Sifted - Founder CEO churn

Good morning there,

The last year has been tough for startups — and one thing that’s come up time and again is founder burnout. It was on everyone’s mind at last year’s Sifted Summit and some VCs even opened founder wellness programmes to try and tackle mental fatigue among portfolio founders.  

But overcoming it is easier said than done, and some founder CEOs are ready to call it a day. Below, my colleague Amy Lewin digs into whether 2024 might be the year we see a wave of churn at the top.

Elsewhere today, there’s an update on Sequoia’s Klarna drama, we dig into the techbio startups that could be set to join the unicorn club and explore how going viral on TikTok cost one startup €10m in revenue. 

— Anne Sraders, senior reporter

How to build more inclusive products

In episode two of The Inclusive Startup Playbook podcast, we’re joined by imagi’s Dora Palfi, Unfabled’s Hannah Samano and OKO’s Simon Schwall to dive into why inclusion is important, how to design inclusively, the hurdles that stand in the way and the rewards at the other side. 

Founder CEOs weigh up precarious future

Over coffee recently, a founder told me he was thinking about his next steps. He wasn’t planning on leaving his startup imminently — he was thinking about taking up some advisory positions and changing his role in the company for now — but, frankly, he sounded a bit fed up.

His company (like plenty of others) needs to raise soon. In hindsight, it didn’t raise enough at its last round, raised at too high a valuation and will likely have to take a downround. It also hired too many people, and will need to make some layoffs. 

“I wish I’d taken some money off the table at the last raise,” he told me, ruefully. That’s not really an option anymore.  

He’s not the only one feeling that way.

Erevena, an executive search firm that works with startups and investors across Europe, tells me that there were significantly more founder CEO resignations in 2023 than any other year since 2017. 

Maddy Cross, partner at Erevena, looked at 300 VC-backed European companies founded between 2010 and 2020 that have raised $50m or more.

She found that 244 (81%) are still led by their original founder CEO, with the remaining 56 led by a replacement chief executive (either a cofounder, or an external hire). 

Of those 56 companies, 36% saw their original founder CEO resign last year. Even 2020 — arguably the other most turbulent year in recent times — saw fewer founder CEO resignations from this cohort.

It’s no surprise, really, says Cross: “The combination of a tough fundraising environment alongside rapid hiring straight into redundancies has left a number of CEO founders feeling exhausted.

“At the same time, the requirements of a CEO have changed because of the difficulties of the market; there is less need for CEOs to be visionary, and more need for rigour in financial management and operations. Some CEO founders are fantastic at all of those things but, for many of them, financial and operational rigour isn't why they set out to be a founder in the first place,” she adds.

I asked a handful of Europe’s best-known VCs if they were seeing any founder churn in their portfolios, and most said no, not really. 

But if I was going to place a bet, I’d guess that we’ll see even more founder CEO resignations this year.

There have been a few notable examples so far already. Helsinki’s Supermetrics’ cofounder Mikael Thuneberg stepped down as co-CEO in January. “While it’s been an amazing journey, it’s also been a lot of work and stress,” he posted on LinkedIn. 

Last month, Christian Reber, a serial founder, announced he’d be stepping down as CEO of Pitch, a presentation software startup he launched in 2018.

“I’ve given my absolute best to the company, and after 6 years, many highs, and some painful lows, I need a break,” he posted on LinkedIn. At the same time, he shared that the company would be letting go of a third of its employees.

We’d like to know how many other founders are feeling like they could do with a break — and are seriously considering taking one. If that’s you, please take our latest Sifted survey. It’s completely anonymous — and won’t take more than three minutes to complete. 

And, as always, if you have something you’d like to add to the conversation, email me!

— Amy Lewin, editor

🛴 After filing for insolvency in November last year, Cityscoot — a provider of shared mopeds that are popular in the French capital — has found a buyer in Spanish competitor Cooltra, which is set to acquire the French startup for €400k. 

🚪 In a swift turning of the tables, Sequoia Capital retracted its bid to oust investor Michael Moritz, who left the firm last year, from Klarna’s board, according to The Information. Instead, Sequoia partner Matthew Miller will leave the company’s board. Sequoia confirmed to Sifted that another partner will replace Miller but has not yet announced who. 

💰 London-based VC firm Molten Ventures acquired a secondary stake in Seedcamp’s 2016 fund, which holds investments including Revolut and Pleo. Molten is taking a 19% stake for €8.5m. 

⚡️ UK startup Ev.energy, which provides software to help EV owners find chargers, has secured a £32m grant in public money from the California Energy Commission, to launch its service in the state. 

• Ev.energy secured a $33m Series B round in July last year from investors including InMotion Ventures (the VC arm of Jaguar Land Rover) and Energy Impact Partners.

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📱 How going viral on TikTok cost this startup €10m in revenue. On a fateful day in April last year, air up cofounder Lena Jüngst woke to a text from a friend congratulating her on her product launching in Australia for the first time. The only problem: the company hadn’t debuted there yet. What her friend had actually seen was one of a wave of copycat products that had flooded online marketplaces. 

• In early 2023, TikToks advertising counterfeit air up bottles started flowing in under the hashtag #AirUpDupe; to date, posts under this tag have racked up a total of 2.1m views.
• Fake air up bottles also popped up en masse across online marketplaces, and on April 26 the team tracked a peak of 1,500 infringing listings, compared to fewer than 100 the previous week.
• Air up’s products are all protected by patents — but Jüngst says that there are common misconceptions about what this actually means for a company. “I think one thing that is a myth is that once you have those IP rights, you are shielded from infringement, which is not the case.” Instead, patents offer the ammunition needed to fight against infringement and enforce those protection rights, but it’s ultimately up to founders to do that, she says. 

🧪 22 techbio startups on the cusp of unicorn status.

💰Europe’s government grant system is not fit for purpose. Startups deserve better.

London-based Napier, which provides financial crime and regulatory compliance software, raised £32m in funding from Crestline.

Darmstadt, Germany-based Threedy, which develops spatial computing technology for building 3D apps, raised €9.6m in Series A funding from investors including LBBW Venture Capital, TRUMPF Venture, Futury Capital, EquityPitcher Ventures, High-Tech Gründerfonds and Matterwave Ventures.

Nottingham, UK-based IsomAb, which is developing a new treatment focused on peripheral arterial disease, raised £7.5m in funding. Broadview Ventures led the round and was joined by Mercia Ventures and SCVC.

Birmingham, UK-based Tagomics, a genomics platform for disease profiling and diagnosis, raised £6.7m in seed funding. Calculus Capital led the round and was joined by investors including Illumina Ventures, IQ Capital and Mercia Ventures.

Stuttgart, Germany-based Cyclize, a climate tech startup that has designed a process for recycling mixed plastic waste into synthetic gas, raised €5m in seed funding. UVC Partners led the round and was joined by investors including High-Tech Gründerfonds, Aurum Impact and UnternehmerTUM Funding for Innovators.

Reading, UK-based Device Authority, a platform for managing the cybersecurity of company devices, raised $2m in extended Series A funding from Mercato Partners’ venture arm Prelude.

Tallinn-based Cognitiwe, which enables retailers to optimise their operations via AI-driven visual analysis software, raised €1m in funding from investors including TechOne VC, Eleven Ventures, Flat6Labs, Domino VC and Caucasus VC.

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