The startups spinning out new startups 🏭

It's a big week for AI. Later today, policymakers will meet to (once again) hash out the details of the eagerly awaited EU AI Act. Some VCs and founders are hoping that recent additions to the draft — which, as I wrote about earlier this week, could add extra layers of bureaucracy for startups building large language models — won't make the final cut. Despite that, over in France one of those startups, buzzy OpenAI challenger Mistral, is reportedly in the final stretch of raising a big new funding round — just six months after its €105m seed. Clearly the AI frenzy isn't calming down anytime soon.

Elsewhere, we dig into a new fund to invest in climate scaleups, what Germany's startup commissioner has to say about the EU AI Act and the fintech that beat N26 and Klarna to the top spot for spinning out the most founders.

— Anne Sraders, senior reporter

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Calling all fundraising founders...

In my recent conversations with VCs, they say things have picked up over the past couple of months — lots of startups are coming back to the market to fundraise — and investors are plugging away at due diligence. But looking at this year's deal count, it's clearly not easy to actually secure that cheque.  

So, founders, how’re you finding fundraising in 2023? Are you raising from new investors, or tapping existing VCs? How long is it taking to raise your current round? And what happened when you last raised capital? 

We'd love to hear from you via our new, quick — and anonymous! — survey on the state of startup funding. Once we have enough responses, we'll share the findings.

Of course, you can always reach out to me directly, too. I'm curious to hear what fundraising is like on the ground right now, how many VCs you're pitching, what feedback you're getting, etc. My ears, and DMs, are open. 

— Anne Sraders, senior reporter

💰 Paris-based Partech is launching a new fund to invest in climate scaleups. The VC hopes to raise €300m for its first growth impact fund, and has closed €150m so far, the firm told Sifted. 

• The fund will invest in 15 B2B companies with at least €10m in revenue that focus on creating an impact in areas including industrial, agri-food and the environment. 
• It's backed by investors including Bpifrance, EIF, Legrand, LCL and Société Générale.

🇬🇧 The UK government announced new plans yesterday to curb immigration. It wants to increase the earning threshold for “skilled workers” from overseas from £26,200 to £38,700; the minimum income to bring in a family member to the UK will also rise to £38,700.

• What do these new stricter rules could mean for the country’s tech sector? Do you think you might be directly impacted? Get in touch with tim@sifted.eu and zosia@sifted.eu.

🤖 Buzzy French AI startup Mistral could soon be valued at a whopping $2bn. After raising its seed round earlier this year, the OpenAI competitor is reportedly in the final stages of raising around €450m in fresh equity and debt, reports Bloomberg.

• The new funding round includes big corporates Nvidia and Salesforce, with Andreessen Horowitz leading the equity fundraise, according to the outlet (Sifted confirmed a16z is involved in the latest round). 
• Per the report, Mistral is raising over €320m in equity and about €120m in convertible debt. (Mistral and investors declined to comment to Bloomberg.)
• The Paris-based company raised eyebrows when it secured a massive €105m seed round in June.

🇩🇪 “It's not good that we don't know what's coming... We want to have the Act finalised." Germany's startup and digital economy commissioner Anna Christmann is impatient to have the details for the long-awaited EU AI Act hammered out.

• Ahead of the big meeting today, where policymakers will negotiate over the Act, Christmann told Sifted that Germany is working with Italy and France — which have all been pushing back against last-minute additions that would place regulations on building LLMs — to ensure the Act "fosters innovation" and doesn't constrain companies in the development phase too much.

🪽 Super angel Verena Pausder has been elected as the new chairperson of the German Startup Association, taking over the reigns from Headline investor, Christian Miele. Pausder aims to improve the transfer of research from universities into companies, improve access to Germany for international talent and promote deeptech startups and impact entrepreneurship.

• She'll have a team of 10 founders and investors with her on the newly-created board, including Jochen Engert, founder of FlixBus, and Hélène Huby, cofounder and CEO of The Exploration Company.

📈 Revolut overtakes N26 and Klarna in spawning alumni founders.

😢 I know you love your startup. But is it time to let it go?

It's been a tough year for investors raising funds — but, on the bright side, Europe's share of the private capital fundraising pie is growing, according to a new PitchBook report on the state of global fundraising through Q3. 

• Recovering from its precipitous decline in 2022 from 2021, Europe's percentage of global private capital funding (which includes VC and private equity) has risen to 20.9% so far in 2023 — just shy of its typical share of roughly 23%.
• Of course, Europe is still dwarfed by North America, whose fund inflows made up a whopping 66.8% of capital raised so far this year. 
• However, LPs are opting to refill PE fund coffers over VC, with VC funding continuing to slide in 2023. As of Q3, an estimated 955 funds raised just $117.3bn globally — compared to 2,502 funds raising $301.4bn in 2022. 

European companies will up their investments into GenAI by 115% to $2.8bn in the next year, according to a new forecast from the Infosys Knowledge Institute, Infosys' research arm, which surveyed 1,000 executives in the UK, France, Germany, Belgium, the Netherlands, Luxembourg and the Nordic regions.  

• France and Germany are set to spend the most cash on GenAI — with France expected to double spending to nearly $730m and Germany to about $610m in the next year.
• Despite nearly all respondents saying they plan to increase spending on AI in the next year, only 6% of the companies surveyed report actually creating business value from their AI initiatives.

🔮 Eleanor Warnock's hosting a free Sifted Talks with Multiple Capital, Dawn Capital and Puzzle Ventures today at 12pm GMT. They'll be using their crystal balls to predict what's in store for VC in 2024. Don't miss out! 

🗣️ On December 12, we’ll host five female-led SaaS startups currently fundraising and interview serial entrepreneur Jessica Holzbach — exclusively for Pro subscribers. Last chance to register.

🎤 Miriam Partington has a seat at the moderator's table on December 13. She's joined by We Are Human, Balderton and Slack, who'll unpack how founders can reset their routine and (actually) get stuff done — sign up here. 

SoftBank Corp. agreed to acquire a majority stake in Dublin-based Cubic Telecom, which provides software to connect vehicles around the world in the automotive, agriculture and transportation industries, for €473m at an over €900m valuation.

Paris-based Eligo Bioscience, which develops biotherapeutics for microbiome gene editing, raised $30m in Series B funding. Sanofi Ventures led the round and was joined by investors including Khosla Ventures, Bpifrance and Seventure Partners. 

London-based Sunsave, which provides solar panels through a subscription, raised £5.4m in seed funding. Norrsken VC led the round and was joined by investors including IPLG, Plug and Play and angel investors. 

Amsterdam-based Farmless, which is working on using fermentation to make proteins for food without needing agricultural land, raised €4.8m in seed funding. World Fund and Vorwerk Ventures co-led the round and were joined by investors including Revent.

Tallinn, Estonia-based UP Catalyst, which is making battery materials by extracting graphite from carbon dioxide, raised €4m in seed funding. Extantia led the round and was joined by investors including SmartCap, Sunly, Little Green Fund, Scottish Baltic Invest and UniTartu Ventures.

Lille, France-based Carbon Maps, a carbon accounting tool for the food industry to monitor its environmental impact, raised €3m in extended pre-seed funding from investors including Daphni, Breega and Samaipata.

Kyiv, Ukraine-based Respeecher, which uses AI to clone voices for content creators and TV shows, raised $1m in pre-series funding from investors including ffVC Poland, Bad Ideas, ICU, SID Ventures and angel investor Gary Vaynerchuk.

Octopus Group acquired a majority stake in London-based amicable, which offers services to couples who are divorcing or separating. Financial terms weren’t disclosed.

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

One thing you didn’t know you needed in your inbox today was a picture of an AI founder holding a Pomeranian. Well, you do, and here it is.

Roeland Decorte (left) is founder of Decorte Future Industries, a Cambridge-based startup that's using AI to extract health data from sound to detect — among other things — cardiovascular issues. Human and canine hearts are actually very similar, Decorte tells Sifted, and the company is running clinical trials with dogs to validate its listening technology, before getting approval for human use.

                                                                               —Tim Smith, senior reporter

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