Sifted - Electrifying the skies

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It took years for charging infrastructure to start catching up with the electric revolution happening on the roads. Today, we look at one startup that’s gambling on the same transition happening in the skies — and aiming to preempt the market rush for infrastructure.

Elsewhere, we highlight the deeptech startups that could be on the way to unicorn status, UK-based chipmakers are now able to tap into billions worth of EU funding and French VC Elaia has closed €60m of a €120m fund.

— Kai Nicol-Schwarz, reporter

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Electrifying the skies

What comes first, the problem or the startup? Typically, it’s the problem. A founder sees something that’s causing people grief — and sets to building the solution. 

In the world of electric vehicle (EV) charging, that approach has caused speedbumps. 

The electric revolution that’s happened on the roads in the past decade has seen the number of EVs skyrocket. There are now 1m registered in the UK — about 3% of all cars — compared to 3,500 just over a decade ago. 

Startups — and their VCs — have smelled opportunity, and investment in EV infrastructure has boomed in the past few years. Since 2021, the sector has raised $7.6bn in Europe, according to Dealroom.

But they’re late to the party; pre-2021, the sector picked up just $789m. Charging networks take time to install and while EV use has grown, patchy charging station coverage has already put off mainstream buyers. 

It’s a problem UK-based Aerovolt is trying to preempt in the skies. 

Last month, the startup switched on the world’s first public charging network for electric planes. It has installed charging points at six airfields in England — and wants to install them at dozens more across the UK in the next 18 months. 

But, right now, its potential market is miniscule. Of the 19k privately owned planes registered in the UK, just 10 are electric, says Aerovolt. 

“Ultimately the goal is to knock out the competition,” says Alan Kingsley-Dobson, who founded Aerovolt in 2022 with his twin brother Phil. While it’ll be “three or four years” until the company sees “significant revenue…that’s [the case] with any new technology and getting in there first”, he tells Sifted.

Some investors are betting on the benefits of Aerovolt moving “massively early” (as Alan puts it). The startup raised £400k from 7percent Ventures at the start of last year and is raising another £3.5m, which it hopes to close by mid-April.

There are signs that the electric aviation market could pick up. The fuel that most conventional small aircraft use is being banned in Europe and the US by 2027, while several new electric planes will also enter the market in the next couple of years.

But it’s risky to build a product before a market exists for it. It likely means a long gap between capex spend and getting anything back. A market in a comparable situation is Europe’s cultivated meat industry, with startups waiting on the green light before they can sell products in the region — but spending on facilities and R&D in the meantime. 

That said, if electric aviation goes the way Aerovolt hopes, the payoffs of moving so quickly could be big. 

While its target £3.5m fundraise might not raise many eyebrows on the wider tech scene, VCs have shown that they’re game to throw huge sums of money behind startups building the infrastructure behind the green transition and promising to gobble up large portions of the market. 

UK energy infrastructure duo Zenobe Energy and Gridserve raised £870m and £200m, respectively, last year, while Paris-based Electra raised a €304m Series B in January this year.  

But, in truth, electric aviation infrastructure is likely years off raising those sums.

Aerovolt’s looking to expand to 40 more airfields in the UK in the next 18 months. In a few years’ time — when there'll be more competitors vying for a slice of the pie — it wants to expand to Europe. “That could be the test,” says Alan.

But the bigger test may be whether the electric aviation market picks up quick enough for Aerovolt’s gamble to pay off. What do you think? Should startups take more chances on upcoming markets — or is it prudent to wait for the problem to arise first?

— Kai Nicol-Schwarz, reporter

🇪🇺 In a hotly anticipated vote, the European Parliament yesterday voted to approve the EU AI Act — a text that has been three years in the making and made for much debate and controversy. 

• The rules apply to all companies that produce and deploy AI models in the EU and become increasingly stringent with the level of risk the models pose to society.
• Opponents, however, say that the Act is further hindering innovation in the bloc, which is already lagging far behind competitors in the US. 
• Either way, the text is expected to formally pass and become EU law after a final green light in the summer. AI founders, to make sure you’re ready, check out Sifted’s guide to compliance.

🤝 UK-based chipmakers can collaborate with EU businesses on semiconductor design projects funded by the EU. The British government announced on Wednesday that Britain has joined the Chips Joint Undertaking scheme, an EU public-private partnership with a total budget of €11bn to be spent by 2030, partly funded under the EU’s massive R&D programme Horizon Europe.

• Britain will take part as a “participating state”, equivalent to full membership status, which will allow it to play a role in setting research priorities and funding decisions as the scheme evolves.

🙌 Paris-based Lago, a Y Combinator alum that provides open source infrastructure for billing systems, has raised a $15m Series A that brings total funding for the company to $22m. 

• The startup is targeting an issue that many businesses face but remains overlooked: building efficient billing systems when money comes in via several different sources, such as monthly subscriptions, metering, pay-as-you-go or transaction-based commissions.
• It’s a service already provided by companies like payments giant Stripe, but Lago says existing platforms don’t offer enough flexibility for businesses. “Stripe was mostly made for B2C and pure subscription models,” says founder Anh-Tho Chuong.
• The French startup is backed by a remarkable number of US VCs, including FirstMark and SignalFire. A third of its customers are already based in the US, and it plans to use the new injection of cash to continue expanding its footprint across the Atlantic.

💰 French deeptech VC Elaia has closed the first €60m of a new €120m seed fund. The investor, an early backer of Nasdaq-listed Criteo and French unicorn Mirakl, focuses on academic spinouts and startups born from research.

• To spot opportunities at the earliest possible stage, Elaia is deploying the fund in partnership with academic institutions and research labs across Europe. 
• This means the VC gets priority access to scientists thinking of turning their research project into a business use case — and it intends to use this to get involved early with Europe’s next hot generative AI deals.

🇺🇸 Swiss startup Climeworks, which is Europe’s best-funded direct air capture startup, has opened its US HQ in Texas and plans to triple its headcount in the country by the end of 2024. It has also opened new office locations in New York, Washington and California.

• Climeworks has been one of the largest European players to ramp up its focus on America in the wake of the Inflation Reduction Act — a mammoth tax incentives package for green tech.

🚀 14 deeptech soonicorns in Europe.

🤖 How to use AI to boost sales.

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London-based PPRO, which offers a cross-border digital payment platform, raised €85m in funding from investors including Eurazeo, HPE Growth, Sprints, J.P. Morgan, Citi Ventures and PayPal Ventures.

Cambridge, UK-based Mission Therapeutics, a clinical-stage biotech company working on therapeutics in the area of mitophagy, raised £25.2m. Pfizer Venture Investments, Sofinnova Partners, Roche Venture Fund, SR One, IP Group and Rosetta Capital led the round.

Tallinn-based BotGuard OÜ, a cybersecurity software company for web hosting providers, raised €12m in Series A funding. MMC Ventures led the round and was joined by investors including Tera Ventures and Expeditions Fund.

London-based SAPI, which enables payments companies to offer business loans and other financing products to their clients, raised £7.5m in funding from investors including Passion Capital. 

Vienna-based Necture (formerly known as Ubiq), a platform for managing electric vehicle fleets and charging infrastructure, raised €7m in extended Series A funding. Smart Energy Innovationsfonds and Verbund X Ventures led the round and were joined by investors including Speedinvest and smartworks innovation. 

Berlin-based Polar Signals, which methodically tracks CPU and memory usage and creates profiles from that data over time, raised $6.8m in funding. Spark Capital led the round and was joined by investors including Google Ventures, Lightspeed and Haystack.

Paris-based Docent, an AI-based discovery platform for art enthusiasts, raised €5m in funding. Polytechnique Ventures led the round and was joined by investors including BPI ICC and Point72 Ventures.

Tallinn-based GScan, which specialises in non-intrusive scanning of building materials and structures to test for faults, raised €3m in funding from investors including Bolt founder Markus Villig.

Stockholm-based Younium, a B2B subscription management and billing software startup, raised €2.7m in funding from investors including Partinc Capital.

Dortmund, Germany-based Spherity, a developer of identity management software, raised €2.5m. Blockwall led the round.

Hamburg, Germany-based Autonomo, which allows retailers to deliver a checkout-free experience to shoppers, raised £2m in seed funding. Potter Ventures and River Capital led the round.

Bristol, UK-based Anaphite, which has developed dry coating technology for EV batteries, raised £1.6m in funding — split between £880k in equity funding and £685k in grant funding — from investors including Elbow Beach Capital, Wealth Club and Bristol Private Equity Club.

Bonn, Germany-based Tomorrow Things, which creates digital twins of industrial assets, raised €1.5m in funding. High-Tech Gründerfonds and neoteq ventures led the round, and were joined by investors including Notion Capital and Robin Capital.

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