As the second half of 2023 gets under way, all eyes are on the startup and VC investment ecosystem.
With many on Wall Street calling for continued macroeconomic woes, startups must face the fact that the days of seemingly endless capital being plowed into emerging names with little concern about profitability are long gone.
In fact, global VC funding dropped 53% year-over-year in Q1 2023 to $76 billion, according to Crunchbase. So, while many VCs have money to invest, it’s safe to expect lower fundraising rounds as VCs take a more cautious approach.
But despite the lurking economic challenges, startups with disruptive technologies and products still hold tons of promise.
Looking ahead to the remainder of the year, the list of startups below puts the spotlight on names that are positioned for strong growth going forward based on their business models, cutting-edge product offerings, management teams, and future profitability.
Here are the 10 most promising startups to watch in 2023, according to VCs:
1. Replit
Using AI, Replit was designed to offer simple yet powerful tools and platforms that enable developers, educators, and students to build software collaboratively.
With Replit, software creators can take advantage of its browser-based integrated development environment (IDE) to build, test, and deploy their code on any browser or device—all with zero setup.
Founded by Amjad Masad and Haya Odeh in 2016, the San Francisco-based company has raised a total of $202 million in funding.
2. Walnut
In any climate, let alone an economic downturn, sales teams need ways to easily showcase value at each stage of the funnel without relying on R&D. And that’s exactly what Walnut tries to provide.
Founded in 2020 by Yoav Vilner and Danni Friedland, Walnut developed a platform that gives go-to-market teams the ability to deliver interactive product demos that can be personalized by use case, vertical, or specific customer need and add value throughout the sales funnel.
The company’s latest funding round of $35 million brought its total funding to $56 million, with investors from Felicis, NFX, ACapital, SV Angel, Liquid2, Eight Roads, and angels including Avishai Abrahami (Wix), Ariel Cohen (TripActions), Eynat Guez (Papaya), and Sarah Franklin (Salesforce).
As for the customer base, it has grown from 100 last year to several hundred, and includes the likes of Adobe, Dell, NetApp, Varonis, and more.
3. Runway
Everyone has a unique story to tell.
This belief is exactly what drove Cristóbal Valenzuela, Anastasis Germanidis, and Alejandro Matamala-Ortiz to found Runway in 2018. The company is an AI research name that uses recent advancements in computer graphics and machine learning to make compelling content creation available to everyone. The team’s hope is that this will unleash a new wave of art, entertainment, and creativity.
To-date, Runway boasts total funding of $236.5 million from investors like Felicis, Coatue, Amplify, Lux, and Compound.
4. Forethought
First there was ChatGPT, and then there was SupportGPT.
Knowing that everyone hates traditional chatbots, Deon Nicholas and Sami Ghoche founded Forethought in 2017 to give companies a way to offer better customer support experiences.
Forethought’s SupportGPT, which is a generative AI platform that uses Large Language Models (LLMs), helps customer support teams maximize productivity and efficiency.
The San Francisco name has raised about $92 million in funding to-date.
5. VAST Data
To help companies succeed in the AI era, VAST Data created a data platform that’s capable of speeding up the time to insight for workload-intensive applications.
VAST Data’s goal is to offer simple solutions that make data more meaningful to empower other businesses to make better decisions, innovate, and solve previously impossible problems.
Within three years, the company, which was founded in 2016 by Jeff Denworth, Renen Hallak, and Shachar Fienblit, went from $1 million ARR to $100 million. Not to mention, the company is cash flow positive and captured market share at 27 times the industry average year-over-year.
So far, the company’s total funding lands at $263 million.
6. Truework
Operating in the financial services space, Truework is a one-stop platform for banks and lenders that was built as a solution for the broken data economy.
The company, which was founded in 2017 by Ryan Sandler and Victor Kabdebon, provides a way to securely verify income and employment information.
Based in San Francisco, Truework boasts total funding of $118.9 million to-date.
7. Island
Recently coming out of stealth, Island has built a secure enterprise browser to bridge the gap between current consumer-focused browsers and the complex security requirements of enterprises.
Completely redefining what a browser can do, Island’s enterprise browser can help companies gain control over browser activities, secure data and assets, offer improved visibility regarding browser behavior, and improve the browsing experience.
Mike Fey and Dan Amiga founded Island in 2020 and the company has raised $100 million to-date. Its investors include Insight Partners, Sequoia Capital, Cyberstarts, and Stripes.
8. AKASA
AKASA is on a mission to rid the healthcare industry of administrative inefficiencies that drive burnout among staff and inflate spending.
Using AI, the company scales human intelligence with AI and ML, provides automation and analytics for complex workflows, and helps healthcare providers cut costs by properly allocating resources.
Since it was founded in 2018 by Benjamin Beadle-Ryby, Andy Atwal, Malinka Walaliyadde, and Varun Ganapathi, the company has raised a total of $85 million.
9. Regal.io
Regal.io is an outbound phone and SMS sales solution built to drive more meaningful conversations with customers. The platform allows you to add branded, event-driven calls and texts to help companies boost their response rates.
Since Alex Levin and Rebecca Greene founded the company in 2020, Regal has raised $42.1 million in funding.
Not to mention, the solution is being used by well-known names like SoFi, Ro, Angie’s List, Emeritus, Vroom, The Farmer’s Dog, and Fidelity Life.
10. People.ai
People.ai operates with one key goal in mind: to give companies the data they need to improve pipeline execution.
Using the power of AI, the company’s revenue intelligence solution helps teams focus on the right buyers and accounts as well as gain AI-driven insights to identify deals that are unqualified, missing key personas, or neglected.
Founded by Oleg Rogynskyy in 2016, the company has raised a total of $200 million, with its investors including Iconiq, GGV Capital, Lightspeed, and Index Ventures.
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