Sifted - Fixing the ownership problem

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By now, we’re all well aware that gender diversity among European startups and VCs is appalling. And despite years of (often lacklustre) efforts to improve the abysmal stats, the needle has hardly budged. But some say the best way to change the dynamic in a meaningful way isn’t so much about focusing on founder diversity quotas: it’s getting more money into female-founded companies and focusing on ownership. Europe editor Mimi Billing explores the issue more below.

Elsewhere, we dig into big news in Germany, where a new dual citizenship law passed Friday could make the country more attractive for foreign talent, we bring news on Tech Nation’s new programme and look at how China is trying to charm Spanish deeptechs. 

— Anne Sraders, senior reporter

Gen Z is writing a new script for work. Here’s how to read it

Gen Z is coveted in the tech talent market, but it has different priorities: work-life balance, values alignment and refreshing the tech stack. So, on January 31, we’ll explore strategies for engaging the next generation of workers. 

Fixing the ownership problem

There’s an ongoing quest to get more women-founded unicorns — but the many “office hours” and meetups created to “help” female entrepreneurs to understand the ecosystem and network with VCs haven’t borne fruit, at least not yet.

As many female founders have openly said: “What we really need is more money, not more mentoring.” 

A quick reminder of the (awful) stats: all-women founding teams raised just 3% of all dollars invested in 2023, according to Atomico’s latest State of European Tech report. Mixed gender founding teams took 15%, leaving 82% of dollars to flow to founding teams that are all men. That number has only nudged up by a single percentage point since 2019.

When criticised for not investing in enough women, some VCs counter that they’re encouraging their portfolio companies to put more women into management positions. 

VCs know what they’re doing. Having women in C-level positions translates to better financial performance for portfolio companies.

But — and this is a conversation we need to have a whole lot more often — it doesn't change the capital structure. Looking at listed companies in Sweden, for example, less than 1% of the ownership is held by women in management — the rest, 99%, is owned by men.

That means that when those startups exit, almost all of the profit goes to men — men who can then angel invest, or start their own funds, or start new companies. And so the cycle repeats. 

Michaela Berglund, founder of Feminvest, a network of women angel investors and founders, sees the inequality in ownership as key to solving the diversity problem in tech.

“Without equal rights to taking risk, women don’t have the same conditions as men,” she says.

She thinks one way to tackle the problem is to invest in startups that are majority owned by women, rather than just run by them — and she’s raising a new fund which will do just that.

What do you think is the solution? Let me know.

— Mimi Billing, Europe editor

🇨🇳 China launches charm offensive over Spain’s deeptech. While China is becoming increasingly isolated in the geopolitical technology arms race, Spain appears to be leaving the door more open to its attempts at scientific collaboration.

• Wei Huang, a senior researcher and member of the Chinese Academy of Sciences, told the Science for Industry deeptech conference in Madrid on Friday that his country is open for partnerships with Spanish innovators — including in areas such as flexible electronics, chips and cutting-edge materials, which are expected to provide an edge on future defence systems. He said Spain was the “friendliest” country in Europe, adding that it has “its own foreign policy, it’s quite independent, not like the UK or Germany which follow the instructions from the US”.
• But one EU official tells Sifted that the Chinese “presence in force” at the Madrid event is “unusual” in the current geopolitical climate. Spanish universities have come under “huge pressure”, the official says, and although Beijing is trying hard to build tech partnerships “all over Europe”, it is finding it increasingly difficult. “We were surprised by the level and scope of their presence, given the strategic nature for Europe of many of the innovations discussed here,” they add.

🇬🇧 Tech Nation, the UK startup organisation, has launched its first programme since its funding from the government was controversially cut in January last year. 

• 20 climate tech startups will join the new programme, and will be given training on fundraising, acquiring customers and advocating for climate policy. 
• After announcing that it would cease operations in March last year, in April it was announced that Founders Forum Group, founded by Brent Hoberman, had acquired Tech Nation. 

🥂 ‘The toast of Davos’: Buzzy French AI startup Mistral has apparently been a hot topic at the World Economic Forum — and top tech CEOs are singing its praises, the Financial Times reports.

• Several large tech CEOs consider Mistral’s latest AI model to be one of the best products on the market, based on technical benchmarks of performance, they told the publication. 
• Mistral raised heaps of money from eager VCs last year, most recently its €385m Series A round led by US VC Andreessen Horowitz in December, which reportedly valued the company at $2bn. 

🇩🇪 Germany’s parliament voted on Friday to ease dual citizenship laws — opening the door for a host of people living in the country to become German citizens faster, while keeping their original passport.

• The reform, approved by the Bundestag, will generally enable people who have lived in Germany for five years, and in some circumstances three, to apply for citizenship without having to give up their passport (it was eight years before).
• It comes as Germany has been struggling to attract foreign talent amid a skilled labour shortage. 
• “Offering the possibility of citizenship is a significant advantage in attracting the brightest minds internationally,” Niclas Vogt, head of communication at the German Startup Association, tells Sifted, adding that “for highly skilled professionals, this is a compelling incentive, a strategy already proven effective in successful immigration countries like Canada and the USA.” 

👼 Angels, pitch decks are overrated. Go with your gut.

E-commerce startups are probably wishing VCs were in the mood for some retail therapy. Investor interest in European e-commerce and retail companies has dropped significantly since its peak in 2021, according to Dealroom data cited in Sifted’s latest briefing.  

• VC funding for European e-commerce startups plummeted to $770m in 2023, down more than 50% compared to the $1.6bn invested in 2022.
• And there’s not much money being made by VCs cashing out on the bets they have made in the sector, either: there were only six exits in 2023, compared to 19 the year before.

But what should VCs and startups be watching for in 2024? Dig into the whole briefing here (exclusively for Pro subscribers).

🛍 On January 24, Sadia Nowshin will be joined by Stripe’s Fanny Talagrand, Synthesia’s Steffen Tjerrild and Creandum’s Lars Nordwall to dive into the latest strategies, tools and frameworks startups are using to drive profitable growth. RSVP.

🌳 Come along to our climate tech pitch event. Join us virtually on January 30 to hear from five early-stage startups in VCs' new favourite vertical: climate tech. RSVP.

💼 On January 31, Tim Smith will be joined by Notion’s Robbie O’Connor, Index Ventures’ Paula Garcia Domingo and Figma’s Siobhan O’Reilly to find out how founders can understand, engage and empower Gen Z workers to fuel the next growth phase of their startup. RSVP.

Reims, France-based Latitude, a space launcher manufacturer which is planning its first launch in 2025, raised $30m in Series B funding from investors including Crédit Mutuel Innovation, Expansion, Bpifrance, UI Investissement, Blast.club and Kima Ventures. 

Paris-based Heex Technologies, which helps AI companies filter and manage their data workflows, raised €6m in funding. SHIFT Invest and Karista led the round. 

Warsaw-based Gotiva, which helps digital image creators monetise their work, raised €1.1m in seed funding. SMOK Ventures led the round and was joined by investors including Movens Capital and Big Bets. 

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