Good morning Sifted reader,

Sifted Summit is now only one week away (we can’t believe it) and the agenda reflects many of the threads our newsroom has been chasing this year. Infrastructure startups. Defence tech. AI. The rise of the CFO. And of course, because everyone likes a good competition… how Europe’s many tech hubs are jostling to attract the best talent and build the best companies.

The competition is particularly fierce between France and Germany. The latter has historically attracted more funding, but was overtaken by its hexagonal neighbour in 2022. That year, French startups raised €15.2bn — €3.6bn more than their German neighbours.

La French Tech’s quick rise is in no small part thanks to the French government: President Emmanuel Macron pledged in 2017 to make his country the next “startup nation”, and state bank Bpifrance, alongside other government initiatives, pumps billions of euros into the tech ecosystem every year.

Startup expectations are high for the country’s 2024 budget, due to be presented later today in Parliament, and could include tax incentives to encourage more startup investment by private investors.

But it’s not all politics. Yesterday, French billionaire Xavier Niel announced plans to invest €200m in AI, which includes securing supercomputing capability from NVIDIA — which will be available to companies via cloud provider Scaleway — and building a new AI research lab based in Paris. Niel says that, with this, he hopes to create an entire ecosystem for AI in France. With the sector booming, France doesn’t just have its eye on Germany now — but Silicon Valley.

There are already telling examples of French engineers returning from big tech companies in the US to start ambitious AI startups back in their home country — such as Mistral AI, Dust and Nabla. Now, even some US-based startups, like Poolside AI, are making the move. France is making no secret of its goal to become Europe’s AI champion — will it be enough to win?

Give us your answer next week at the Sifted Summit. If you haven’t got your ticket yet, grab one here!

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❌ Dutch arm of vertical farming startup Infarm declared bankrupt. The news follows a string of Infarm exits over the past year, after Europe's largest vertical farming company shut down operations across the UK, France, Germany, the Netherlands and Denmark.

⚽️ The metaverse isn't dead. London-based virtual world maker Improbable has cut losses from £150m in 2021 to £19m in 2022, according to its latest financial results — that's after it refocused its efforts on building tech for the metaverse.

🎧 Spotify x AI. The Swedish music streaming giant has announced a new feature that will have a lot of GenAI startups worried — voice translation technology, which will allow users to listen to any podcast episode in their own native language.

Buzzy European startups like ElevenLabs and Voicemod are working on GenAI-powered voice modulation technologies that they are selling to media organisations and gaming companies.
This week’s news shows that big platforms like Spotify might be more inclined to build the tech in-house, rather than buying it from external providers — particularly as cutting-edge models are becoming increasingly available open source.

🤖 Amazon to spend big in AI arms race. The company plans to invest up to $4bn in US AI startup Anthropic — the company behind chatbot Claude — as it looks to compete with the likes of tech giants Microsoft, Google and NVIDIA, who are all trying to convince AI startups to use their tech.

The deal will see an initial investment of $1.25bn for a minority stake in the startup — that may rise to $4bn.
Anthropic will also use Amazon's cloud computing platform as part of the deal, as well as its AI chips to build its models.

🇺🇸 Europe, America is coming for your startups. US firms have contributed nearly half of the funding for European startups so far this year. While it's a cause for concern for some, it could be a golden ticket for the region's tech companies, writes VC Francesco Perticarari.

🤖 25 deeptech startups at the heart of Europe’s tech sovereignty — they've all raised big bucks from investors and are working on everything from AI to quantum computing.

🇳🇴 16 Norwegian startups to watch — according to investors from Alliance, Verdane, Skyfall Ventures and Katapult.

While 2022 saw fintech investors put the brakes on late-stage deals, 2023 has seen the slump trickle further down the food chain.

So far this year, just $379m has been invested into pre-seed and seed-stage fintechs in Europe — compared to $995m for the whole of 2022.
All but two of Europe's most active early-stage fintech investors last year have seen a dramatic drop in the number of deals done in 2023.
That could change though. Investors tell Sifted they're beginning to see their deal pipeline pick up as they head into the last quarter of 2023.

Elsewhere, the fintech sector has been knocked off the top of the UK funding charts for the first time in a decade — according to data compiled by Dealroom and HSBC Innovation Banking — and replaced by the energy and transportation sectors.

Energy startups have raised $3bn so far this year, just shy of the $3.4bn they raised across the whole of 2022.
Transportation startups — many of which cross over into the energy sector — have brought in $2.7bn this year.
Fintech, meanwhile, has raised just $2.1bn in 2023, down from a high of $13.5bn in 2021. It is likely to end the year at its lowest level since 2018.

Equity investment into UK spinouts saw a sizeable dip in the first half of 2023, according to a new report by data platform Beauhurst and spinout investor Parkwalk Advisors.

UK spinouts picked up £743m in H1 2023, compared to £2.34bn across the whole of 2022.
While overall funding has been hit, if deal count remains steady, it'll likely get close to last year's figure — 192 deals were made in H1 2023, compared to 414 in the entirety of 2022.

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Aledia, a French startup developing microLED displays, has raised a €120m Series D featuring Bpifrance.

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Traceless materials, a German startup making an eco-friendly alternative to plastic from plants, has raised a €36.6m Series A featuring Planet A Ventures and High-Tech Gründerfonds.
Pexapark, a Swiss energy investment platform, has raised €20m in Series C funding.
Kern tec, an Austrian startup that upcycles waste products like fruit pits into spreads and oils, has raised a €12m Series A.
Continuum Industries, a Scottish startup that has developed an AI tool for planning infrastructure projects, has raised $10m in Series A funding led by Singular.

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Notify Therapeutics, a Danish biotech developing novel treatments for infertility, has raised €5m.
Mintago, a UK-based finance management platform for consumers, has raised $4.75m.
Rayon, a French design tool for the architecture, engineering and construction industries, has raised a €4m seed round co-led by Northzone and Foundamental.
Cleveron, an Estonian last-mile delivery startup, has raised €3.5m.
Cygnetise, a London-based blockchain security startup, has raised £2.5m.
Flygildi, an Icelandic drone startup, has emerged from stealth with a $2.2m seed round.
QA.tech, a Swedish startup that provides an AI-powered software quality assurance testing platform, has raised $1m.

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