Sifted - M&A's a-coming

Good morning there,

Investors, lawyers and bankers have been telling us for a while that we’re on the brink of a wave of M&A — and the first signs of that are starting to appear. That’s what we dig into today.

Elsewhere, Starling Bank has poached a new CEO from OVO Energy, we round up the Monzo alumni-turned-founders and bring you data on the European startups most likely to hit unicorn status in the near future.

— Kai Nicol-Schwarz, reporter

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M&A's a-coming

The much-anticipated spell of startup M&A might finally be upon us.

Yesterday, we covered the news that Surf Beyond, a small Norwegian scooter startup, acquired a bigger (but bankrupt) competitor’s European business for around €5m. It’s picked up 25k scooters — plus the software that runs them — and 40-50 staff members from US micromobility company Superpedestrian, which filed for bankruptcy at the end of last year.

Surf Beyond is hoping the deal — which its investor, Norway’s Songa Investments, helped finance in exchange for a 22% stake in the company — will help it compete with established players across Europe. 

One of them, Sweden’s Voi, announced a $25m equity and debt fundraise yesterday too. The funding will primarily be used to expand Voi’s fleet, CEO Fredrik Hjelm told Sifted — but could also be put towards “further consolidation possibilities to grow”. 

Micromobility first saw dozens of competitors launch in 2018 and attracted millions in venture capital. But investors, lawyers and bankers tell me they also expect other heavily funded and highly competitive sectors of yesteryear — like speedy grocery delivery, neobanks and Amazon aggregators — to see more consolidation soon. 

French digital bank Qonto has made clear its intentions to make some “targeted acquisitions” to bolster its range of services — and announced its latest acquisition, of accounting platform Regate, last week. 

Acquirers are most likely to be the “category leaders” (like Qonto), who’ll be able to pick up their competitors at hugely reduced valuations, Taylor Wessing partner Josef Fuss told me last month. “Given the overall outlook for founders of the potential targets, those deals might be the best options around.”

Strategic investors might also swoop in; it would be a good time for banks and financial institutions to enhance their tech stack by picking up struggling fintechs, for example. 

Last year, Sonya Iovieno, head of venture and growth at HSBC Innovation Banking, told me on the Sifted Podcast that her team had been putting in place ‘hunting lines’ — debt facilities for growth-stage companies looking to do M&A — but hadn’t seen them used much. 

She thought there was a gap between what founders were willing to sell for and what acquirers were willing to pay. This year, it seems we’re beginning to see reality bite — and founders accept what they can. 

I’ll be discussing how founders should approach acquisition deals today, at 12pm GMT, on a free Sifted Talks. You can still sign up here. We’ll get into how to identify potential acquirers (and targets), line up a good deal,  manage your investors through an M&A process, best integrate teams and much more. 

We’ve also launched a new survey — for founders and startup C-suiters — on M&A intentions. If you’re thinking about selling your startup or buying another startup, please answer a few quick questions. Answers are anonymous. We’ll share the findings on Sifted soon.

— Amy Lewin, editor

🤖 Stability AI has quietly replaced its CTO, Sifted has learnt. Three former employees tell Sifted that Tom Mason, who has held the role since 2022, has stepped back from his duties, with Christian Laforte taking his place. Former employees tell Sifted that leadership changes are contributing to an environment where teams feel they lack strategic direction.

🇬🇧 The UK government agency ARIA will direct £42 million towards AI compute startups — its first programme to try and fulfil its goal of unlocking a “scientific or technical capability that changes the perception of what’s scientifically possible and help catalyse social and economic returns.”

• The Advanced Research and Invention Agency is sponsored by the UK’s department for Science, Innovation and Technology, and will back around a dozen research projects in each programme.
• The capital will be deployed over four years — and universities, large corporates and public labs will also be eligible.

🚚 London-based Packfleet, a logistics startup founded by a trio of former Monzo employees, has raised a $10m Series A round. US-based VC firms General Catalyst and Voyager Ventures co-led the round, which also featured participation from existing investors Creandum, Entree Capital and Founder Collective.

• The funds will be used to build out its delivery presence in London, expand to other cities and develop its proprietary routing software named Pathfinder.

🏦 UK neobank Starling has poached OVO Energy’s CEO Raman Bhatia to lead its next stage of growth after founder Anne Boden stepped down as boss in May 2023. He’ll take up the role early summer.

• Bhatia has been at the helm of OVO — Britain’s third biggest household energy supplier — for the past two years, navigating the energy crisis and leading a £200m raise in July 2023 for the Bristol-based company.

🛴 Swedish scooter startup Voi Technology has raised $25m from existing shareholders and hopes to take advantage of “rapid consolidation in the industry”. With the anticipated merger of Dott and Tier as well as US company Bird filing for bankruptcy, Voi CEO Fredrik Hjelm believes it is a great opportunity to invest in growth. “When we started, there were about 15-20 competitors in each tender process — now we are down to three to four,” he says. 

• The company, which was valued at around $1bn when it raised its Series D in 2021, is on the path to profitability. But, due to market conditions, its valuation dropped to around $380m in its latest round.

Who are Europe’s soonicorns? Viva Technology, together with tech advising firm GP Bullhound and investment firms Accel, Eurazeo, NorthZone and Partech, drew up a list of 100 scaleups across Europe that are most likely to reach a $1bn valuation soon. With criteria ranging from company growth and funds raised to geographical distribution, the list spans 16 European countries, with over-representation of businesses in the UK (22), France (21) and Germany (14).

• The report features some of the usual suspects, such as Germany’s Camunda and AnyDesk, France’s Pasqal and Alma and Spain’s Wallapop. SaaS companies took almost half the spots, followed by digital media in second and — featuring for the first time in the top three, to no one’s surprise — AI.
• Europe’s 100 unicorns-to-be have raised a total of €16bn. On average, individual companies have raised €170bn.

👨‍👦 Meet the 15 startups founded by former Monzo employees.

🦸‍♀️ Is it time for new heroes?

🧠 96% of neurodiverse founders report experiencing discrimination, according to a new report from think tank The Entrepreneurs Network. Surveying 500 UK-based entrepreneurs with at least one form of neurodiversity, the report paints a picture of a neurotypical workplace that can be a challenge for those who don’t fit the mould. Here are some of the key stats:

• Almost two thirds of founders surveyed said that they felt starting their own business was the only way they could make a living, and 78% said they hid their neurodiversity in business situations. 
• On the flip side, 61% of respondents said that they believe it has become easier for people with neurodiversity to succeed in business compared to when they first became a founder. 
• If you’re a neurodiverse founder who’s willing to talk about your experiences launching, building and running your company, Sadia Nowshin wants to hear from you. Email her here.

💸 Today at 12pm GMT, editor Amy Lewin will 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.

🇸🇪 Tomorrow, 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 20, news editor Tim Smith will hear from 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 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.

⭐️ Also on March 26, we'll be showcasing five of the rising stars from the world of deeptech — exclusively for Pro subscribers. Explore the latest developments and discover some of the most promising startups from across Europe. RSVP.

Barcelona, Spain-based AbilityPharma, a biopharma startup focused on autophagy-based therapeutics to treat cancer, raised €7m in funding from investors including CTI Life Sciences Fund, Inveready, the EIC Fund, Fitalent and CDTI Innvierte.

Berlin-based Frontnow, which provides AI solutions for B2B e-commerce, raised €3.8m in funding. Peak led the round and was joined by investors including PROfounders Capital and Identity Ventures.

Berlin-based Quantistry, which is developing a chemical simulation platform for materials discovery, raised €3m in funding. Ananda Impact Ventures led the round and was joined by investors including Chemovator — the business incubator of chemical manufacturer BASF — and IBB Ventures.

Lille, France-based Nijta, which provides AI-powered speech anonymisation technology, raised €2m in funding from investors including Elaia and Finovam Gestion.

Amsterdam-based Ellogon, which is working on personalising immunotherapy to fight cancer, raised €1m in funding from investors including ROM InWest and UvA Ventures Holding.

If you’d like to submit a deal, get in touch. 

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