Good morning Sifted reader,

Yesterday, US VC firm General Catalyst and German early-stage VC La Famiglia announced they were merging. Jeannette zu Fürstenberg, founding partner of La Famiglia, will become managing director at GC and will help build out a global seed investment programme.

La Famiglia declined to give financial details of the deal — which is set to complete early next year — but Fürstenberg told Sifted “we’re not doing this for the financial outcome”. She said that the firms will be raising joint funds in the future.

Commentators were quick to suggest that this is unlikely to be the last such move we'll see.

"There was a big increase in the number of funds during the past few years, especially in some of the 'hot' spaces like climate — and I don’t think all of them will survive to raise subsequent funds, at which point they will think about options, one of which is merging," Andris Berzins, managing partner at Change Ventures, told me via WhatsApp.

"A lot of poorly differentiated SaaS funds are candidates for mergers right now," said one of those climate investors, Florent de Gantès, on LinkedIn.

Others pointed out that it could be a good way for US firms to grow their teams in Europe quickly — however, not all US firms want to expand their footprint here. At the Sifted Summit earlier this month, Alex Ferrara from Bessemer told us his firm has no plans to hugely grow its team in Europe.

So, which other US VCs are new enough to the market — and keen enough on the market — to bother? Lightspeed already has people in France and Germany — and is doing plenty of deals. Andreessen Horowitz? ICONIQ? IVP?

Or — maybe — it will be European VCs buying other European VCs.

Finally, perhaps the biggest question of all is: which seed funds would have something so unique that a later-stage or bigger firm would rather buy them than hire their own early-stage team?

You tell me.

A final hot take on the deal from a friend of Sifted? "They got to liquidity faster than their portfolio companies."

– Amy, editor

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🛃 The UK's Financial Conduct Authority has imposed customer onboarding restrictions on payments fintech Modulr.

The restrictions prevent Modulr bringing on new "partner" clients who use its technology to provide payments.
Modulr, which is backed by General Atlantic, Frog Capital, Highland Europe and PayPal’s venture arm, says it’s working with the regulator on its “systems and processes”.

🇬🇧 If only you could invest in a startup index. UK startups consistently grow 25-31% annually — making them a great place to park your money, finds SyndicateRoom, an EIS fund (which wants you to park your money in it, presumably). It looked at all the British startups which raised capital between 2011-2015 and tracked their valuations to 2022.

The top 6% companies accounted for 80% of the value in 2022.
The final value of all the cohorts was £181bn, with an average £3bn invested in the cohort every year.

🇫🇷 France wants to build the data centres Europe's AI startups need, and French billionaires and government officials alike are stepping up to make it happen.

💬 'VCs, stop wasting your money on AI chatbots and invest in deeptech instead.' The bubble will burst.

🇳🇱 Inside Rotterdam’s bid to be Europe’s largest green hydrogen hub (sponsored by Up!Rotterdam)

Team Sifted are on the road.

Eleanor Warnock and Miriam Partington will be in Heilbronn on Wednesday and Thursday this week.
Climate tech reporter Freya Pratty is hanging out in Malmö for a month from next week. Let her know if you fancy a fika.

🔥

Webel, a Madrid-based startup which helps customers find everything from cleaners and masseuses to hairdressers and dog groomers via its app, raised €2.1m led by Trind Ventures.
Milan-based SaaS startup Zakeke raised a €2m SAFE fromBerrier Capital.

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

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