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Just a month after the fanfare in Brussels over securing a deal on AI regulation, the EU’s got AI in its sights again. The European Commission is looking into Microsoft’s investment in OpenAI to see if it deserves further investigation under the bloc’s merger rules. It’s been met with a mixed response from the European tech community. We get into that below. 

Elsewhere today, Carta ditches secondaries, Finnish quantum startup IQM looks to Taiwan and we list all the new VC funds of 2024. 

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The EU has AI in its sights again

Just a month after Brussels secured a deal on AI regulation to a mixed reception, AI is front and centre of the EU’s agenda again. 

The European Commission is looking into Microsoft’s investment in OpenAI to see if it deserves further investigation under the bloc’s merger rules. It’s one of several agreements reached between large digital companies and generative AI developers the Commission says it’s reviewing. Some leading European AI startups, like Sana Labs, have partnerships with OpenAI, which allow them early access to powerful models like GPT-4.

But the response from the European tech community is iffy, with some saying the move could stymie the ability of European startups to work with developers such as OpenAI. 

“Once again, European leaders appear to be more focused on limitation than innovation,” says Rasmus Rothe, founder of Berlin-based AI venture studio Merantix. 

“Early AI adopter startups in Europe that have struck smart business deals with large-language model providers like OpenAI shouldn’t be punished. In seeking to make the landscape more competitive, European regulators risk doing the opposite — making it harder for our startups to flourish and compete with their American counterparts.”

Not everyone’s pessimistic. Daniel Abbou, president of the European AI Forum (EAIF), an industry lobby group, says it is “certainly not to the disadvantage of European AI startups” and that it is “important” to keep “a watchful eye” on attempts by big US tech companies to reduce the number of AI developers to get a competitive advantage.

“AI businesses will have large implications for economic growth and market capabilities, so we have to prevent monopolies,” he says.

The announcement comes ahead of a trip by Margrethe Vestager, the Commission’s executive vice-president in charge of competition policy, to Silicon Valley, where she’s expected to meet with the heads of several big tech companies, including Apple CEO Tim Cook, Google CEO Sundar Pichai and two leading executives from OpenAI.

As part of its process the Commission is inviting tech companies to flag “any competition issues that they may perceive” in the AI industry through an online questionnaire. It’s part of an attempt to closely monitor partnerships between AI companies, “to ensure they do not unduly distort market dynamics,” Vestager said in a statement. Questions cover things like the main barriers to and drivers of competition for the provisions of generative AI systems, and the rationale behind investments and acquisitions of large companies in small GenAI startups.

The EU’s not alone on the matter. Last month, the UK’s Competition and Markets Authority also announced it was examining whether Microsoft’s deal with OpenAI had resulted in “an acquisition of control.”

— Cristina Gallardo & Tim Smith

🇫🇮 Espoo, Finland-based quantum hardware startup IQM is in “advanced discussions” to build testing platforms in Taiwan. The facilities will be used for the testing of novel components for quantum computers made in Taiwan, IQM’s CEO Jan Goertz told Sifted’s Cristina Gallardo. He declined to provide a date for them to become operational. 

• Taiwan aims to produce its first quantum computer by 2027, and working with IQM is an effort to establish a component supply chain. 

🚮 Days after Carta came under fire for reaching out to investors in its customers to sell secondaries, the equity management platform announced that it will no longer deal in secondaries trading. “Because we have the data, if we are trading secondaries, people will always worry that we are using the data, even if we are not. So we have decided to prioritize trust, and exit the secondary trading business,” Carta CEO Henry Ward wrote in a blog post.

💰 Berlin-based neobroker Trade Republic — which was granted its EU banking licence late last year — has reported its first annual profit in eight years. Cofounder Christian Hecker told the FT the company saw a "solid double-digit million euro amount” of net profit in the year to September 2023. Public filings show it had losses of €145m the previous year.  

• Hecker also said that the startup was attracting up to 100k new clients per month by the end of last year. But with increased marketing and other expenditures anticipated, he said the company expects to return to a loss this year. 
• Sifted recently mapped out the people with the power at the digital broker.

🇨🇳 When Silk Ventures launched in 2017 with a $500m fund, the VC firm said it planned to build “the new Silk Road to the world’s most exciting market — China.” It would do so with the backing of the Chinese government, which funnelled $250m into it. 

• But, six years on from the launch, Silk Ventures has gone curiously silent and severed direct ties with the Chinese government.
• When Sifted reached out to people about the fund, many were hesitant to give information, highlighting how a once bright promise of a closer relationship between European tech and China has faded. Freya Pratty has more. 

❤️‍🩹 2023 was the hardest year of my life. Here’s how I got my startup through it. 

💸 Looking for some funding to kick off the year? Here are all of the new VC funds of 2024. 

💼 Need to hire? Here’s the alternative to using external recruiters.

(Sponsored by Adaptor).

The UK’s startup ecosystem has reason for cheer, according to a new report by HSBC Innovation Banking and data platform Dealroom. 

• The report says that the $21.3bn brought in by UK startups in 2023 is the third highest total ever for VC funding in the country, behind the golden years of 2021 and 2022 — over 20% more was raised in 2023 than in 2020. It means across Europe, the UK retains the top spot for funding, with a $12bn lead on second-place France.
• The report also found that breakout stage funding (Series B and C rounds) reached 110% of pre-pandemic levels last year.
• That said, Atomico’s recent State of European Tech report showed the percentage share of total European capital invested in the UK is down nearly 3%, when comparing 2018-2020 and 2021-2023. The HSBC and Dealroom report also shows funding in the UK in 2023 was down 31% on 2022’s figure.

🛍 Revenue, runway and returns: How to go-to-market in 2024. Join Sadia Nowshin, Stripe’s Fanny Talagrand, Synthesia’s Steffen Tjerrild and Creandum’s Lars Nordwall on January 24 to dive into the latest strategies, tools and frameworks startups are using to drive profitable growth.

🌳 Come along to our climate tech pitch event. Join us virtually on January 30 to hear from five early-stage climate tech startups currently fundraising — exclusively for Pro subscribers. RSVP here.

💼 Startup to scaleup: Creating the dream Gen Z workplace. Join us for a Sifted Talks on January 31 to find out how founders can understand, engage and empower this new generation of workers to fuel the next growth phase of their startup.

Amsterdam-based Picnic, an online grocery store, raised €355m from investors including The Bill and Melinda Gates Foundation Trust and German supermarket group Edeka.

London-based ZILO, which specialises in asset and wealth management software, raised £25m in Series A funding from investors including Citi Bank, State Street and Fidelity International Strategic Ventures (FISV).

Milan-based Contents.com, which uses AI to offer multi-lingual content generation, raised $18m in Series B funding. Synergo Capital led the round and was joined by investors including Azimut Digitech Fund, Invictus Capital and Thomson Reuters Ventures.

Antwerp, Belgium-based Unbox, a platform used by brands and governments to manage their funding distribution networks, raised €12m in Series A funding. HSBC Asset Management led the round and was joined by SFPIM Relaunch.

Lombardy, Italy-based Mogu, which produces materials for interior design from pure mycelium, raised €11m in Series A funding. CDP Venture Capital and ECBF VC co-led the round and were joined by investors including Kering Ventures and Progress Tech Transfer.

Harpenden, UK-based FA Bio, which has developed technology able to identify superior microbial bio-products for improving soil health and crop production, raised €6.1m in funding. Clean Growth Fund and Pymwymic co-led the round and were joined by Ship2B Ventures.

Munich-based einwert, a digital platform for requesting property valuations from certified appraisers, raised €4m in funding. Ventech led the round and was joined by existing investors 468 Capital, Wecken & Cie, Auxxo Female Catalyst Fund and Infinitas Capital.

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