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SEPTEMBER 26, 2022

Hello Sifted reader,

Last week, healthtech Babylon told the NYSE it would implement a reverse share split (a fancy way to say it'll consolidate shares so they're worth more) as soon as possible before the end of the year so it can continue trading. The move comes as the telehealth giant's stock price has fallen more than 95% since it listed last autumn — but the company isn't the only UK star in choppy waters.

Other first-generation, now publicly-listed UK tech darlings like BenevolentAI, Deliveroo and Darktrace are also suffering. Nearly a decade after they all launched, Sifted looks into whether they've achieved what they set out to.

Also this week, you might have noticed we've rolled out a new design for The Sifted Newsletter — let us know what you think here.

From the Sifted newsroom:

• Why do digital health startups want to exit so badly?
• What the UK "mini-budget" means for startups
• Delivery Hero founder invests in a mini CERN

📉 Babylon, BenevolentAI, Deliveroo and Darktrace face choppy waters. The UK's first wave of startup success stories has fallen on hard times as share prices plummet with the downturn. All were launched in 2013, and almost a decade on Sifted digs into whether they've achieved what they set out to do.

💰 Why do digital health startups want to exit so badly? Barely a day goes by without telehealth company HealthHero being approached by a startup on the lookout for an exit, and the total number of acquisitions of digital health startups this year has already nearly exceeded 2021's total. So what gives?

🤔 What the UK budget means for startups. As the new UK government announces its first fiscal policy package, Sifted takes a look at what support could be on offer for the UK’s startup scene — from tax relief for early-stage investors to increasing stock option allowances for employees.

😬 Only 14% of angel investors in the UK are women. But they're playing a crucial role in giving startups a launchpad. Between 2012 and 2021 they backed 4,149 UK businesses to the tune of £2.34bn — and what's more, 25% of those businesses have a female founder. 

💸 The UK's most active early-stage investor. And we bet you've never heard of them. Introducing Boost, the fund using a novel approach to tackle VC's abysmal track record when it comes to backing a diverse group of founders. Half of the 50 investments it’s made since June have female founders and 30% have founders from an ethnic minority. 

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🔮 Delivery Hero founder invests in compact particle accelerators. There are only five of them in the world, and they're massive — the biggest is 27km all the way around. But TAU Systems wants to reduce that to just 25 metres, and it's just raised a $15m seed round from a big name in European tech to make it happen.

🏥 Babylon plans to implement reverse share split to avoid delisting. Following 30 consecutive days of trading below $1 on the NYSE, healthtech scaleup Babylon had a decision to make. Either it delisted — or it set out a plan on how it was going to get shares trading above $1 again. It went for the latter, and here's what it means for shareholders.

🥈 Tech Nation, the UK startup support organisation, has lost its main government contract. Barclays, the bank, has instead been awarded the £12m to help growing tech businesses. It's unclear yet whether Barclays will also take over the country's digital visa scheme. 

Sifted’s central and eastern Europe correspondent Zosia Wanat spent last week at the How to Web conference in Romania — the home of the region’s shiniest international star, UiPath. The two days were filled with panels and keynote speeches from CEE’s biggest names, off-stage conversations (during which “the next UiPath” and “SaaS is life” were frequently dropped) and intense advertising from founders and some VCs (most notably Enis Hulli, who put stickers for his rebranded VC firm 500 Emerging Europe all over the venue).

She gathered some thoughts from regional VCs on the outlook for investing in the region amid the upcoming economic downturn:

Stephane Gantchev, partner at LAUNCHub, a Bulgarian VC: “VCs are probably going to be a bit slower in decision-making regarding certain investment deals — but I think this will not last for very long. 2022 is a record year for money raised by VCs in the region — so we have money we have to deploy.”

Michał Rokosz, partner at Inovo, a Polish VC: “We used to look at growth rates, at the potential of how quickly you can capture the market. Now we’ve added an efficiency KPI, so we look at good old burn multiples and self-sufficiency. All founders need to be aware that right now there are two core things: growth and efficiency.”

Alexandru Bogdan, general partner at RocaX, a Romanian VC: “There’s going to be a clean up. Lots of the startups that weren’t absolutely necessary, were optional for customers, probably will face challenges. They will be forced to look at more efficiencies to reduce their spending and to optimise headcount.”

🎧 A16z's latest European investment and the world's biggest bug business — plus the download on Klarna's second round of layoffs. Listen to the latest episode of The Sifted Podcast.

🇮🇱 Israel’s booming startup ecosystem in four charts. With 97 unicorns produced from a population of only 9m, Israel has more than earned its unofficial title of "The Startup Nation". So what took the country to its lofty heights and how's it faring in the current climate? (In partnership with Sapphire Ventures.)

Get even more from Sifted with our range of specialist newsletters, covering everything from climate tech and venture capital to everything you need to know about running a startup. Sign up for bonus news, wisdom and gossip you won’t find anywhere else — not even on the Sifted site.

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Kai Nicol-Schwarz

Reporter

Get in touch with him at

kai@sifted.eu 

He tweets from

@NicolSchwarzK

Amy Lewin

Editor

Get in touch with her at

amy@sifted.eu

She tweets from

@amyrlewin

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