Mahmood, lead investor from Accel. "They have a huge opportunity ahead."
While economic uncertainty plagues much of tech, ReadMe‘s fresh take on developer tools represents the type of innovative product that can still thrive.
Passkeys aim to passwords – but user adoption remains uncertain
Passwords may finally meet their demise thanks to a new technology called passkeys. Major tech firms led by Apple and Google are rallying behind passkeys as the future of authentication.
Last week, Google expanded passkey support beyond consumer accounts to also include Google Workspace and Cloud Identity. This means admins can now enable passkeys for users on corporate devices.
But what exactly are passkeys and why are tech giants betting on them?
Passkeys use public key cryptography to provide a secure, passwordless login experience. Rather than typing a password, you authenticate your identity using the security keys saved on your devices.
This approach confers several advantages:
- Passkeys are immune to phishing – there‘s no password for an attacker to steal.
- Signing in is faster and easier without needing to type or generate codes.
- Your passkey works across all compatible devices, whether desktop or mobile.
"Passkeys are a game changer for security teams battling credential theft and reuse in phishing attacks," said Lina Tran, Director of Security at GoodCore Technologies. "They eliminate an entire class of threat."
The promise of passkeys is clear, but major challenges remain around user education and mainstream adoption. And not every website and application supports them yet.
"It will take years before passkeys become ubiquitous like passwords," cautioned Beau Visser, analyst at Sanctuary Securities. "Google and Apple have their work cut out for them driving adoption."
But with these tech giants now putting their weight behind passkeys, the countdown to a passwordless future is officially on.
The road ahead looks bumpy, but innovation marches on
As we‘ve seen today, it‘s a precarious time in certain tech sectors as the funding winter intensifies. However, pockets of innovation around AI and developer tools continue flourishing.
Meanwhile, the security industry is slowly moving toward a future without passwords even as adoption hurdles persist.
There‘s certainly some bumps along the way, but resilience has always been the hallmark of great startups and founders. As an eternal optimist about technology‘s potential, I‘m confident the brightest ideas will continue rising to the top no matter the conditions.
What news and trends are you most excited or worried about in today‘s tech landscape? Let me know on Twitter where I‘m always down for a good discussion!
