Sifted - Boffin VCs

Good morning there,

The trick of a good startup is translating a big idea into a useful (and commercial) product or service. That can be easier said than done, especially when those big ideas are being dreamed up in university labs.

There are, of course, a host of European universities and tech and science-focused accelerators spinning out fresh startups, but today my colleague Cristina Gallardo digs into some of the snags holding back academic founders — including the lack of VCs with a deep science background and whether universities should be spinning out VCs, too.  

Elsewhere, we look at Google's new AI lab in Paris, Europe's AI-driven sextechs and Glovo cofounder and CEO Oscar Pierre joins the Sifted pod.

— Anne Sraders, senior reporter

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Boffin VCs

Europe has science on the mind. More and more of the startups dropping into Sifted’s inbox are working on solutions that require proper brain power — like combining GenAI and quantum to design new drugs, making drug manufacturing greener and autonomous factories to make everything from rollercoaster wheels to rocket engines.

Universities in Europe are also stepping up efforts to promote tech transfer and get more ideas from the lab to the market. Spinout activity is hot in areas of the UK like Cambridge, Manchester and Bristol — in Europe, institutions like Switzerland’s ETH Zurich and Germany’s Technical University of Munich are doing good work. 

There’s also a handful of focused accelerators for entrepreneurial PhD and PostDoc students looking to get the filaments of an idea out of their mind and into the real world — including the UK’s Conception X and the University of Edinburgh’s PhD Max programme.

But there seems to be a snag holding back some academic founders. Do the rounds at any deeptech conference in Europe and you’ll inevitably come across someone complaining about an insufficient number of VCs with a background in science or technology who can do proper due diligence on startups working on deep science.

That got me thinking: should those same universities also be training the next generation of deeptech investors?

“There’s no reason why universities shouldn’t be running programmes or training courses that enable scientists to become investors or develop their knowledge of investment,” says Ben Mumby-Croft, director of entrepreneurship at Imperial College London. This would be the “logical next step” to their efforts to promote tech transfer, he adds.

But some are concerned about a lack of incentive. If you’re an academic founder and you create a startup, you have a job. If you were to come out the other side of a university VC training programme you get thrown into an unruly jobs market with no guarantee of work.

That’s one of the reasons universities aren’t playing a more active role in this, argues Nikita Thakrar, CEO of Included VC, which offers 5-month fellowship courses on VC investment. The return on investment doesn’t persuade them.

To get them on board, says Thakrar, VC firms would need to guarantee there would be jobs waiting for STEM graduates who finish the course. “I do think universities have a part to play but I believe it has to be a private-public partnership, and I think VC funds have to be involved,” she says.

Thakrar suggests creating new roles within a firm — something akin to a research VC, responsible for building a deeptech network. “You could get 5 to 10 VCs in Europe to come together as a consortium and say, ‘we are going to pick five universities in Europe and we are all going to teach VC’, universities bear most of the costs and then the firms hire all of them,” she says. 

Such a course could last between 8 and 10 weeks and train about 10 people in each quarter — creating a pipeline of 40 new deeptech VCs per year.

But not everybody’s convinced it’d work; some people I spoke to are against the idea of STEM graduates following a career in VC investment right after university. 

Focusing on turning academics into VC investors before they have tried their hand at entrepreneurship would result in VCs with less empathy, argues Eleanor Kaye, executive director of the Newton programme, an executive education course for the venture capital industry aimed at getting under-represented groups into the sector.

“An investor who’s previously been a founder understands the reality of milestone setting, IP creation, they can read lab results, they understand about due diligence, but more importantly they have empathy with the founder on what work has gone into that discovery or new innovative idea and can provide real founding support,” she says.

But what about her own programme, whose last cohort included 48% of alumni with STEM backgrounds? She argues that Newton students get “the spirit of variety of thought plus VC training, without learning in a silo of being just scientists.”

Having spent years in a previous professional life meeting scientists who neither wanted to stay in academia nor had a great innovative idea to commercialise, I can’t help but wonder whether widening their career options wouldn’t be beneficial.

What do you think? Should we train scientists to become VCs? Would this help European tech? What else is missing? I want to hear from you. Email me.

— Cristina Gallardo, senior Iberia and deeptech correspondent

🇫🇷 Google’s opening a new AI lab, and it’s chosen Paris to do it. The tech giant’s CEO Sundar Pichai was in the French capital yesterday for the grand opening of a hub that it says will gather more than 300 researchers and engineers from Google DeepMind and Google Research, but also YouTube and Chrome. The objective? Advance AI research and development in France thanks to partnerships with some of the country’s most prestigious academic institutions and labs, such as Inria and CNRS.

• It comes just a few months after French billionaires Xavier Niel and Rodolphe Saadé, together with ex-Google CEO Eric Schmidt, launched Kyutai — a €300m AI lab of their own — to advance open research in the field. It begs the question –- is Paris becoming the place to be for AI?

🗣️ Talk dirtAI to me: how sextechs are getting intimate with artificial intelligence. AI is no longer restricted to automating workflows or writing up meeting notes — it’s also entering the bedroom.With the rise of AI girlfriends, sextechs are exploring ways of bringing artificial intelligence into the realm of human intimacy — there are companies working on everything from audio erotica content to ‘spicy’ fiction.

• AI could make sextech — a typically taboo topic for many VCs — more appealing to investors. “I think [AI] makes investors more curious,” says Dominnique Karetsos, partner at Amboy Street Ventures. Startups can use AI bots and voice cloning to up the quantity of content without being restricted by human productivity, and “the pathway to profitability for a lot of these companies from a commercial perspective is 10x” as a result, she says. 
• Mike Albertshauser is one of the founders in the space. He launched audio erotica platform Bloom in 2020, and last year launched an AI-powered roleplaying feature by cloning the voices of his actors. But while VCs could be drawn to the sector, he’s decided to continue bootstrapping his passion project. “My wife and I founded this company to create a product for women and couples to better their sex lives —  for us, this is not a four or five year exit plan.”

🎧 Oscar Pierre: 'If Glovo had been acquired by any other large delivery company, I’d be out.' The latest guest on the Sifted Podcast is Glovo cofounder and CEO Oscar Pierre, one of Spain’s best-known entrepreneurs and now, also, investors. He sat down with editor Amy Lewin to discuss the state of the food delivery market in 2024, what’s next for Glovo, why he raised a VC fund and if he’s planning to start something new soon. Listen to the full conversation here — or read a condensed version here. 

🏥 12 hospital tech startups to watch, according to VCs.

💰 Nearly All Wealth Gained by World’s Rich This Year Comes From AI. (Bloomberg)

😬 Start-ups worry over EU's Big Tech crackdown. (FT)

🇪🇸 Madrid breaks its deal count record. Despite an international slowdown in VC investment last year, there were 249 investment rounds into Madrid startups in 2023, an historical record that suggests the local ecosystem is maturing, according to the annual Startup Radar report published by Fundación Madri+d. Spain also saw its early-stage companies raise 4% more than they did in 2022 — as we wrote about in this newsletter last week.

• According to the report, local investors in Madrid raised a combined total of €1.2bn last year — a 9% increase on 2022.
• The report ranks Madrid as the sixth best ecosystem in Europe by number of rounds and by number of exits, and eighth by total VC investment volume.
• Half of the money invested in Madrid startups last year was pumped into companies working on mobility, B2B software, fintech, events, healthcare, foodtech and marketing. AI startups captured more than €200m, while companies in other deeptech areas raised €130m.
• Fundación Madri+d also shed light on the state-of-play of deeptech companies in Spain. It says there were 1,205 such companies in the country last year — 8% of the total in Europe — of which 347 were based in the Madrid region.

Milan-based Bending Spoons, a mobile app developer, raised $155m in funding from investors including Durable Capital Partners, Baillie Gifford, Cox Enterprises and NB Renaissance.

Amsterdam-based Monumental, which builds autonomous, brick-laying construction robots, raised $25m in funding. Plural and Hummingbird led the round and were joined by investors including Northzone, Foundamental and NP-Hard Ventures.

Copenhagen-based Go Autonomous, which develops e-commerce software that automates quotes and orders, raised €10m in Series A funding. Octopus Ventures and Ridge Ventures led the round and were joined by investors including EIFO and 42Cap.

Stockholm-based Capitainer, which is developing at-home sampling kits for things like blood and urine, raised €6.7m in Series A funding. We Venture Capital led the round and was joined by Sciety and Sciety Venture Partners.

Newcastle, UK-based Newcells Biotech, which builds 3D models of human tissue for drug testing, raised £2.4m in funding from investors including North East Venture Fund, Mercia Ventures and Northstar Ventures.

Oxford, UK-based MeVitae, which offers hiring tools to help mitigate biases, raised $1.8m in seed funding. Apex Black led the round. 

Oudkarspel, Netherlands-based Amazec Photonics, which is developing diagnostic devices using photonics technology for cardiovascular monitoring, raised €1.5m in seed funding. PhotonDelta led the round. 

London-based Koalaa, which develops prosthetic limbs, raised €1.1m in funding. British Design Fund led the round and was joined by Imperial College Enterprise Fund.

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