Good morning Sifted reader,

This week the European Investment Fund (EIF) — the biggest backer of European VC — held a snazzy shindig in Luxembourg. 300+ general partners, from everywhere including Greece and Iceland to Finland and Portugal, gathered to hear what the EIF is seeing in the market — and wants to see from the market.

The resounding message — as several attendees pointed out on social media — was that the EIF wants to see a whole lot more focus placed on gender diversity and sustainability.

It was also made crystal clear that the hyperbolic valuations of 2020 and 2021 were blips in European VC history: fund returns are now looking a lot more like they did at the end of 2019.

What’s unsure is whether things now level out — or get even worse. Join the Sifted Summit next Wednesday and Thursday to hear some of Europe’s leading investors’ best guess at what will happen.

— Amy Lewin, editor

Has the fintech bubble burst?

For over a decade, fintech went up like a rocket. But in 2022, a drop in tech valuations has pushed investors to do some soul searching. Our latest report takes a look at the bright spots in Europe’s fintech sector, including those helping CFOs navigate the downturn.

Read our latest report

In a move that will perhaps surprise nobody, France has announced that it plans to hold an AI conference in November to rival the UK’s AI Summit:

The announcement was made by French billionaire and tech investor Xavier Niel, who intends to host the AI conference in Paris on November 17 — sponsored by US chipmaking giant NVIDIA.
That’s just two weeks after the British AI Summit on November 1-2.
Niel also announced a €200m investment pledge for AI.
But, says Sophia Gaston of the UK think tank Policy Exchange, it looks like they aim to do two different things: “The British one will be focused on the international diplomacy and governance of AI, while the French proposal seems more industry and innovation focused.”

Rather than duel with France over AI, the UK might want to think about putting more energy into its semiconductor sector.

Sifted has discovered that US officials have been approaching UK startups to encourage them to apply for funding under the US Chips Act, which is pumping $53bn into R&D and manufacturing of semiconductors.
If they took the funding, some of their work would have to be carried out in the US.
Some say that might be reason enough for a number of UK startups to take their key strategic technology stateside.
However, thanks to the UK’s recent deal with the EU, as of 2024 UK chips startups will also be eligible to apply for some of the €43bn worth of EU funding for semiconductors — but only the cash channelled through Horizon Europe. That leaves some hope British startups will stay on the continent.

— Amy Lewin, editor

💻 Mistral has released its first AI model, which the Paris-based generative AI company says outperforms others on the market — including Meta’s Llama 2 — and requires nearly 50% less computational power to run.

It's the first piece of technology the startup has built since making headlines with a €105m seed round in June, four weeks after it launched and with no product.
But training AI models costs a hell of a lot, and has led some experts to question whether using equity financing to pay for these compute costs is a smart use of dilutive funding.
Cofounder Arthur Mensch says Mistral is also pondering that question, but isn’t disclosing how much this model cost to train.
He did tell Sifted that this model used around 200k hours of GPU hours (a measure of how much computational power is used in AI training). To give a ballpark, NVIDIA’s latest chips cost around $2-2.5 per hour on the cloud, meaning that Mistral’s model is likely to have cost $400k-450k in compute alone, and the company is currently training larger models that will be more resource intensive.

🇩🇪 Redstone achieves first close of €52m quantum fund. The German investor has secured €20m of its total target so far, which it'll use to back European seed to Series A startups with a focus on quantum computing, sensing and communications.

🔐 Nord Security raises $100m. US private equity group Warburg Pincus fronted the cash for the Lithuanian VPN maker, which is now worth $3bn — nearly double what it was a year ago.

📲 The “iPhone of artificial intelligence”. Sources tell the Financial Times that OpenAI founder Sam Altman is in advanced talks with former Apple designer Sir Jony Ive and SoftBank's Masayoshi Son to develop the ChatGPT creator's first consumer device — fuelled by more than $1bn from the Japanese conglomerate.

💰 "I took this business to one billion — he has to take it from one to five." That's the challenge that Daniel Dines, cofounder of Romanian automation giant UiPath, has set his co-CEO Rob Enslin.

Dines, who is stepping aside as the company's CEO at the end of the year to take on the chief innovation officer role, is also planning to tap the generative AI wave.
On top of having its own AI research centres, Dines tells Sifted that UiPath is looking for interesting startups to acquire in the process automation and GenAI space.
For now though, he's using the tech to tap into his inner Bard. “If I write a poem [...] I can use ChatGPT to help me rephrase some of the things, give me some ideas, wording. It’s not bad".

🇧🇾 “We fought the regime. But now, who cares?” Less than three years ago, hundreds of tech workers and founders from Belarus opposed to leader Alexander Lukashenko's regime took refuge in neighbouring Poland. They were promised fast track visas, financial aid and jobs — but since the war in Ukraine began, Poland has shifted its focus to accommodate millions of Ukrainian refugees, and Belarusian founders say they're being left behind.

🔎 LPs 101: What they are, and what they look for from VCs.

⚽️ 11 sports tech startups to watch, according to investors from Boost Capital Partners, Active Partners and Moonfire Ventures.

🎙 On this week’s edition of Startup Europe — the Sifted Podcast, we’re hearing about the fate of two of Europe’s most hyped deeptech companies, and about how the vertical farming sector is struggling to stay alive as energy prices have soared.

↘️ 4 ways CFOs can adapt to the downturn — and their changing role. (Sponsored by Mangopay)

☁️ Cloud, privacy and AI: Trends defining the future of data and databases. (Sponsored by SurrealDB)

Are celeb investors worth it?

The Venn diagram of “angel investor” and “scored the goal that won a football World Cup” doesn’t have an extensive cast — but there is one person perched in the middle.

Since cushioning the ball on his chest and volleying home the goal that won Germany the trophy in 2014, footballer Mario Götze has backed companies like cybersecurity startup NetBird and edtech platform Knowunity — and he’s just one of many famous faces that have taken the leap into the world of startup investment.

But beyond getting a "shiny sticker on a press release," what benefit do famous folk actually bring to the founders they back?

The PR buzz shouldn't be underestimated. Consumer tech startups particularly benefit from celebs with a track record endorsing their brand — Snoop Dogg, for example, backed medical marijuana company Sanity Group through his $100m fund Casa Verde Capital, which has backed several other medical marijuana-based startups.
Unique industry insight. Celebs can become valuable advisors to startups working to shake up the industries they have experience in and discuss pain points and feature ideas with founders — they can also help VCs validate investments in the due diligence process.
The net worth of the network. Celebrities and athletes have an "incredible black book" of contacts, from colleagues who could become advisory voices or clients through to suppliers, distribution partners and governing bodies.

But, says Caspar Lee — a former YouTube star and cofounder of Creator Fund — startups should still vet celebs like any other investor. He says that some celebs reckon the value of their personal promotion of a company is enough to demand discounts on their investments — which he tells Sifted isn’t a good idea in the long run for either party.

To receive more from Sifted's Startup Life coverage, sign up to our Startup Life newsletter, dropped into your inbox every Wednesday.

🌳 2023 is the year of the infrastructure startup.

The four largest equity rounds in European tech so far this year have all gone to companies building climate infrastructure — which Sifted defines as companies working on green technologies that demand a large physical footprint and are capital intensive.
And out of the biggest 20 rounds in Europe this year, half have been for climate tech companies — equating to 69% of the capital across those rounds.

We hear a lot from founders about starting and scaling a startup, but what about when things go the other way? Have you had to shut down your startup? How did you do it? And how did it feel? Share your thoughts with orlando@sifted.eu.

🔥🔥

Paris-based Swish, a provider of charging stations for electric vehicles, raised €47m in equity (and "quasi-equity").
Framer, an Amsterdam-based no-code website builder for designers, has raised a $27m Series C round.
AYRO, a French startup building wingsails for cargo ships and yachts, has netted a €19.2m Series B round led by Blue Ocean.
Hamburg's Resourcify, a waste management platform, netted a €14m Series A round led by Vorwerk Ventures.

🔥

London-based fintech Apron has raised $15m in Series A funding to simplify invoicing for companies, in a deal led by Index Ventures.
TravelLocal, a UK-based site providing tailor-made itineraries for wealthy travellers, raised a €9.7m Series B led by Puma Private Equity.
Pencil Biosciences, a gene editing techbio based in the UK, has raised £5.6m from investors including Octopus Ventures, Northern Gritstone and Martlet Capital.
Ondorse, a French B2B identification and verification platform, has raised a €3.8m seed round, led by existing investors Eurazeo and ISAI.
London-based Flawless, a monitoring and alerting platform for ops teams, has raised a $2.2m seed round led by 42CAP.
London-based employee training platform Morphoses has secured €2.1m — led by Greek investor Uni.Fund.
Berlin-based proptech Novo has bagged a €1m pre-seed round to help building managers renovate properties to cut emissions.

If you’d like to submit a deal, get in touch.

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