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OCTOBER 12, 2022

Hello Sifted reader,

We've got good news and bad today, so we'll start low and end on a high. German neobank N26's annual report showed it lost €172m in the year to December 31, up 14%, as it battled compliance issues across Europe. 

On the other hand, Spain welcomed a new unicorn to its ranks as HR management platform Factorial's $120m Series C saw it hit the hallowed $1bn valuation mark. Plus, Paris-based game development platform Homa raised $100m to continue equipping indie developers with the resources to compete with bigger rivals, and legal SaaS (and Sequoia accelerator alum) Fides took home $4.3m in a seed round led by Berlin's La Famiglia.

Also from the Sifted newsroom:

• 7 Czech startups VCs are watching
• Ecosia's advice for prioritising impact over profit
• Seed funding in September: the wrap-up
• The state of AI investment in 2022

🔥 What happened to seed funding in September? With 333 deals and a collective €510m raised, last month seed funding in Europe recovered ground on a recent dip. British fintech Sequence had the honour of the biggest seed raise — it took home $19m in a round led by Andreessen Horowitz. But which sectors were the overall winners of the month? 

🌳 The Patagonia effect. If the VC rat race is getting you down and you wish you could be a bit more like Patagonia, there's a great option in becoming steward owned. Christian Kroll, the founder of search engine Ecosia, which donates 100% of its ad profit to environmental causes, runs through everything you should consider.

🤖 Is 2022 bad news for AI? A new State of AI report has revealed that despite a growth boost in 2021, investments into the sector have dipped back down to 2020 levels this year. But it's not all doom and gloom. While a decrease in "megarounds" of $100m+ is partly to blame — something that has affected other sectors too — some areas of deeptech continue to pique investor interest.

🇨🇿 The startups investors think you need to Czech out. The Czech Republic's tech ecosystem is about more than antivirus software Avast. In the last few years it's birthed several unicorns — including online grocer Rohlik Group and productivity SaaS Productboard — and other local startups are expected to hit the $1bn mark soon. So who do VCs have their eye on?

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🦄 Factorial becomes Spain's newest unicorn. The HR management platform's $120m Series C round was led by new investor Atomico and supported by the likes of Tiger Global and Creandum. It's been a strong few years for the company, which says it's seen a 3.7x boost in revenue since 2019. 

💰Sequoia accelerator alum raises $4.3m. Legaltech startup Fides's seed round was led by Berlin's La Famiglia and also included angels like Luciana Lixandru, partner at Sequoia. The startup's app is designed to help general counsels digitise and manage their governance duties in one place, and some of the fresh cash will go towards the AI tool the company is developing to automate as many of these tasks as possible. 

📉 N26's losses widen. The German neobank was €172.4m in the red last year, up 14.4%, as it focused on addressing compliance headaches. It put the losses down to a 31% increase in spending on governance, compliance and online fraud prevention frameworks, as well as continued hiring — at a time when many of its competitors have frozen hiring or are making layoffs. 

🎮 Homa bags fresh cash to help indie game studios battle the giants. The Paris-based game development platform, which allows smaller developers to build and test mobile games to rival their better-funded competitors, raised a $100m Series B round co-led by Qaudrile Capital and Headline.

SIFTED TALKS

In this uncertain economic climate, the investment pace for VCs has slowed and the focus has shifted from blitzscaling to cutting costs. On October 26, we’ll ask the experts how founders and revenue leaders can successfully navigate this new context.

Register to attend.

🤝 Fintech M&A in an economic downturn. Fintech is facing an early winter frost, with valuations dipping and deals slowing down. At last week's Sifted Summit, Amy O'Brien consulted the wisdom of fintech founders and VCs to find out if — and why — M&As might be the answer. 

👉 ESG regulations are changing in Europe: here’s what growing startups need to know. (Sponsored by ECBF.)

Sadia Nowshin

Editorial Assistant

Get in touch with her at

sadia@sifted.eu 

She tweets from

@sadianowshin_

Eleanor Warnock

Deputy Editor

Get in touch with her at

eleanor@sifted.eu

She tweets from

@misssaxbys

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