Good morning Sifted reader,

After months of negotiations, the UK has re-entered the EU's €95bn Horizon Europe funding programme. That means British researchers can once again apply for grants and co-operate with peers across Europe on research projects, after a three-year hiatus. Here's what it means for startups.

All eyes are now on Switzerland, which has also been shut out of Horizon for the past two years — and plans to reopen negotiations for its own re-entry.

The UK government has also been busy sending out invites to its flagship AI Summit — but not to 21 of the EU’s member states, Sifted’s Cristina Gallardo has learnt. China, the US and India have, however, received invitations to the event, where officials plan to discuss how to mitigate the risks posed by AI.

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Is trouble coming for startups offering weight-loss drugs?

If you've had half an eye on celebrity news you'll have likely come across Ozempic or Wegovy. The "miracle” weight loss injections have been flying off shelves and into the medicine cabinets of celebs like Elon Musk and Amy Schumer.

As weight loss fever hits European shores, European startups are also getting in on the game.

Danish company Embla recently raised €10m, and Swedish company Yazen €3.1m. Both startups offer treatment plans with semaglutide — the drug sold under brand names like Wegovy and Ozempic.
Other startups focused on men's health — like Manual and Numan — also offer weight-loss treatments that include semaglutide injections.

But the surge in demand is making the drug harder to access for diabetics — who it was originally designed to treat. Some medical experts are also worried about how easy it is to get your hands on.

On top of that, investors are worried that a shortage could spell trouble for the startups selling the drugs.

🇬🇧 UK rejoins Horizon Europe. After two and a half years of post-Brexit negotiations, a deal that will let UK universities and startups access the EU's €95bn research funding pot has been given the go ahead by prime minister Rishi Sunak.

🇨🇳 China invited to UK's flagship AI summit, but 21 EU states left out, sources tell Sifted.

💰 Connect Ventures collects $$$ for its new fund. The London-based product-focused VC shared that its fourth fund has passed the $80m mark ahead of a final close later this year. The firm typically invests between $150k-2.5m in pre-seed and seed rounds across B2B SaaS, fintech, consumer, healthcare and Web3.

💰 H2 Green Steel has secured a mammoth €1.5bn in equity from investors including Altor, GIC, Hy24 and Just Climate. It says it'll use the cash to build the world’s first large-scale green steel plant in Sweden, and Europe’s first giga-scale electrolyser. 

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👀 Europe's founder factory flywheel be turning. Sifted has recently been unpacking the startups launched by alumni from some of the continent's success stories. Today we're digging into 7 Personio alumni-turned-founders you need to know.

Read more founder factory stories from Sifted: Babylon | Revolut | Adyen | Trade Republic.

📧 The secret to staying sane as a VC: get to inbox zero — LETA Capital's Sergey Toporov explains why organising your emails can be the key to being stress-free, and shares his tips on how to gain control.

🧪 Europe’s scientific founders are fighting for lab space. Demand for labs is only set to grow as science-based startups working on everything from drug discovery and novel treatments to new materials and climate change look to scale — but scarcity of space, low-specificity labs and high rents are proving a bottleneck for progress.

😴 “No one gets outta bed for less than half a million dollars." That's what Builder.AI’s Sachin Duggal had to say about the AI talent crunch when he joined the latest episode of the Sifted podcast.

Funding for B2B startups increased in 2022

VC deal value in Europe fell 60.8% in the first half of the year, compared to the first half of last year, according to new PitchBook data. In the UK, it fell 57.7%.

That is even worse than many of us realised. Speaking on a Sifted Talk yesterday, Hoxton Ventures partner Hussein Kanji — who's also set to speak at the Sifted Summit — said: “The rhetoric in the market is, it’s down a little bit, maybe down a medium bit — but this is down a lot.”

If you take the long view, it’s not terminal for the European tech ecosystem. “We’re still on track to be about the same size as 2018/2019, so if you just ignore the pandemic years it’s kind of okay,” Kanji said.

But the problem doesn’t look like it’s going away anytime soon. VC fundraising is also slowing down big time. So far this year, PitchBook has tracked just 20 fund closes in the UK, compared to 66 in the whole of 2022 and 107 in 2021.

VCs aren’t raising, VCs aren’t investing, companies aren’t selling — or listing — or buying. The “system is clogged up”, said Kanji.

“I suspect it’s going to take another two to three years for this mess to clear up. It’s not going to take six months. And it’s going to be difficult out there for companies to raise money, in the same way that it’s going to be difficult for venture firms to raise money.”

Unless, of course, you’re a generative AI company.

— Amy Lewin, editor

🌿 Are nature-based solutions to the climate crisis VC-backable?

Protecting the natural world has typically been left to ecologists and nature-lovers, not VCs. But a sweep of recent legislation that has tried to put a price tag on protecting nature is starting to change that.

In particular the EU's Nature Restoration Law, passed in July this year, which will see restoration measures put in place by 2030 covering at least 20% of all land and sea areas in Europe.
As part of that companies will need to be more transparent about the harm they're causing to nature in the areas in which they operate, and what they're doing to help. It's seeing big brands turn to startups for help.
It's good news for companies like UK-based Pivotal, which captures data on biodiversity — including the number of plant and animal species in a given area and their health — and allows companies to fulfil measurement and monitoring requirements. Investors are also on board with the business model. “I’ve never been so chased in my life by VCs,” says cofounder Cameron Frayling.
But it's not a guaranteed cash cow, and as the sector matures, not everyone's convinced it can be a long-term bet for VCs.

More recent climate stories from Sifted: The case against carbon capture | Batteries from crashed Teslas could power UK homes

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🔥🔥🔥

Envisics, a UK-based company which provides holographic tech for cars, has added $50m to its Series C round, which now totals $100m. Investors included M&G Investments and existing investor Van Tuyl Companies.
French startup Corteria Pharmaceuticals, which is developing new therapies for heart conditions, has secured €65m in Series A funding led by OrbiMed and Jeito Capital. Exising investors Kurma Partners, Fountain Healthcare Partners, V-Bio Ventures, Invivo Capital and Omnes Capital also pitched in.
France-based Gradient Denervation Technologies, which is building a catheter device, has raised a €14m Series A round led by Asabys Partners. Thuja Capital and Sofinnova Partners also invested.
Swiss startup deskbird, which offers a workplace management platform, has bagged $13m from investors including ALSTIN Capital and AVP (AXA Venture Partners). Session.vc, Rivus Capital and PortfoLion also invested.
Swedish fintech Treyd, a buy now, pay later service financing retail supplier invoices, has added $12m to its Series A round, bringing the total round to $25m.
Anti-money laundering software startup Strise, based in Norway, has raised $10.8m led by Curiosity, with Maki.vc, Sondo Capital and Likeminded also pitching in.

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Sweden's Skyqraft, which provides energy infrastructure inspections, has raised $3.8m led by Antler, Subvenio Invest and Neptunia Invest.
Estonian electric vehicle charging startup VOOL has raised €1.3m in additional seed funding led by Specialist VC, alongside a €1.6m grant.

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