Sifted - Founders at breaking point

Good morning there,

One year has passed since the ground fell out from beneath many founders' and VCs' feet, as the venture bank SVB went kaput. Over a fraught weekend, founders — many of whom kept all of their money with the bank —  feared the worst. 

The catastrophe was avoided as governments on both sides of the Atlantic stepped in to facilitate rescue deals. But SVB UK — and its HSBC rebrand — has seen its dominance of the startup banking sector chipped away in the 12 months since.

Today, Sifted looks at who’s begun to encroach on SVB UK’s previously unchallenged patch — and whether startups have learnt any money-management lessons. 

Elsewhere, we take a look at the sad state of founder mental health, VCs share which digital therapeutics startups they’ve got their eyes on and WVC:E’s Sophie Winwood tells us everything we’ve got wrong about women in VC.

— Kai Nicol-Schwarz, reporter

A practical guide to inclusive hiring strategies  

Once your company starts to scale, hiring people you already know doesn’t cut it. In episode four of The Inclusive Startup Playbook podcast, we’re joined by Morgan Stanley and AMAKA Studio to explore how to write inclusive job descriptions, how to structure the hiring process and how to give good interviews — so you can find the right talent for your business. 

Founders are reaching breaking point 

During the first year of the pandemic, I lived with a founder. I saw first-hand just how relentlessly tough it is to run a company day in, day out: how you jump one hurdle just to whack right into another one; how the whole team’s problems become your problems; how fundraising runs your batteries all the way down; and how your mind never really switches off. 

That was a brutal year. But, based on our recent survey of 156 founders’ mental health, it seems like last year was equally difficult, if not more so. 

Founders told us about their experiences in the past year, with 85% suffering from high stress while 75% said they had anxiety. 45% told us they felt that their mental health was ‘bad’ or ‘very bad’ at the moment.

“I have been at extremely high levels of stress pretty much non-stop and I am tired and exhausted most of the time,” said one respondent.

“I’m not sure I can muster the energy to keep going,” said another.

Worryingly, they’re far from alone: 49% of founders said they’re considering quitting their startup this year. 

“I cannot sustain this rhythm anymore. Solving problems seems the only purpose in my life and while doing it my mental and physical health is deteriorating,” one founder told us. 

Another said: “My personal life suffering and cost of living/startup wages are not enough to support my family.” Several founders brought up “financial security” as a key reason for considering quitting for a “more stable job”. 

The challenging fundraising environment, coming so shortly after the pandemic, coupled with investors’ focus on reaching profitability, is the number one reason founders are “broken”, our survey found. 

But there are other concerns. Founders are worried about the toll it’s all having on their personal lives, with some telling us the stress had(or nearly) ended their marriage. That’s not surprising; 65% of founders told us they lean on their partner or spouse for support, while 64% also told us they’d started spending less time with friends and family over the past year. That’s a hard deal for any partner. 

As for non-romantic partners, the strains of the current environment are also leading to cofounder break-ups. “I’m sick of arguing with my cofounder over the future,” said one respondent. 

Not every founder, however, feels this way: 28% said if they left their current startup they’d want to start a new one. 

But a far bigger group are considering leaving startup life for now. Of those wanting to depart their business, 39% said they’d take a break while 30% would look for a job.

For the investors among our readers, what do you think of these findings? For the founders’ partners out there, how tough has the last year been for you? And for the founders, my colleague Sadia Nowshin would like to hear more about how you’re feeling. If you’re happy to be interviewed by her (not anonymously, this time), please send her an email.

— Amy Lewin, editor

🏦 Exclusive: London-based banking-as-a-service fintech Griffin has raised a $24m Series A extension. And it’s done so at an increase to its previous $83m valuation, says founder David Jarvis.

• The round was co-led by MassMutual Ventures, Nordic Ninja and Breega and also featured participation from previous investors Notion Capital and EQT Ventures. 
• Founded in 2017, Griffin helps fintechs create banking services — like payments, savings and deposits — without having to build the tech for them in-house. 
• Griffin has also recently secured a full UK banking licence.

👩‍💼 All the ways you're wrong about women in VC. 

👀 11 digital therapeutics startups to watch, according to VCs.

France is edging ahead of the UK and Germany in the race for GenAI funding in Europe, according to Dealroom data. In our latest Briefing, we dig into the facts, figures and trends that you need to know about the startup scene’s sexiest sector. Here are some of the key stats to whet your appetite:

• Between 2015-2023, French GenAI startups raised $731m — ahead of the UK’s $686m and Germany’s $621m. 
• Outside of the podium, there’s a big drop off. The next best-funded GenAI ecosystem was the Netherlands, which picked up $166m over the same period.
• The vast majority of all of that capital has, unsurprisingly, arrived in the past couple of years. In 2023, GenAI startups in Europe raised a record $1.5bn — nearly three times as much as the previous year. In 2024 so far, startups have already picked up $277m.

💶 Today, editor Amy Lewin will be at SuperReturn Secondaries Europe. If you’ll be there too, let her know.

🤖 Tomorrow, news editor Tim Smith will be hosting an editorial conference call, exclusively for Pro subscribers, alongside founders and investors who are working at the bleeding edge of automation in the AI economy. Join us to learn where AI can drive new opportunities and efficiencies — as well as where its limitations still lie. RSVP. 

💸 On March 13, Amy Lewin will also bring together a panel of experts from Octopus Ventures, FaceIt, Latham & Watkins and Bloom to discuss what’s in store for M&A activity and how startups can prepare. RSVP. 

🇸🇪 On March 14, Europe editor Mimi Billing will be hosting Sifted’s first intimate breakfast meetup in Stockholm alongside Magnus Nilsson, cofounder of iZettle, to discuss the experience and challenges of selling his company. Be part of the discussion — apply to join. 

🇺🇸 On March 26, Mimi Billing will also bring together a panel of experts to hear their actionable advice on how to nail your tax strategy when expanding in the US. RSVP.

Dublin-based Legitify, which specialises in digital notarisation services, raised €1.5m in seed funding. Verb Ventures led the round and was joined by investors including Enterprise Ireland, Actium Partners and Redbay Ventures.

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