The week in startup news: Sep 28-Oct 4

1. Anthropic's Sonnet 5.5 is faster and cheaper

Anthropic released a new version of Sonnet, its mid-tier AI model (a model priced between its cheapest and most powerful ones). The company says it is 30% faster than the last version, released only three months ago, and burns far fewer tokens (the units of text an AI model processes, which is how you get billed). If you're building something that uses AI for coding or everyday office tasks, this means lower running costs today.

2. Modal Labs is closing a $750 million round at $15.75 billion

Modal Labs provides AI inference infrastructure — the servers and software that let you run an already-trained AI model without building that plumbing yourself. It's reportedly raising $750 million led by Accel, at a $15.75 billion valuation (what the company is said to be worth). That's more than triple its $4.65 billion valuation from just four months ago, showing how much demand there now is for renting AI computing power instead of owning it.

3. A tiny AI model runs across 7 cheap chips

A hobby project split a 0.5 billion parameter AI model, using a very compressed math format called BitNet, across a cluster of 7 ESP32S3 chips (cheap microcontrollers used in small electronics). One chip handles reading the prompt, the rest handle the actual thinking, all linked by a fast daisy-chain of wires. It's a real demonstration that AI doesn't need a data center to run, just cheap hardware wired together well.

4. Jeff: a small model that just decides

Jeff is a fine-tuned AI model, under 1 billion parameters, built only to make fast decisions rather than write long answers. You describe a situation and a list of options in plain words, and it returns which option fits best in about 30 milliseconds. No generated text to parse, just a fast, calibrated answer you can drop straight into a support queue, a moderation system, or a voice app.

5. Test 7 tiny AI models in your browser

MicroLLM Lab is a free browser tool that runs 7 small AI models locally, right on your machine, and measures both their speed (tokens per second) and accuracy on objective tests. Nothing leaves your device. It's a fast way to pick the right small model for a project without needing to set up test infrastructure yourself.

6. UK investors want cheaper rules to launch funds

A coalition of UK investors, including Entrepreneurs First, Antler and Seedcamp, is asking the government for a US-style exemption that would make it cheaper for small venture funds to launch. They argue current regulation is blocking a new generation of investors from starting funds, which in turn means fewer people funding early-stage startups in Europe.

7. Ultraviolette raises $85 million to grow its EV business

Ultraviolette, an Indian electric two-wheeler maker, raised $85 million in a Series E round (a later-stage funding round) led by deeptech investor Yali Capital and TDK Ventures. The money will fund manufacturing, its next generation of electric vehicle platforms, and expansion, with a planned entry into the US in 2027 and further expansion into Latin America and Southeast Asia. It's a reminder that hardware and EV startups can still raise serious money, not just software.

8. Epik pitches a Try and Buy model for Indian shopping

Epik, a Bangalore-based marketplace, hosted an event for its brand partners to pitch what it calls a Try and Buy Everything Store, letting shoppers try products before committing to buy. Brands from smart homes, electronics, skincare, and premium apparel came together around one idea: building a commerce model designed for Indian shoppers, instead of copying a model built in the US or China.

9. Ram Sukumar keeps remaking Indium, this time with AI

Ram Sukumar has rebuilt his company Indium more than once over the years at key turning points, and he's doing it again now, this time around AI. It's a grounded, honest look at what it actually takes to reinvent an existing business rather than start fresh, which is a different kind of hard than launching something new.

Why this matters if you're building

This week was about tools getting cheaper and smaller at the same time money keeps flowing to both software and hardware. A faster, cheaper AI model from Anthropic and a browser tool to test tiny models both mean you can build and ship without waiting or spending much. Meanwhile, big rounds for Modal Labs and Ultraviolette show that whether you're renting out computing power or building electric bikes, real demand still gets funded. And the UK funding story and the Indium rebuild are both reminders that the rules and the reinvention around you matter as much as the product itself.