Sifted - Klarna workers strike ❌

Good morning Sifted reader,

Another day, another new forum to look into the risks and challenges of AI. 

This time it's the United Nations, which is setting up an AI Advisory Body to “strengthen international cooperation on AI governance”. 

The UN has invited Albania, Estonia, Germany, France, Spain and Switzerland to take part — but not the UK — which might come as a snub given prime minister Rishi Sunak’s ambition to put the country at the forefront of AI discussion.

The UN body will meet for the first time today, and publish preliminary recommendations by the end of this year, with final recommendations due by summer 2024.

Meanwhile, tech founders in Europe are calling for a regulatory reprieve, warning that the US and China will race ahead in building AI as we Europeans spend our time talking about it.

And in non-AI news, Klarna is the latest tech company in hot water with unions over its refusal to negotiate with them. Workers are planning to strike on November 7, Sifted revealed last night.

— Orlando Crowcroft, commissioning editor

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🙅‍♀️ Klarna workers will strike on November 7 over a refusal by the fintech's management to negotiate with unions in Sweden. Klarna has resisted calls to establish collective bargaining, under which unions would have to be consulted over issues like pay and redundancies. 

🇩🇪 German fund of funds Equation has bought VC fundraising platform Betterfront. 

• Equation backs up-and-coming European VC managers, while Betterfront helps digitise the VC fundraising process by letting managers share docs and track record analytics with potential LPs. Betterfront has also developed a marketplace for the sale of stakes in VC funds, known as secondaries.

➡️ Restrictions ease on N26 new customer onboarding. German financial regulator BaFin is set to relax the restrictions on new customer onboarding it placed on the neobank in October 2021, which have hampered its growth and margins. In a letter to investors, seen by the FT, N26’s founders said the bank is soon expected to be permitted 60k new customers a month; an increase of 10k new customers per month. A spokesperson for N26 confirmed the news to Sifted, but said the bank is yet to receive formal confirmation from the regulator. 

💰The Future Fund, which wrote convertible loan notes worth £1.14bn to 1,190 British startups during the pandemic, says it has extended 65 loans by up to two years. Not all companies have been so lucky, however — in the summer, Sifted spoke to several startups who were denied loan extensions and had to dissolve their companies as a result. 

• 661 loans, totalling £652m, have already converted into equity, meaning the British Business Bank is now a shareholder in those startups. 
• New equity holdings include Juno Bio, a vaginal microbiome test startup; Micrima, a spinout from the University of Bristol which has developed a breast cancer detection tool; and AstronauTx, a spinout of UCL which is looking into new treatment for neurodegenerative diseases. 
• 146 startups have gone insolvent since receiving their loans, writing off £138m.
• 329 loans, totalling £298m, are outstanding.

🇫🇷 French insurtech Luko’s in hot water again, according to reporting from French insurance publication Argus. Once a promising business backed by the likes of Accel, Speedinvest and Kima Ventures, Luko started bankruptcy procedures last June — and was promptly acquired by insurance giant Admiral Group. It’s now emerged that the FTSE 100 insurer might be walking away from the deal due to unforeseen cash holes. Heard of anything? Get in touch –– in all confidentiality — with our fintech correspondent Amy O’Brien.

🇬🇧 UK to create an AI Safety Institute. UK prime minister Rishi Sunak has confirmed plans to create a UK-based AI Safety Institute, building on the work of Britain’s Frontier AI Taskforce, led by founder and investor Ian Hogarth. “It will advance the world's knowledge of AI safety, and it will carefully examine, evaluate and test new types of AI so that we understand what each new model is capable of, exploring all the risks from social harms like bias and misinformation through to the most extreme risks of all,” Sunak said in a speech in London, ahead of the UK’s AI Safety summit taking place on November 1-2. “We will make the work of our AI Safety Institute available to the world.”

• New AI research network. Sunak also revealed he is set to pitch fellow leaders attending the summit a new AI research network formed by international experts and modelled on the Intergovernmental Panel on Climate Change. The network will be tasked with publishing a state of AI science report. Members would be nominated by the countries attending the AI Safety summit, he added.
• China confirms attendance. The Chinese government has accepted Britain’s invitation to the summit, the UK’s deputy prime minister Oliver Dowden said, confirming Sifted’s reporting from last month. But it’s not clear yet who will eventually show up to represent Beijing, he added.

🤖 DiffBlue CEO Matthew Lodge says that his AI startup will be looking to raise a Series B round in 2024 in order to beef up its presence in the US, where 90% of its customers are based. DiffBlue — which was spun out of the same Oxford University AI labs that gave birth to DeepMind — has built a code automation tool that’s already being used by JP Morgan, Citi, Goldman Sachs, Amazon Web Services and Cisco.

👔 Is a £130 jumper donned by Harry Styles and Bieber really a climate investment? The VCs backing Pangaia, a fashion brand creating celeb-endorsed casualwear made from organic cotton and bio-based materials, seem to think so. 

• The company launched in 2019 and saw a boom in demand in 2020, when lockdown had people working from home in the classic comfortable-bottoms-and-smart-shirt combo. The sustainable alternatives it uses include a wildflower alternative to the goose feathers plumping up puffer jackets and a new material made from bamboo, pineapple and banana leaves found in fruit production waste.
• At a price point of £130 a hoodie, its founder says the brand isn't looking to compete with the high street: “Fast fashion is artificially cheap. Someone is paying for that, whether it be a person or the earth — t-shirts shouldn't cost $3. We don't want to encourage that, we want that model to die."

🇺🇸 Thinking of expanding to the US? Read this first.

• Do go if you have a large US total addressable market (TAM) — and are willing to pivot your whole organisation towards the US.
• Don’t go (yet) if your US TAM is between 15-30%; focus on Europe for now.
• Do look into talent availability — and the cost of hiring that talent in the US. 
• Don’t do anything without really doing your homework. “Too many startups try to break into the US markets too soon and it’s like trying to land the whale,” says Aidan Larkin, whose London-based startup Asset Reality expanded to Washington.

For more on expanding to the US: Why have so many European fintechs tried — and failed — to crack the US?

💡 Personio hires its first CMO. The German HR tech unicorn has hired Naman Khan — formerly at Salesforce, Dropbox and Microsoft — to head up its marketing department. Earlier this year, Personio opened up a new office in New York with plans to double its US headcount by the end of this year. It also converted to a Societas Europa (SE) company to ready itself for the public markets, it told Sifted at the time.

🩺 Digital health deal count in Europe was lowest in five years, finds CB Insights.

• Total funding for digital health startups in Europe and Israel hit $600m in Q3. If funding doesn’t pick up in Q4, 2023 will be the worst year in half a decade.
• There were 50 digital health deals in Q3. The average number of deals per quarter, over the last five years, is 113.
• The top three deals in Q3 were CMR Surgical’s $165m raise in September, Casualy’s $60m Series B in July and Corti’s $60m Series B in September.

Cancer tech — our latest ranking

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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