Sifted - French AI's big year

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Exits are few and far between right now, and 2023 just missed out on a big one: Adobe‘s would-be acquisition of Figma for $20bn. The deal faced lots of scrutiny over competition concerns — including from EU regulators — and, after 15 months, the pair have given up.

Elsewhere today, we dig into the trends that shaped French tech in 2023, Allianz’s reported bid for embattled insurtech Luko for just €4 and the move that just enabled the UK’s first vertical rockets to launch in 2024. 

                                                                 — Anne Sraders, senior reporter

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The year of Le Big Model 

Like everywhere else in Europe, 2023 was a year of reckoning in France amid the bite of the downturn. Halfway through the year, French startups had raised almost 50% less money than they had at the same time in 2022; a sharp comedown for a country that was the only major tech hub in Europe that saw startups raise more money last year than they had in 2021. 

It will take more than that, though, to temper the excitement among French VCs and founders. “The foundations are there,” one investor told me, for France to establish itself as a top tech player. In the past few years, French tech has become increasingly visible at the national and European levels — a combination of strong government support, more available capital and ambitious entrepreneurs. For many in the ecosystem, the downturn is only a glitch — and it won’t be enough to set back the bigger trend at play.

In 2023, French tech fired the starting gun on the race to be the AI hub in Europe. Against the backdrop of the wider downturn, money flowed into France’s AI sector and capital Paris lured talent from the US. 

Leading the trend is Mistral AI, a startup that didn’t exist this time last year. France’s AI starlet raised a total of just under half a billion euros in the space of six months and has become referred to as one of Europe’s “OpenAI challengers”. On top of that, French billionaire Xavier Niel brought together former Google CEO Eric Schmidt and fellow billionaire Rodolphe Saadé to fund a new Parisian lab dedicated to AI research. A US startup founded by GitHub’s ex-CTO Jason Warner even moved its headquarters to Paris to make the most of France’s cheaper AI talent. He joined a host of Big Tech alumni making the move across the Atlantic to settle in the French capital.

Of course, the AI hype makes it easy to forget that 2023 also marked the downfall of startups that were once the hottest thing in town — such as insurtech Luko’s slow and painful search for a buyer. Some of France’s most high-profile VCs have been faced with challenges of their own. Eurazeo lost its growth team in July — then decided to postpone fundraising its next growth fund until possibly February, new managing partner Hala Fadel told Sifted. 

So what does 2024 have in store? Will it be more of the same in AI? Will France overcome the challenges of a poor economic environment and see through the emergence and establishment of its long-awaited tech champions? If you’ve got an opinion, I want to hear it. Email me here with your best prédictions for 2024.

— Daphné Leprince-Ringuet, French tech reporter

💔 Adobe takeover of Figma abandoned after 15-month regulatory battle. The proposed $20bn tie up was ultimately quashed following scrutiny — including from EU regulators — over competition concerns, the companies said yesterday.

• The deal, first announced last September, would have given some early investors like Index’s Danny Rimer and LocalGlobe’s Saul Klein a handsome exit. 
• Figma will still walk away with a $1bn breakup fee from Adobe. 

👀 Allianz offers to buy Luko a beer. It’s gone from bad to worse for French insurtech Luko, which has been looking for a buyer for six months. It has emerged that German insurance giant Allianz has made an offer to acquire the startup for a symbolic €4, according to an AFP report — a hard blow for a company once valued at more than €200m. 

• Luko has raised close to €70m to date from high-profile investors including Accel and Speedinvest. But the company filed for bankruptcy procedures in June, after it failed to secure fresh funding. That marked the start of what has become a lengthy search for a buyer. 
• A first deal to be acquired by FTSE 100 insurance giant Admiral Group for €14m was secured early on — but that fell through in October when Admiral pulled out of the deal because of accounting concerns raised during the due diligence process. The insurtech was then placed in receivership last month while potential buyers make their bids. A decision is expected in January. 

🚀 UK spaceport gets sign-off, easing Europe’s reliance on SpaceX and others. The UK’s first vertical rockets will launch in 2024 after the SaxaVord spaceport in Scotland’s Shetland Islands received approval from aviation authorities — in a boost to Europe’s rocket and small satellites startups. The UK’s Civil Aviation Authority (CAA) has granted it a licence for up to 30 vertical launches a year, after checking it met the safety and environmental requirements. 

• It’s one of Europe’s first such spaceports to be fully licensed; currently, Europeans wanting to send something into space usually have to hitch a ride on a SpaceX rocket or go down to French Guyana. 
• Investors say more spaceports should help bring down prices per launch, helping startups deploy faster and cheaper. Having spaceports on European soil is also strategically important for the region’s tech sovereignty. 
• German space startups Rocket Factory Augsburg and HyImpulse Technologies are expected to become some of the first users of the former RAF base. 

Are you an early-stage climate tech startup who is currently fundraising? If you’d like to participate in Sifted’s virtual pitch event on January 30 at 12:30 GMT, please share your pitch deck with us by Thursday, January 11.

🌱 Cement is the second most widely used product in the world after water, and generates about 8% of global CO2 emissions — but when it comes to building, few alternatives exist. Now, European startups are looking to break humanity’s concrete habit with green cement, a process that replaces virgin limestone with industrial byproducts that could cut its carbon footprint by 95%.

• Swedish startup Cemvision has now entered industrial-scale production of its green cement at its demo plant in Poland. It’s aiming to produce 5m tonnes by 2030.
• UK-based Material Evolution uses fusion reactions to create a cement-like product without using any heat at all – next year it plans to open a plant with a maximal capacity of 150k tonnes.

🎙️ “We’ve made more money than we ever dreamed of. More than we need” — Johanna Småros, cofounder of supply chain and retail-planning software maker RELEX Solutions, joined the latest episode of the Sifted pod to discuss the company’s decades-long journey from academia to commercialisation, just how many millions of kilos of waste the company is helping to avoid annually and why RELEX’s engineers are tired of hearing about AI.

🙋‍♀️ 21 people in European tech who mattered in 2023.

💰 All the new first-time European VC funds of 2023

Rennes, France-based Sweetch Energy, which is using the differences in water salinity to create renewable energy, raised €25m in Series A funding from investors including Crédit Mutuel Alliance Fédérale, EDF Pulse Ventures, Demeter Investment Managers, Go Capital and Positive Future Capital.

Dublin-based LUMA Vision, which is developing a platform for cardiac imaging, raised $22m in extended Series A funding. EQT Life Sciences, ABV Uni Fund and imec.xpand led the round, and were joined by investors including Atlantic Bridge Growth Fund and Bayern Kapital.

Cambridge-based Spotta, which developed technology to help detect pests like bed bugs, raised £3m in funding. The Yield Lab, STIHL Ventures and ACF Investors led the round, and were joined by investors including Martlet, Wren Capital, Remus Capital and Cambridge Angels.

Turin, Italy-based Algor Education, an edtech platform that transforms texts into interactive learning tools like concept maps, raised €1.4m in funding. Emerge Education led the round, and was joined by investors including Investors Club and 40Jemz Ventures. 

Hokksund, Norway-based BRUDELI, which is developing technology to electrify trucks and make fleets more sustainable, raised €1.3m in funding. Hexagon Composites ASA and Leax Group AB led the round.

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