Sifted - Starships were meant to fly

Good morning there,

If you've spent any time in Estonia, the UK or Germany recently you might have seen an army of coolbox-sized robots whizzing down pedestrian pavements delivering groceries. 

They belong to Estonian startup Starship, which is active in 80 locations around the world and has just announced a $90m funding round led by Plural and Iconical. Zosia Wanat digs into that below. 

Elsewhere today, German neobank N26 has a new IPO timeline, Germany leapfrogs the UK for early-stage funding in January and a DeepMind alum joins the UK's AI Safety Institute. 

— Sadia Nowshin, editorial assistant 

Say hello to your new AI coworker

Our latest report offers insights into how AI is poised to shape the future of work — including work we can’t yet imagine. The big development of the year? Everyone’s getting an AI coworker.

One day, robots will do all the jobs we humans hate doing — the dishes, the laundry and taking out the bins. Or, at least, that’s what science fiction from the 1960s taught us.  

Instead, today startups are building robots to do much more useful jobs all across Europe. They’re assisting in surgery, fixing wind turbines and inspecting dangerous areas. 

One company, Estonia’s Starship, is tackling last mile delivery — one of the most costly and carbon intensive aspects of the supply chain. Its delivery robots — which are 99% autonomous — are already being used by companies like Estonia’s Bolt, the UK’s Co-Op and France’s Sodexo. Starship says a single delivery uses the same amount of energy as boiling a kettle, making its robots much more sustainable than a dude on a moped. Oh — and they’re super cute.

When I visited Tallinn, I saw Starships on almost every corner. Estonians love the robots and treat them like a national pet: I heard of people helping get them out of heavy snow and safely cross streets. My colleague Éanna Kelly says he saw one twerk on the dancefloor at a Sifted event in Estonia. 

Starship is currently active in 80 locations, including cities and university campuses in the US, the UK, Germany, Denmark, Estonia and Finland. It’s profitable, and has made 6m deliveries to date.

But it’s got plenty more to make. Today, it’s announcing a $90m funding round from VCs Plural and Iconical to roll out new technology and expand in existing (and possible new) markets.

“Autonomous delivery isn’t some science fiction concept from Blade Runner for decades in the future, it’s a reality for hundreds of thousands of people every day,” says cofounder and CEO Ahti Heinla.

Now I just need a savvy founder to design a robot that can help my three-year-old get dressed in the morning and I’ll feel like I’m living in the future.

— Zosia Wanat, senior reporter

💰 London VC Episode 1 closes £76m third fund to back pre-seed and seed-stage B2B startups. It’ll write 10-15 cheques per year of between £250k-3m, with a focus on AI, techbio, open-source, software infrastructure, healthtech and marketplaces. LPs include British Patient Capital and the National Security Strategic Investment Fund.

• Episode 1 is one of a number of VCs investing heavily in data-driven deal sourcing. It’s built its own proprietary data platform that whittles thousands of new businesses down to less than 100 potential investment candidates each week — analysing things like company background, fundraising history and founder background.
• About a quarter of the 16 investments made from the VC’s new fund were sourced by its data platform.

💸 The European Investment Fund has allocated more than €1bn into four European growth funds to back European scaleups.

• Sifted previously reported that the UK’s Atomico and France’s Keensight were among the recipients of the funding — but the EIF is also backing Italy’s FSI, a private equity firm that is raising €1.5bn for Italian mid-sized companies, and is close to a deal with an undisclosed fourth fund. 

🤖 DeepMind alum joins UK’s AI Safety Institute. Geoffrey Irving — who led the scalable alignment team at Google’s DeepMind, and before that spent two years at OpenAI — is joining as a research director. Chris Summerfield — professor of cognitive neuroscience at Oxford University — is also joining as a research director.

➡️ AI companies would have to share the results of road testing their tech under a Labour government. The UK’s opposition party says that it would replace the current voluntary testing agreement with a compulsory rule, forcing AI tech companies to release all of their test data to government officials and say what they are testing for.

🎤 N26 CEO has a new timeline for an IPO. Back in 2020, it was looking probable the German neobank would IPO by 2023. But in recent years, it has had to U-turn on expensive international expansions, pay hefty fines to its national regulator for rule breaches and face a slew of senior executive departures, causing it to revise its timeline. 

• An IPO is now looking likely in the next three to five years, CEO Valentin Stalf tells Sifted.  He also thinks that the equity story the company would tell investors at the point of listing is already “super clear”.
• “We would be the most modern bank with the best margin on the market, with super strong growth, good revenues, good margins and a straightforward, lean balance sheet,” he says.
• Last year, the company focused on cleaning up its finances: its losses more than halved, from €213.4m in 2022 to around €100m in 2023; its gross revenue for 2023 is also expected to jump 30%. Stalf expects the fintech to reach profitability on a monthly basis in the second half of this year. Read the full interview here.

🏦 Will every company be its own bank by 2034? (Sponsored by NoFrixion).

📉 January 2024's early-stage funding was down 38% YoY, according to Dealroom data. Europe's startups brought in €418m across 265 pre-seed and seed rounds last month, up from €403m in December — but down compared to January 2023’s €673m. That said, a reporting lag in deal data means last month’s figure is likely to creep up a bit.

• Germany and the UK took podium spots with first and second place, respectively — while the two countries are regularly in the top three, it’s the first time since August 2023 that the UK hasn’t taken the crown. 
• Spain, which usually ranks lower down in the top 10, took third place, with more than double its December total of €18m.
• When it comes to sectors, healthtech came out on top with €76m raised, followed by energy startups with €68m. SaaS came in third with €53m.

Paris-based Naboo, a platform that helps companies to plan and manage corporate offsites, including booking accommodation, workspaces and catering, raised €7.5m funding from investors including ISAI, Kima Ventures and Better Angle.

Bristol, UK-based Clue Software, which offers software to help companies manage their data and investigate potential security threats, raised £4m in funding. Frog Capital led the round.

London-based Sable Bio, which helps scientists identify potential safety risks for drugs in development, raised £1.5m in pre-seed funding. Episode1 Ventures led the round and was joined by Seedcamp.

Oslo-based OTee, a SaaS platform engineers can use to design industrial automation systems and deploy them on hardware, raised €1.25m in funding. RunwayFBU and Superangel co-led the round and were joined by investors including Antler and StartupLab.

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