# Startup Deals Endure, But Valuation Scrutiny Intensifies: This Week in Tech Funding

## Startup Deals Endure, But Valuation Scrutiny Intensifies: This Week in Tech Funding

Despite ongoing global uncertainties, the startup ecosystem demonstrates resilience, with deals and IPOs continuing to move forward. However, as this week’s news confirms, a new reality is setting in: price and valuation are under intense scrutiny. Here’s a breakdown of the most interesting developments in the startup world this week, focusing on funding, acquisitions, and shifting market dynamics.

**Acquisition Activity & Shifting Strategies**

While tariff turmoil initially cast a shadow over the M&A landscape, this week brought signs of life. However, the context is crucial.

* **Price Matters:** Anysphere, the company behind the AI coding assistant Cursor, is experiencing such rapid growth that a potential acquisition by OpenAI is now reportedly off the table. The focus might shift towards Windsurf, another AI coding assistant competitor, highlighting the increasing competition and potentially driving down acquisition costs.
* **Strategic Acquisitions:** Datadog strengthened its AI capabilities by acquiring Metaplane, an AI-powered data observability startup. While the terms of the deal were not disclosed, this acquisition demonstrates the continued importance of AI in bolstering existing tech platforms.
* **Acqui-hires:** a16z welcomed Erik Torenberg, the creator of the Turpentine podcast network, as a new partner through an acqui-hire, demonstrating the value placed on content creation and thought leadership within the VC space.

**Funding Highlights: Vibe Coding and Beyond**

Venture capital continues to flow, with particular interest in certain sectors while the focus shifts to more measured valuations.

* **Vibe Coding is Hot:** Supabase, an open-source database startup capitalizing on the “vibe coding” trend, secured a massive $200 million Series D round, pushing its valuation to $2 billion, just seven months after its previous funding round. Reflecting the trend, Adaptive Computer, which focuses on vibe coding for non-programmers, landed a $7 million seed round.
* **AI-Powered Solutions Attract Investment:** Several startups leveraging AI in different ways secured substantial funding. Manychat raised $140 million for its AI-enabled business messaging platform, while Endor Labs, focused on AI-generated code vulnerability scanning, secured $93 million. Noxtua, a legal AI startup, garnered $92.2 million to develop AI tools tailored for the German legal system.
* **Fintech and Cybersecurity Remain Attractive:** Fintech API brokerage startup Alpaca picked up $52 million, and virtual CISO provider Cynomi raised $37 million, indicating ongoing investor confidence in these sectors.

**Adjusting Expectations: IPOs and Emerging Markets**

This week revealed some recalibration of expectations in the IPO market and a renewed focus on established models in emerging markets.

* **IPO Size Trimming:** Ather Energy, an Indian EV startup, scaled back its IPO size and target valuation, citing current market conditions. This reflects a broader trend of companies adjusting their IPO aspirations to align with investor sentiment.
* **Replicating Success:** Fluent Ventures is distributing $40 million to international founders aiming to replicate proven business models in emerging markets. This strategy indicates a shift towards lower-risk investments and a focus on scalability in these regions.

**Accelerator Updates:**

Techstars joined Y Combinator in updating its deal for startups accepted into its program. Techstars will now invest $220,000.