Good morning Sifted reader, |
Marijuana has been on my mind a lot this week.
And I'm not alone. Across Europe, cannabis tech startups are on tenterhooks, waiting to see if German lawmakers pass the long-awaited Cannabis Act (CanG), making Germany the only second EU nation to legalise the drug. It's unlikely to be as wide-ranging as some hoped, but nevertheless it's likely to turbocharge Germany's buoyant medical marijuana industry, already the biggest in Europe and expected to be worth €7.7bn by 2028.
Although medical marijuana has been legal in Germany since 2017, it was still classed as a narcotic and, as such, difficult for doctors to prescribe.
From 2024, getting weed will be as easy as getting antibiotics. “Germany will be the biggest medical cannabis market in the world,” says Niklas Kouparanis, founder of Bloomwell Group, a medical cannabis startup.
And it isn't only medical marijuana where startups are expecting a nice post-CanG buzz. The law allows anyone in Germany to grow three marijuana plants at home, opening up opportunities for those that sell home-growing equipment like lights and seeds, Kouparanis says.
But it may not be that simple. Critics say that Germany's medical marijuana industry is already saturated, with over 100 cannabis wholesalers already fighting for business. Meanwhile it is not clear how fast the government will move towards allowing shops to sell recreational weed, the real golden goose.
And even then, in the US — where cannabis is fully legal in 23 states — cannabis tech startups have struggled to make money, and remain locked out of the banking system and restricted on where they can advertise their products.
CanG is a start, but Europe's cannabis tech bonanza may a little way off.
– Orlando Crowcroft, commissioning editor |
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Once upon a time, circa 2019, it looked like Babylon Health was about to revolutionise the UK's infamously dysfunctional healthcare system. Just four years on and the healthtech giant has been sold for scraps. So, what happened?
Sifted's Kai Nicol-Schwarz spoke to nine former employees and multiple industry insiders to chart the rise and fall of Babylon. They tell a tale of hubris, blitzscaling and the power of a charismatic and connected founder, Ali Parsa, to convince a nation that his vision was attainable and desirable.
“He knows how to get to people and knows how to open doors,” one healthtech consultant who worked with Parsa told Sifted. Another described Parsa as a "cult leader" — but not in a “bad way”.
When he couldn't open doors himself, Parsa brought on Dominic Cummings, the former Boris Johnson advisor and the man who masterminded Brexit, to help him. Parsa fully embraced Jeff Bezos' concept of "constructive conflict" at Babylon HQ, and hours were punishing.
Ultimately, unlike his revered Amazon, the economics at Babylon never added up: the company admitted it lost money on every patient in the UK in 2022 and abandoned contracts. Things went from bad to worse and finally, in August 2023, it was all over. So, what did we learn from Babylon? “One of Ali’s skills was simplifying hard problems," one former senior employee told Sifted. "But he oversimplified healthcare too much.” |
🇫🇷 Paris-based VC Breega, an early backer of quantum startup Alice & Bob and French unicorn Exotec, has announced a new €150m early-stage fund — with a strong focus on UK startups. -
“With this fund, we really wanted to take the Breega brand — which is still predominantly French and based in Paris — and expand that so that we had a good pan-European approach,” says Dan Shellard, UK partner at Breega.
- Around a third of the new fund will be invested in British startups.
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“The UK continues to be the best-performing ecosystem, London in particular,” says Shellard. “We want to make sure we are backing the best founders.”
🚚 Volta Trucks has filed for bankruptcy in Sweden. It comes eight weeks after its battery supplier, Proterra Inc., failed. -
In a statement, Volta said the Proterra issue had "negatively affect[ed] our ability to raise sufficient capital in an already challenging capital-raising environment for electric vehicle players".
- The company, which has raised €300m from investors, said it would soon file for bankruptcy in the UK.
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It had an order book of 5,000 vehicles, and was poised to begin production at a factory in Austria prior to its supply chain issues.
🗯️ WebSummit cofounder Paddy Cosgrave is in hot water over comments he made about Israel, with a number of VCs announcing that they will not attend the conference later this year. - In a comment on X, the site formerly known as Twitter, Cosgrave accused Israel of war crimes.
- Israel's ambassador to Portugal claimed that dozens of companies have pulled out of the event over Cosgrave's "outrageous" comments.
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Cosgrave has since apologised.
📉 EQT Group CEO Christian Sinding is mulling private stock sales for portfolio companies in the face of what he calls a "dysfunctional" IPO environment. -
Private equity firms like the Nordics-based EQT have struggled to sell down stakes in companies amid a wider slowdown in dealmaking and a lack of IPO prospects, which are at their lowest level since the 2008 financial crisis.
🇩🇪 Germany's chancellor Olaf Scholz may skip the UK's much-vaunted AI Summit, raising fears of a domino effect that could see other world leaders decide not to attend. -
Although the guest list for the event at Bletchley Park has not been published, there is speculation that Emmanuel Macron, the French president, may not attend either.
- Meanwhile, controversy has surrounded the invitation to a representative of the Chinese government.
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😠 Female founders raise less money than male founders even in femtech, where more than 70% of companies are founded by women. -
In 2022, 57 femtech companies with all-male founding teams raised $731m, while 105 femtechs with all-female founding teams shared a total $408m, according to PitchBook.
- In 2023, though, things are looking up: femtech companies founded by women have raised $7.5m on average this year so far, versus $5.7m raised by men.
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🙄 Kestrix founder Lucy Lyons had always imagined she would base her climate tech startup in Berlin — until she tried to get a visa. -
Reaching out to other non-German founders in the country she encountered one piece of advice: don't do it.
- It was not only expensive, but incredibly complicated. In the end she stayed in London, where it was cheap and simple.
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The sector has seen a flurry of deal action in 2023, with funding having already surpassed the $1bn mark. So we set out to discover who’s doing what — and how well. Discover the ultimate list of early-stage European companies you should keep an eye on. |
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Has European SaaS finally bounced back? Generative AI has fuelled growth in the beleaguered software-as-a-service (SaaS) and cloud services industry, according to the latest report published by VC firm Accel. It found: -
That valuations, investment levels and unicorn creation in the sector is back in line with 2019 levels.
- Funding in cloud services in Europe and Israel was $11bn in 2023, down from $31bn in 2021.
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Of the SaaS and cloud unicorns created in Europe and Israel in 2023, 45% are GenAI native, including AI21 Labs, Stability and Synthesia.
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🔥🔥 - Berlin-based startup Inuru, which makes tiny electronic labels that can be added to things like medication and clothes, has raised $10m led by Aper Ventures and the Aria Fund, making its US market debut.
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🔥 LuzIA, a Spanish AI startup, has raised a €9.5m Series A from investors including Pau Gasol OLY, Khosla Ventures, A* Capital and Globo.
Danish startup Creative Force, which helps e-commerce companies create content for marketing campaigns, has raised a $8.9m Series A from EIFO and Hearst Ventures.
Danish climate fintech Klimate.co has raised a €3.5m seed from Eneco Ventures alongside Helen Ventures, Rockstart and the Export and Investment Fund of Denmark. It says it helps customers find quality carbon credits, save money when purchasing them and finances future carbon removal projects. -
Berlin-based Zeedz, which has created a game where players fight carbon emissions by collecting plant-like creatures, has raised a $1m seed from investors including Germany's Shark Tank and Die Hohle der Lowen.
- Stockholm's Hailey HR, an HR platform, has taken on a €1.7m loan from ArK Kapital.
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There are plenty of ways to get your fix. |
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Orlando Crowcroft
Commissioning Editor |
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