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Kalshi Secures $1B To Expand Predictions Market Platform
Another day, another giant round for a predictions marketplace. Who could’ve predicted that? Well, apparently anybody who’s been watching this space in recent months. The two leading names — Kalshi and Polymarket — have been busily scooping up billions in fresh commitments as they expand platforms that let users wager on events ranging from the Stanley Cup to the Epstein Files release. Today, New York-based Kalshi announced it raised $1 billion in Series E funding at an $11 billion valuation. Crypto-focused investment firm Paradigm led the financing, with participation from Sequoia Capital, Andreessen Horowitz, Meritech Capital Partners, IVP, ARK Invest, Anthos Capital, CapitalG and Y Combinator. Notably, Kalshi’s latest raise comes barely a month after its prior round, a $300 million financing at a reported $5 billion valuation. In hindsight, a quick up round seemed, well, predictable. That’s because Kalshi’s chief rival, Polymarket, has been on an even more capital-intensive trajectory. Just last month, New York-based Polymarket secured up to $2 billion in strategic investment from stock and futures exchange giant Intercontinental Exchange, parent company of the New York Stock Exchange. The deal set an $8 billion pre-money valuation for the startup. Kalshi calls itself the world’s largest prediction market. It’s seen hyper-charged growth, with trading volumes now surpassing $1 billion every week, up more than 1,000% from 2024, per the funding announcement. To date, the 7-year-old company has raised $1.6 billion in known funding, per Crunchbase data. In its early days, it was a participant in Y Combinator’s 2019 winter batch of startups. Beyond being places to make or lose money, predictions marketplaces are also growing a cultural phenomenon, providing insights into how people envision future events unfolding, be they elections or interest rate moves. Illustration: Dom Guzman
Sales And Use Tax: What Every High-Growth Startup Should Know About Compliance
By Heather Ake For companies in rapid growth mode, sales and use tax compliance tends to sit low on the priority list. And then, it suddenly matters. But as companies scale across states and/or add new revenue streams, tax exposure also can quietly expand in the background. The U.S. has more than 12,000 distinct sales tax jurisdictions, and each has its own rules and rates. So, even a small misstep can snowball into significant penalties or create challenges during due diligence. Heather Ake At the most basic level, sales tax is what a business collects from customers on taxable goods or services. Use tax applies when a company purchases taxable items and no sales tax was charged (which commonly occurs from an out-of-state vendor). For example, if a startup based in California orders $10,000 of equipment from an Oregon supplier, the business likely owes use tax to California. The point of the system is to keep local and remote sellers on equal footing. However, complexity arises because rules differ dramatically by state and industry. For founders, that complexity becomes more than a compliance nuisance — it’s a business risk. Noncompliance can delay funding, lower valuation and, in some cases, create personal liability. Legally, nexus is the connection that requires a company to collect and remit sales tax in a state. And historically, this required physical presence such as an office, a warehouse, or an employee. But after the Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc., states have imposed obligations based solely on economic nexus, meaning a certain level of sales or transactions within the state. Most states set the threshold at $100,000 in annual sales. So, even fully remote SaaS or e-commerce companies may trigger nexus without realizing it. And today, more than 45 states enforce economic nexus standards, making it critical for startups to regularly review where their activity might create obligations. Mapping your tax liability A quarterly “nexus map” can help track thresholds and avoid surprises. But it gets tricky because not everything a company sells is taxable. Tangible goods are almost always taxable. However, digital products like software as a service vary: some states tax them fully, others exempt them, and a few tax only certain components and may do so at varying rates. Services are often exempt, but are also increasingly being taxed as states broaden their bases to capture digital and professional offerings. Understanding the nuance isn’t just an accounting detail. It’s critical to ensure accurate pricing and revenue forecasting. Further, marketplace facilitator laws mean that platforms such as Amazon or Apple often collect and remit sales tax on behalf of third-party sellers. Startups selling directly through their own website or issuing invoices must manage those obligations themselves — even marketplace sales could require a business to register and file in a state. Keeping marketplace and direct sales segmented in your accounting system avoids double taxation or missed remittances. It’s worth noting that a big area that can trigger an audit is tax due on nontaxed purchases. Another is bundling a nontaxable service with a taxable product/service, which is an area Burkland sees come up frequently with our clients. Additional detail on overlooked areas, which can create exposure: Do your diligence before due diligence Sales and use tax issues don’t just surface in audits. They also appear in diligence. Buyers and investors frequently uncover unpaid liabilities, and this can lead to escrow holds or valuation adjustments. By contrast, clean compliance records demonstrate operational maturity and readiness to scale. Penalties, back taxes and interest are painful enough, but once a state initiates an audit, it’s often too late to access Voluntary Disclosure Agreements. Proactive compliance is the only safe route. So, sales and use tax may feel like a back-office issue. But for high-growth companies, it’s much more than that. It’s strategic. Founders and finance teams can stay ahead by engaging with a tax expert. In addition, consider: A thoughtful sales and use tax strategy preserves your runway, builds investor trust and prevents costly distractions down the road. Heather Ake is Burkland‘s indirect tax and compliance director. She has 25 years of industry and tax consulting experience. Since joining Burkland, she has significantly developed and expanded this practice area. Her substantial tax expertise spans sales/use/gross receipts, excise, and property tax, gained through various roles in public and private industry, and consulting — progressing from tax accountant to director. Her knowledge of tax law across diverse industries has positively influenced the key financial performance of the businesses she has served. Illustration: Dom Guzman
Germany’s AI Image Generator Black Forest Labs Raises $300M At $3.25B Valuation As European AI Fundings Scale Up
Black Forest Labs, a German AI image-generating startup, says it has raised $300 million at a $3.25 billion valuation, marking one of the largest investments in a Europe-based AI startup this year. Its funding comes as investment in the continent’s AI sector overall, while still lagging far behind the U.S., has risen this year. New backers Salesforce Ventures 1 and Anjney Midha (AMP) co-led the financing, which included participation from a slew of other investors, including Andreessen Horowitz, Nvidia, Temasek Holdings, Bain Capital Ventures, Air Street Capital, Visionaries Club, Canva and Figma Ventures. Founded in 2024, Black Forest has raised a total of $450 million in funding, per Crunchbase data. Its headquarters are in Freiburg, Germany, but it also has a lab in San Francisco. The company is known for its Flux foundation models of AI generation. It touts that its open models are “the most popular image models” on Hugging Face, and that companies such as Adobe, Canva, Meta and Microsoft are “building” on its models. The startup has received attention not only for the fact that its models help generate images, but also for the fact that they help edit them, too. Europe’s AI scene slowly gains traction Europe as a whole has lagged the U.S. and China in the race for global AI dominance. However, a number of players such as Black Forest Labs are making it increasingly competitive. The continent saw $5.2 billion invested in its AI startups in Q3, up from $2 billion in the same quarter last year, per Crunchbase data. (Still, that remains a fraction of the $35.7 billion that went to North American AI startups in Q3.) Largest fundings for European AI startups In early September, Paris-based generative AI startup Mistral AI announced a roughly $2 billion Series C round. Per Crunchbase data, Mistral’s Series C marked the largest-ever venture round raised by a European AI company. Black Forest Labs’ massive raise is notable in that it means that Mistral AI is no longer the only GenAI play near the top of the rankings of the largest European AI rounds. After Mistral, here are the four next-largest AI equity funding deals for Europe-based startups, per Crunchbase data: (For additional context, here is a list of all European AI-related financings of $200 million or more from the past five years.) Despite the impressive fundraises, Europe’s largest generative AI startups are still valued quite a bit lower than their U.S. counterparts. San Francisco-based Anthropic is now valued at $183 billion, and OpenAI in October completed a secondary share sale amounting to $6.6 billion, giving it a $500 billion valuation. Related Crunchbase query: Related reading: Illustration: Dom Guzman
Sector Snapshot: Defense Tech Funding Hits Record High
Global defense spending is on the rise, and startups are vying for a larger share of the outlays. Looks like there’s plenty of capital to go around too. Last year, world military expenditures rose 9% to top $2.7 trillion, per think tank Sipri’s estimate. It was the sharpest rise in more than 30 years. Meanwhile, in startup-land, defense tech is also sizzling. This applies to virtually every metric, including total spending, round counts, large deals and unicorn creation. In fact, global investment in defense tech has already hit a record high this year. The numbers: Funding to VC-backed startups in defense — defined here as the industries of military, national security and law enforcement — hit $7.7 billion across close to 100 deals in 2025, per Crunchbase data. That’s already well over double last year’s investment tally, as charted below, and marks an all-time high for investment in the space. Noteworthy recent rounds: Ultra-large rounds were key in boosting the totals. So far this year, at least 10 rounds of $200 million or more have gone to companies in defense categories, per Crunchbase data. Anduril Industries, probably the most famous defense tech startup, was also this year’s top fundraiser. The Costa Mesa, California-based company closed a $2.5 billion Series G round this summer. Founders Fund led the financing, which more than doubled 8-year-old Anduril’s valuation to $30.5 billion. Defense and critical infrastructure tech startup Chaos Industries, was another investor favorite. The Los Angeles-based startup locked up a $500 million Series D this month, just six months after closing a $275 million Series C. Founded in 2022, Chaos specializes in advanced detection, monitoring and communication for the defense and commercial sectors. The company develops a radar system that provides early warning and tracking capabilities against drones, missiles and aircraft. Meanwhile, Austin-based Saronic has closed on considerable capital to develop autonomous surface vessels for naval and maritime use. The 3-year-old startup picked up $600 million in Series C funding early this year. Europe is also upping its defense spending considerably, with EU expenditures reaching record levels in the wake of Russia’s attack on Ukraine. In tandem, defense-related startups in the region are attracting big checks. The frontrunner here is Munich-based Helsing, a startup focused on applying software to modernize and improve defense capabilities, which raised $694 million in Series D funding this summer. Software is eating the military: Defense-focused investors are optimistic that the recent spike in startup funding to the space is an indicator of much more to come. In an overview this year, Point72 Ventures, a venture investor with defense among its core focus areas, opined that in coming years “AI, autonomy, and software-first systems will redefine modern conflict with their prioritization of agility over mass and scale.” Per Point72, much of the defense sector’s industrial base was designed for a different era, in which six- to eight-year timelines and “hardware-first thinking” were the norm. Today, it says, “that’s not going to cut it.” Recent conflicts have shown there’s an urgent need for new technologies including autonomous systems, electronic warfare and advanced manufacturing. While we at Crunchbase News lack the expertise to opine on the demands of a modern military, we can say something about what venture checkbooks indicate about the space’s momentum. In this area, it’s clear that investors’ interest is on the rise. Given the relative youth of much of the defense startup pipeline, there’s also a high likelihood of bigger checks to come. Related Crunchbase queries: Related reading: Illustration: Dom Guzman
The Toy Startups Getting Funded This Year: Talking Dinosaurs, Sticker Cubes And Tin Can Phones
It’s that time of year again, where parents are frantically looking for the new cool thing to wrap up and surprise their kids with this holiday season. The choices are more diverse than ever, especially as artificial intelligence has been increasingly incorporated into children’s toys. What is intriguing, however, is that while AI-enabled toys are gaining traction, we are simultaneously seeing renewed interest in older technologies, including analog toys and screen-free gadgets. There is also a movement toward toys that are more than mere playthings, but also models of cultural learning and identity. While Crunchbase data shows the toy industry overall doesn’t receive much in the way of venture dollars, there are some companies in the space getting investor cash, many with an AI angle. So as we head into the holiday season, we thought it would be fun to see what funded startups in the toy space are selling this year, and some of the trends catching investor attention. (I’m of the age where I mostly got Barbies and Play-Doh, so all of these cool new toys are extra fascinating to me.) AI-enabled It’s no surprise that artificial intelligence has made its way into the toy industry, as it is infiltrating seemingly every industry in one way or another. While there’s still plenty of debate about the potential risks and drawbacks of AI technologies aimed at children, the AI toys market is projected to nearly triple to $6.4 billion by 2032, up from $2.2 billion in 2024, according to a recent report from Credence Research. One of the funded startups marketing an AI-enabled toy for youngsters this holiday season is Bondu. In early October, the company unveiled its AI-powered conversational companion in the form of a stuffed dinosaur. According to GamesBeat, the new toy is designed “to help children learn, imagine, and grow through safe, interactive play.” The startup has raised $5.3 million in a seed funding round led by Makers Fund with participation from Samsung Ventures, Boost VC and Founders Inc. Bondu is not cheap. The toy costs $199.99, but hey, at least it comes in four different colors. Ironically, even though the toy is powered by AI, the company is touting it as a way of helping your kids “say goodbye to screens.” Some of the things Bondu can do, according to its manufacturer: help kids learn by having “conversations” in which it answers questions and teaches facts and can reply back to a child in 32 languages. Parents can even use the toy to set reminders in an effort to motivate their kids to do boring tasks such as brushing their teeth. Another startup funded this year that offers a screenless, conversational, AI-powered toy is Roybi, a San Jose, California-based maker of a companion robot for young children. The company, which has raised $4.3 million to date, likewise touts a companion that it says can help young children with language development (English, Spanish, French and Mandarin), and math and science skills. The funded companies are examples of growing investor interest in embedding conversational AI into physical toys. More recently, another AI-enabled startup, New York-based Stickerbox, managed to raise $7 million in seed funding in just two months after co-founder Robert Whitney’s 4-year-old son asked: “Can we make our own coloring sheets?” That question prompted Whitney, an alumnus of Anthropic, to join co-founder and CEO Arun Gupta (formerly of Grailed) to start Stickerbox, a toy company that claims it has developed the first-ever voice-powered AI creativity tool for kids. Investors such as Maveron, AI2 Incubator, Matthew Brezina and tennis legend Serena Williams’ Serena Ventures wrote checks into the startup to help it grow. The Stickerbox is pretty much like what it sounds like: A cube that prints stickers. Children deliver prompts for images with their voices. Importantly, the company says, the box doesn’t collect voice data and doesn’t have a camera. Like many other popular techie toys these days, including the Yoto and Toniebox audio players, Stickerbox also emphasizes that while it’s tech-enabled, it’s screen free, meaning it doesn’t come with many of the drawbacks associated with excess screentime for children’s developing brains. What’s old is new again The move away from screens is another trend that’s attracting investor interest. Case in point: In September, Tin Can, which has created a landline-style WiFi telephone for children, raised $3.5 million in funding. For those of us who remember the days of phones with actual cords, there is something nostalgic about the idea behind Tin Can. Essentially, the Seattle-based startup is tapping into a trend where parents want simpler, more “analog” devices for kids so they can slowly back away from the screens and participate in more direct communication. PSL Ventures, Newfund Capital, Mother Ventures and Solid Foundations all felt compelled to fund the company. Greg Gottesman, managing director at Seattle-based PSL, told GeekWire that he believes Tin Can is “one of the fastest growing and most viral businesses” he’s seen in over 25 years of investing. Personally, I love the idea of these colorful phones that are shaped like, you guessed it, oversized tin cans. Kids can actually talk to each other without a screen or via text. One might argue that kids can talk to each other with cellular phones. But to that, I argue back, cellphones still have screens. I’m rooting for this one. Other trends: Subscriptions and cultural ties Two other trends we’ve spotted in our perusal of funded companies in the toy space: Those that tap into cultural heritage, and subscription offerings aimed at reducing clutter. In October, Gubbachhi, a toy brand offering handcrafted, eco-friendly toys inspired by Indian culture and heritage, raised an undisclosed amount of funding from D2C Insider Angels. The nod to promoting culture is one to be applauded. And last but not least: We all know how easily kids can get bored with toys. They’ll play with one toy for two months straight, only to discard it with not so much as a glance at it again. A startup called Orbit Crates has the solution for frustrated parents who are tired of seeing discarded toys strewn all over the house, cluttering up rooms and taking up space — not to mention the money wasted on toys that are only played with for a short time before their child loses interest and moves on. Started by mother of three Kim Conti, Orbit Crates is a subscription toy-rental company designed for children aged newborn to 6. The startup, according to UConn Today, “has almost 500 toys in stock, from classic wooden toys to Bluey and Disney princesses.” The startup participated in the Wolff New Venture Competition in October, winning the $5,000 Mark and Jamie Summer Innovation Award. In India, a similar toy rental startup called ToyFlix last month raised $1 million in pre-seed funding, per Crunchbase. So if you’re struggling with shopping for kids this holiday season — whether they be your own or someone else’s — hopefully this will give you some creative and fun ideas. Related reading: Illustration: Dom Guzman
What Startups Are Selling For The Person Who Has Everything
In recent years, we’ve witnessed continued shrinkage in investment to consumer-facing product startups, particularly those selling gadgets and giftable goods. While there’s no single explanation for the decline, it doesn’t help that this has been a tough area for returns. It’s a widespread trend, as we’ve chronicled, affecting areas including fashion, consumer electronics and the once-burgeoning direct-to-consumer space. All this is to say that, if one were perusing recently funded startups to find gift ideas, the options aren’t as broad as they used to be. No more $700 juicers or smart party coolers this holiday season. That said, there are still intriguing options in the mix, particularly around wellness, customization and apparel. To illustrate, we used Crunchbase data to assemble a list of 24 companies funded this year with products on the market, ranging from libido-lifting kits to 3-D printers. We also dig into some of the more transparent trends. Wellness is one of the top trends Wellness was the standout focus area this year for consumer gadgets and products startups. This includes the most heavily funded and best-known name on the list — Oura, maker of smart rings that track over 20 biometrics to deliver wearers personalized and timely health metrics. The starting price is around $500. We could all use a better night’s sleep, and startups are tackling this area as well. The top fundraiser here is Eight Sleep, which picked up a $100 million Series D in August. It sells connected bed gear that can adjust to provide optimal temperature and support. Getting older also brings its share of wellness needs, and startups are on this too. This includes San Francisco-based OneSkin, which sells anti-aging skincare products and raised a $20 million round this summer. And for menopausal or post-menopausal women, there’s a Black Friday sale at Womaness, which sells “menopause survival,” libido-lifting and healthy aging kits, along with skincare and sexual wellness products. Customization Personalized gifts are also a popular offering, with several recently funded startups focused on customized products. For artistic types, Arcade offers an AI-enabled platform for designing jewelry and home decor goods. The startup then works with a team of “verified makers” to turn the design into a finished product. On the manicure front, Blank Beauty is mixing up custom nail polish based on customer-submitted photos. The Tennessee startup snagged a $6 million Series A in May. For those seeking a pricey item to pre-order, meanwhile, crowdsource-backed EufyMake wants to let you make your own custom creations with its personal, 3-D texture UV printer. One can currently pre-order a printer for $2,300. Fashion’s still in style (somewhat) We’re also still seeing some fashion startups raising good-sized rounds, although it’s admittedly not the most action-packed sector. The biggest startup fundraiser in this niche for 2025 was Kim Kardashian’s Skims. The shapewear and clothing brand closed on $225 million in a Series D this month. Vivrelle, a subscription offering for luxury accessories, was another investor favorite, picking up a $62 million round this summer. It’s also running a Black Friday sale for those targeting fans of designer handbags. Fun vs. fundable Overall, there’s a lot of stuff to buy, even if VCs haven’t been heavy patrons of the consumer space. This is pretty typical. As startup categories go, consumer products has always been one of the more fun ones to research. Offerings tend to be clever, quirky and nice-to-have, if not essential. But while the category may be a startup reporter favorite, it’s not always venture investors’ top pick. This was apparent for 2025, as VCs poured record sums into AI deals and mostly ignored market-ready consumer products and gadget startups. Still, I wouldn’t count this sector out. For one, while we didn’t see many market-ready consumer products unicorns, investors did put considerable cash into a number of robotics startups working on consumer products. Bots for housework look particularly compelling. Two-year-old The Bot Co. has raised $300 million to date to develop a robot for doing housework. And Sunday, a Benchmark-backed startup building a household robot capable of doing everyday chores, introduced its first bot, Memo, last week. Several others in the heavily funded space are working on both consumer and more specialized workplace bot offerings. Perhaps these will be the hot holiday item in a couple years. If they work as well as early buzz hints, they might even be able to wrap themselves. Related Crunchbase list: Related reading: Illustration: Dom Guzman
Why AI’s Next Phase Belongs To Infrastructure
By Laura Connell and Andreas Cleve The artificial intelligence wave is entering its most valuable phase. Even in conservative scenarios where AI capabilities plateau at current-generation models, analysts project tens of trillions in value creation as companies integrate AI into their operations. In more ambitious outlooks, the impact could rival the industrial revolution itself. The question isn’t whether this transformation will happen, but where value will accrue as the market matures from frontier research to broad deployment — and over what timeframe. Investment dispersion reflects genuine uncertainty about AI’s trajectory, but infrastructure value compounds regardless of which scenario unfolds. Why this time is differentLaura Connell and Andreas Cleve Every tech cycle attracts skeptics who compare it to past bubbles. The data tells a different story. During the dot-com boom, 97% of fiber capacity sat unused. In 2025, the opposite is true: Every unit of compute is active, utilization rates remain high, and returns on AI infrastructure are already positive. Global investment in generative AI reached $49 billion in the first half of the year, driven by hyperscalers reinvesting profits, rather than speculation. The first wave of AI value went to the foundation model builders — OpenAI, Anthropic and others — whose breakthroughs triggered an explosion of experimentation at the application layer. That wave proved what was possible. Now, as investment scales and adoption spreads into regulated sectors, the challenge has shifted downstream. The frontier is no longer building larger models, but getting AI live — safely, reliably and within real-world constraints. Deployment at this stage depends on more than compute access or APIs; it requires embedded teams who understand the domain, the workflows and the regulations that shape how AI performs. That blend of infrastructure and expertise is becoming the new differentiator — the layer that turns potential into production. Physical capacity is tightening. Data centers now consume up to 10 gigawatts per site. But the greater bottleneck is operational: compliance frameworks growing more complex, orchestration challenges in global deployment, and the gap between proof-of-concept and production. When AI systems stall in pilots, even the most advanced infrastructure struggles to deliver returns. The deployment gap Across sectors, between 80% and 95% of AI projects fail, not only because of inaccuracies but because compliance and validation are treated as afterthoughts. In healthcare, U.S. hospitals spend an estimated $39 billion annually on compliance and administrative oversight. Similar dynamics exist across financial services, energy and any domain where AI must operate within regulatory boundaries. Developers are asking new questions: How can models remain auditable as they evolve? How can performance stay consistent across jurisdictions with different data rules? How can costs be contained as usage grows unpredictably? In healthcare, this means API platforms that handle medical-grade data securely, automate audit trails for regulators, and enable deployment in weeks instead of months. Building that capability from scratch delays product launches and drains engineering resources most teams don’t have. The next decade of value lies in the infrastructure making AI both compliant and scalable — the layer that allows innovation to move from impressive demos to mainstream deployment. The rise of vertical infrastructure The next evolution of infrastructure will be vertical. General-purpose compute makes AI possible, but domain-specific infrastructure makes it usable. The highest stakes industries — healthcare, energy, finance, precision manufacturing — depend on systems that understand their regulations, workflows and risk thresholds. That’s where the next generation of durable value will form. The demand signal is clear. To secure long-term success, developers need to build on AI infrastructure that makes their solutions fully deployable. Accuracy is necessary but not sufficient. Deployment is the bottleneck. Corti’s 1 experience illustrates how this is playing out. Health systems need AI they can deploy and trust, not just test. By embedding validation, compliance and audit directly into its APIs, Corti enables developers to integrate clinical-grade AI in weeks rather than months. What began as a healthcare challenge is becoming a broader design pattern — an infrastructure model that abstracts away friction between innovation and safe adoption at scale. Europe’s structural advantage Europe’s early emphasis on interoperability, privacy and safety once seemed like a constraint. As the market shifts from experimentation to widespread deployment, those principles have become a competitive advantage. This is playing out in real procurement decisions. When a top-three global healthtech provider evaluated infrastructure for their clinical AI deployments, they chose Corti over Microsoft, OpenAI and Anthropic. What began as months of technical due diligence became a landmark agreement — a signal that global buyers now prioritize compliance architecture and deployment readiness alongside model capability. Companies that embedded regulatory principles from day one are structurally better positioned for this phase. European builders have been designing for this complexity from the start, treating compliance as a core product requirement rather than a go-to-market barrier. Every transformative technology becomes more efficient over time, and AI is no exception. Model efficiency improves by an order of magnitude annually, while infrastructure-led automation removes friction across regulated sectors. This is not a bubble deflating; it is a market maturing from frontier research to scaled production. The next era belongs to the builders who recognized early that deployment, not just capability, would define who wins. The hype will fade, as it always does. What remains is infrastructure purpose-built for the hardest problems, allowing thousands of companies to turn AI’s transformational potential into measurable reality. Laura Connell is a senior partner at Atomico, the founder-built European venture capital firm. Connell leads growth-stage investing at Atomico, where she focuses on AI infrastructure and applications. Andreas Cleve is the co-founder and CEO of Corti, a pioneering AI company building infrastructure and foundation models for healthcare developers. After nearly a decade as a multientrepreneur in artificial intelligence, Cleve founded Corti with Lars Maaløe to help healthcare developers make clinical workflows faster, smarter and more efficient. Today, Corti’s trusted AI powers real-time consultations across the U.S. and Europe — eliminating administrative burdens and bringing expert-level reasoning to every corner of healthcare. Illustration: Dom Guzman
Innovation Policies: The Australian Lesson Focusing Startup Investments On A Few Strategic Sectors
By Alberto Onetti For some time now, I’ve been pointing out how Australia has been making significant progress, positioning itself as a strong competitor among the innovation ecosystems of the Asia-Pacific region. The Scaleup Summit Australia, which Mind the Bridge organizes every October with the support of Investment NSW, offers a good opportunity to take stock — also thanks to the data and analysis from the “Tech Scaleup Australia 2025” report, published with the support of Crunchbase and Acciona. The numbers Australia is home to 1,582 scaleups — almost six scaleups per 100,000 inhabitants, a remarkable number considering the country’s relatively small population — that have collectively raised more than $36 billion in capital (around 2% of national GDP). Aside from the major Asian economies (the 2 billion-plus-people nations of China and India, which play in a different league with 12,403 and 4,112 scaleups respectively), Australia’s numbers are not far behind South Korea (2,127) and Japan (2,268), roughly on par with Singapore (1,660), and 3x larger than emerging ecosystems like the UAE (503). Notably, Australia also stands out as fertile ground for large tech companies — what we call scalers. We identified 71 Australian scaleups that have each raised over $100 million, a number comparable to Japan (86) and South Korea (96). This can be explained by the relative isolation of the Australian ecosystem, which has encouraged the creation of national champions in strategic sectors for the continent such as construction, mining and energy — collectively referred to as “infratech.” Infratech: Australia’s house specialty A closer look at the infratech landscape shows steady growth over the past five years, with venture capital investments rising from $100 million in 2020 to nearly $500 million in 2025. Among Australian scaleups, about 1 in 10 (107) operate in this vertical, covering the entire value chain: from critical resources (21%) to construction (57%) and energy systems (22%). Australia’s dominance in mining AI As highlighted in the “Unlocking the Future of Mining” report developed by Mind the Bridge with support from BHP, Austmine and Hub de Innovación Minera del Perú, and based on dozens of interviews with mining industry experts, large infrastructure projects promoted by local and international corporations (including ACCIONA, BHP and Rio Tinto) are increasingly integrating new technologies such as AI, advanced robotics, computer vision and digital twins. Therefore, it doesn’t come as a surprise that Australia leads globally, accounting for nearly three quarters of all investments in AI for mining, far ahead of China (12%) and the United States (9%). Australia’s dominance in mining AI reflects structural strengths that are tough to match. The country combines large-scale mining operations, supportive regulations and a mature ecosystem of mining tech vendors and talent — which made it the global hub for mining innovation. For companies abroad, this means access to mining AI capabilities now largely depends on partnering with Australian platforms and experts. Investment landscape: industrial roots, corporate muscle Investors are also moving into tech areas like space tech, UAVs, drones and autonomous mobility, especially when these intersect with construction and mining applications. Although Australia’s investor landscape is broad — with 491 active VCs and CVCs currently managing around $32 billion of dry powder available for local scaleup investments (see map on MTB Ecosystem) — it remains largely focused on seed- and early-stage funding (the majority of funds — 73% — are under $50 million). However, what’s particularly interesting — and consistent with the industrial drive of the Australian ecosystem — is that most of the mega funds (over $1 billion) are corporate venture capital vehicles. Leading examples include Rio Tinto, as well as banks like Macquarie Group, ANZ, National Australia Bank and Commonwealth Bank of Australia. Specialization attracts international players, dispersion does not The Australian strong specialization in specific verticals is attracting the interest of global corporates: 26 large international companies have set up innovation outposts Down Under (map available on MTB Ecosystem). This sends a powerful message in today’s innovation world, where the concentration of investments in a handful of major ecosystems has effectively reduced the visibility of nearly all others, pushing them toward marginalization and irrelevance. Specialization, whether in technological domains or industrial applications, can help some of these ecosystems stand out and claim their space on the global innovation map. For more insights on startup and scaleup ecosystems, see Mind the Bridge’s reports (available for free download here). Alberto Onetti, Mind The Bridge Alberto Onetti is chairman of Mind the Bridge and a professor at University of Insubria. He is a serial entrepreneur who has started three startups in his career, the last of which is Funambol, among the five Italian scaleups that have raised the largest amount of capital. He is recognized among the leading international experts in open innovation and has wide experience in setting up and managing open innovation projects — venture clients, venture builders, intrapreneurship, CVCs — with large multinational companies, as well as advising and training on this subject. Onetti has a column on Sifted (Financial Times) and several other tech blogs. Related reading: Illustration: Li-Anne Dias