Sifted - Late-stage funding's comeback?

Good morning there,

Here in Berlin, the weather has started getting warmer. The sun is (mostly) out, and everyone seems a bit more optimistic. And apparently, that renewed spring-time optimism is filtering into some of Europe’s growth investors, too. I’ve been hearing and reading that after an abysmal 2023, late-stage funding rounds are making a comeback so far in 2024. Today, I dig into what’s going on — and whether VCs think the dealmaking will last. 

Elsewhere, we take a look at the startups addressing the millions-large labour shortfall in Europe’s green economy, tell the story of a founder who brought his startup back from bankruptcy and investors list the AI startups they have their eye on. Plus… SoftBank is reportedly looking to join the Mistral party and there’s a big bio acquisition for AstraZeneca.

— Anne Sraders, senior reporter

Is European late-stage funding making a comeback? 

Over coffee recently, an investor told me they were seeing more attractive growth-stage funding opportunities in Europe so far in 2024 — and that these startups seemed even more appealing than their US peers. 

The surprising bit is that, as we’ve documented at length, late-stage funding has taken a big hit over the last year or so. In 2023, the value of late-stage deals in Europe plummeted 50% compared to 2022, according to PitchBook data. While deal count was less impacted, there were fewer late-stage deals last year than the year prior (they recovered a bit in Q3 of 2023), PitchBook senior Europe analyst Navina Rajan points out.

But some investors are seeing more green shoots for the growth stage this year — and are betting on it. 

Martin Mignot, a New York-based partner at European and US firm Index Ventures, penned a LinkedIn post earlier this week in which he described a “flurry of activity” right now, adding that “January and February were among the busiest of my 14 years at Index Ventures”. That activity has spanned from seed to — yes — “$100m growth tickets,” he wrote.

Index recently led Amsterdam-based DataSnipper’s $100m Series B round in February. And despite his perch in the US, Mignot said that “geography-wise, Europe and the US were active in equal measure” — part of the firm’s general effort to have a roughly even split considering its dual London and San Francisco headquarters.

Several other big deals have been announced so far this year, including UK neobank Monzo’s massive $430m funding round earlier this month, Amsterdam-based grocery startup Picnic’s €355m haul in January and Barcelona-based TravelPerk’s $104m round the same month. 

But it’s got me wondering: what’s behind the apparent growth spurt? And are others noticing it, too? 

Josh Bell, general partner at London-based VC Dawn Capital, tells me the “pace of deployment has now picked up again.” He expects many of Dawn’s portfolio companies will raise growth rounds this year and that we’ll see more “competitive returns to the market as 2024 progresses.”

As others have pointed out, tech’s general recovery in the public markets has likely added to the boost. Meanwhile, investors have recently bid up shares in some pre-IPO companies like Klarna in the secondaries market. 

“Late stage generally declined more than early stage, so you've got a lower base to recover from — which is maybe why you're sort of hearing those anecdotes of a pickup,” Rajan notes. She’s expecting dealmaking to hold up better this year off the back of last year’s slump. 

I do wonder what valuations for these later-stage rounds look like, though. Part of the reason for the big growth slowdown was that many of these large companies had raised cash at such bloated valuations in the heyday of 2021 that many VCs looked for better value and more time until exit at the earlier stages. Some also held off to avoid a brutal reality check of their valuations, although many companies also took down rounds in the last year. 

“It feels like valuations are still conservative,” Rajan says. Mignot recognised in his post that “there are pockets of the market with frothy valuations (both AI infrastructure and some applications), but the vast majority of these investments were made at reasonable multiples, in line with historical norms.” He added: “This is also not an environment where everything gets funded at any price in a matter of days, indiscriminately.” 

Bell of Dawn Capital expects we’ll see more up rounds, as he believes valuations have “turned a corner”. 

The real key here will be what happens with the IPO and M&A markets this year. If we do get a big (successful) Klarna IPO or see more companies getting bought at healthy valuations, the late-stage markets should heat up even more. 

I’d love to hear from you, growth investors: are you noticing a pickup in pace so far in 2024? If so, which countries are you spending the most time looking into? What about companies or sectors? Do you think the growth spurt will last? I’m all ears.

— Anne Sraders, senior reporter

💰 Japanese investment giant SoftBank is eyeing a deal to invest in France’s headline-grabbing GenAI startup Mistral, according to Bloomberg reports. The investor, a backer of high-profile companies such as UK chip designer Arm and fintech Revolut, is said to be interested in taking part in Mistral’s next funding round — although no agreement has been reached so far. Mistral declined to comment and SoftBank hasn't responded to Sifted's request for comment.

• Mistral is France’s hottest property: launching just under a year ago, the startup has already closed two fundraising rounds, amassing a mammoth €490m total.
• In the capital-intensive world of generative AI, however, even mega-rounds can only go so far. As one of the largest tech investment funds in the world, SoftBank could bring the big bucks that Mistral needs to keep building its AI models — and another stamp of approval for the French startup.

💉 Paris-based Amolyt Pharma has been snapped up by pharma giant AstraZeneca for up to $1.05bn. The biotech, which develops therapeutic peptides to treat rare endocrine diseases, is set to be acquired for an upfront fee of $800m and a potential milestone payment of $250m. 

• Amolyt Pharma to date has raised $303m in funding from investors including EQT Life Sciences, Sofinnova Partners and Novo Holdings, according to Dealroom.

🇫🇮 Finnish mobility startup MaaS Global — which developed the city transport app Whim — has filed for bankruptcy. The company employed 120 people at its peak but had reduced its headcount to fewer than 40 by February 2024. It’s the latest casualty to come amid a bruising time for mobility startups, which has seen companies merge and make layoffs to stay afloat.

Supercharge your sales function with Sifted’s new guide

Sales teams often grapple with an array of tasks and shifting market dynamics — so it’s crucial to adopt the right tech to drive performance. In our latest guide, we reveal the tools that are helping industry leaders, from automating administration to bringing more accuracy to forecasts. 

👷‍♀️ Europe needs a lot more green energy systems like heat pumps and solar panels to achieve its climate goals — but there’s a big problem: there aren’t enough people trained to install them. Enter: a host of new startups that are working to fill the energy transition labour gap.

• In the last year, VCs have been eagerly funding several of these startups — including Berlin-based Smalt and Montamo, and London-based Greenworkx.
• Several of these startups use a hire, train, deploy model, where they recruit workers and upskill them through physical and digital training before subcontracting them out to install systems. 
• VCs including La Famiglia, Axel Springer, Owl Ventures and Project A have all written cheques into these types of startups in the last year. “I think there's tonnes of VCs that are interested” in the space, Smalt investor and General Catalyst/La Famiglia partner Judith Dada says. “[Smalt] is definitely a company that a lot of folks have pinged me on.” Dig into the whole story here.

😷 Some founders fail and go on to start new, more successful companies, others fail and call it a day, while a smaller group of founders sign up for round two with the same company — without their previous shareholders. That’s what Alexander Hjertström did.

• The Swedish entrepreneur saw his eight-year-old startup, Airinum, go bankrupt last year, and with no other competing bids for the whole business, he was able to repurchase the company for much less money than it had previously raised.
• “When we filed for bankruptcy, my initial plan was to move on. But then there was an opportunity to buy it back,” Hjertström tells Sifted’s Mimi Billing. You can read his full story here.

📈 How to scale a remote team.

🤖 The AI startups to keep on your radar — according to VCs Speedinvest, Runa Capital, Apex Ventures and Octopus Ventures.

🇨🇭Senior reporter Anne Sraders will be at START Summit in St. Gallen, Switzerland on Thursday and Friday next week. If you'll be there too, let her know.

🇧🇪 Editor Amy Lewin will be in Brussels next week to attend the EIC Summit on Monday and R&I Days on Tuesday. Get in touch with her here if you're also there.

🇬🇧 Fintech reporter Tom Matsuda is at the Digital Asset Summit in London from Monday — Wednesday next week. Fancy catching up? Do reach out.

🇫🇷 French tech reporter Daphné Leprince-Ringuet is at Hello Tomorrow's global summit in Paris on Thursday and Friday next week too. If you'll be joining her, reach out for coffee.

Munich, Germany-based Tubulis, which develops specialist antibodies for cancer therapy, raised €128m in extended Series B funding. EQT Life Sciences and Nextech Invest led the round and were joined by investors including Bayern Kapital, Frazier Life Sciences and Deep Track Capital.

Amsterdam-based TheyDo, which develops software tools for companies to map and improve customer engagement, raised $34m in funding. Blossom Capital led the round and was joined by investors including Steven van Belleghem, Highsage Ventures and 20Sales.

Berlin-based NeoTaste, which offers an app for restaurants to reach new customers through introductory deals, raised €15m in extended Series A funding. Earlybird led the round and was joined by Burda Principal Investments. 

Amsterdam-based D2X, a crypto derivatives exchange for institutions, raised $10m in Series A funding. Point72 Ventures led the round and was joined by investors including GSR Markets, Tioga Capital, Fortino Capital, Jabre Capital Partners, Picus Capital and TRGC.

Dubendorf, Switzerland-based Odne, which is developing technology for root canal therapy, raised €4.5m in Series A funding. Revere Partner and NV Capital led the round and were joined by investors including Dental Innovation Alliance, Plug&Play, Hatcher and Zürcher Kantonalbank.

Munich, Germany-based Mindfuel, a data product management tool, raised €3.75m in seed funding led by Project A Ventures.

Paderborn, Germany-based acto, which has developed a platform to help enterprise sales teams make better use of data, raised €3.7m in seed funding. 468 and Cups Capital led the round and was joined by adesso ventures. 

Cologne, Germany-based Naro, which is building infrastructure to enable companies to launch their own investment products such as ETFs and funds, raised $3m in pre-seed funding. La Famiglia and Discovery Ventures led the round and were joined by investors including Angel Invest and Robin Capital.

London-based ThinkSono, which specialises in ultrasound software enabling non-ultrasound trained staff to diagnose deep vein thrombosis, raised £2.1m in funding. id4 ventures led the round and was joined by investors including Brandenburg Kapital, Calm/Storm Ventures, Dubai Angel Investors, CrowdCube and Cur8 Capital. 

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

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