Sifted - The GenAI copyright conundrum

Good morning there,

As an American, I should have been sitting down in front of a big turkey feast with my family yesterday, fielding questions about why VCs are obsessed with AI and watching (American) football by the fireplace for Thanksgiving.

Instead, I find myself across the pond in London. And although I did feel a sentimental twinge for not participating in the tradition this year and, of course, for missing my family, I'm not necessarily complaining (London isn't too shabby).

What I am thinking about as I write this is what I'm thankful for, like having the opportunity to explore a new city, Berlin — where I'm now based — and for getting to know a host of new readers from all over Europe. To that end, thank you to those who have reached out and introduced themselves to me; keep it coming! But before I get too sappy, I also want to hear from you: During what's been a truly tough year for founders and VCs alike, what is one thing you're thankful for? Shoot me an email or DM.

Elsewhere today, we dive into the thorny issues around copyright in generative AI, why French deeptech startups are being left out of NATO's €1bn VC fund and a new operator-led fund from the Netherlands eyeing software startups.

— Anne Sraders, senior reporter

Cancer-fighting tech: Europe’s early-stage startups to watch

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Check it out

GenAI is killing creators, and it needs to stop

Out of the issues holding back the widespread use of generative AI in business the one that gets the most attention is “hallucination”— where the text output you get from the likes of OpenAI’s ChatGPT may be filled with falsehoods.

But there’s also contention around the legal liability of using material generated by AI. Advertising agencies, for instance, won’t allow the use of generative AI in many business use cases, as they’re still unsure whether the outputs might represent a copyright infringement.

Many leading AI models are trained on copyrighted works, and courts and regulators around the world are still deciding how to treat this new technology, and the way it makes use of other creators’ material, which has historically been economically protected by copyright laws and is now being used without their permission.

“It’s clear that these models will be able to and are already to some degree replacing the demand for the original work,” Ed Newton Rex, the former head of audio at London-based Stability AI — who quit the company last week — tells Sifted in an interview today.

Newton Rex left the company because he didn’t agree with its opinion on copyright protections for creators.

“The fact that you’ve got all these creators who’ve relied on copyright, being essentially told by generative AI companies that they can't rely on copyright here and that value can be extracted from their works without their consent and without paying them — I think ultimately that just doesn’t seem right,” he says.

This is not the first time a tech disruption has created issues for copyright and creator protection — in the internet’s early days new laws were required to try and stop material being distributed without owners’ consent.

And though he doesn’t think the companies building GenAI tools are “evil”, he stresses to Sifted the need for new frameworks defining the relationship between creators and AI.

“The danger now is that it’s all got so good — the Turing test is being passed in various domains — that now is when we need to figure out: ‘Okay, how do we make sure this doesn’t just suddenly decimate entire industries?’

— Tim Smith, senior reporter

🇫🇷 French deeptech startups are left out of NATO's €1bn VC fund – and they're not happy about it.

The fund, dubbed "NIF" and founded in 2021, is backed by 23 EU member states to finance deeptech startups, but France was one of the only countries to opt out, instead deciding to invest in a domestic defence fund. It means French startups can't access any of the money — and some local VCs and startups say it's a missed opportunity.

💰 Operator-led VC firm NP-Hard Ventures just raised €12m to invest in software startups. The fund, led by Anke Huiskes, Micha Hernandez van Leuffen, and Paul Veugen, is one of the few funds headed up by former operators in Europe.

The new fund will invest cheques of around €250k into early-stage software startups in Europe and the US.
The firm plans to allocate the lion's share to European startups, with 25% reserved for bets in the States.

🚛 Swedish EV lorry startup Volta Trucks filed for bankruptcy last month after the collapse of its battery supplier. Now it may have found a buyer for its UK operations, reports Sky News. According to sources, the Volta Trucks shareholder and lender Luxor Capital Group is in advanced talks with the company's administrators to acquire the UK business, where a large majority (600) of its staff are based.

🎙️ “We expect to see more M&A next year.” HSBC’s Sonya Iovieno, head of venture and growth at HSBC Innovation Banking (formerly Silicon Valley Bank), joined us on the Sifted Podcast this week to talk about undisclosed downrounds, companies setting up ‘hunting lines’ for future acquisitions and her experience of the tumultuous weeks this spring when SVB collapsed. Listen to our full conversation here — or read our highlights.

PhotoRoom might just have it all: it’s a GenAI company, based in Paris, which has landed partnerships with Taylor Swift and the Barbie movie — oh, and it’s profitable. Chris O’Brien speaks to cofounder and CEO Matthieu Rouif about its secret sauce — and those fundraising rumours.

Are you a female-led SaaS European startup who is currently fundraising? If you'd like to participate in Sifted's virtual pitch day on December 12 at 12:30 GMT, share your pitch deck with us before this Wednesday.

🔥🔥

Lyon, France-based Indy, an accounting platform for freelancers, raised €40m in Series C funding. BlackFin Capital Partners led the round and was joined by investors including La Maison and iXO.

Milan-based Planet Farms, a vertical farming operator, raised $40m from undisclosed investors at a $500m valuation.

Paris-based DoorFeed, a proptech startup that helps institutional investors manage their residential real estate portfolios, raised an additional €7m in seed funding from Motive Ventures, Stride and Seedcamp.

Gosselies, Belgium-based Bioxides, which is developing therapies to prevent and treat thrombotic and inflammatory diseases, raised €12m in Series A funding from existing investors, which includes a €3.4m grant from the Government of Belgium.

London-based Crezco, an open banking platform to make B2B invoice payments more efficient, raised $12m in Series A funding from MMC Ventures and 13books Capital.

🔥

Paris-based HappyPal, an employee benefits platform, raised €7m in Series A funding. Educapital led the round and was joined by Anthemis Group.

London-based Biomel, which makes plant-based gut health and probiotics products, raised £5.5m from IRIS Ventures.

Paris-based Osium AI, which is using AI to improve R&D for materials science, raised $2.6m in seed funding from investors including Kima Ventures and Y Combinator.

London-based WealthOS, a cloud-based wealth management platform, raised £2m from investors including Barclays and nVentures.

Paris-based Callyope, a mental health monitoring platform that uses speech to analyse brain functionality, raised €2.2m in funding. 360 Capital and BPI Digital Venture led the round and were joined by investors including No Label Ventures.

Lausanne, Switzerland-based biped.ai, which has developed a smart harness that helps the visually impaired detect obstacles, raised CHF1.2m from investors including Serpentine Ventures.

Eindhoven, Netherlands-based CityLegends, an app that connects street athletes and artists, raised €1m in seed funding from Leansquare, LUMO Labs, imec.istart and Dutch Sport Tech Fund.

Barcelona-based Kibus Petcare, an automated device that cooks food for dogs, raised €1m from investors including Easo Ventures.

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

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Sifted - The GenAI copyright conundrum

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