Sifted - Germany’s dealmaking kick

Good morning there,

I’ve spent a lot of time thinking about Germany this week. As I write this, I’m in Berlin airport en route to the START Summit with a host of DACH founders and VCs. But beyond just panel prep, I’ve been reading about Europe’s largest economy a lot lately — especially deal announcements. Today, I dig into whether we’re seeing dealmaking in Germany starting to meaningfully heat up.

Elsewhere, we dig into Berlin-based solar startup Enpal’s new billion-euro debt raise, another big departure at embattled AI startup StabilityAI and Octopus Energy’s shopping spree. 

Also, if you’ll also be in Switzerland for the START Summit this week, send me a line!

— Anne Sraders, senior reporter

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Germany’s dealmaking kick 

From my home base in Berlin, I’ve been keeping an eye on what’s going on with deal flow in Germany. And in the last week or so, I’ve noticed a seemingly big uptick in German startup funding announcements. 

Last week, there were 14 German startup deals announced, according to data compiled by Sifted. It’s been a strongish month so far, with 26 deals announced — compared to 42 during a slower February and 52 in January, by Sifted’s calculations (our Sifted Pro deals newsletter recently pointed to a rise in Germany’s deal activity). Some of those recent deal announcements include Berlin-based restaurant app NeoTaste, Paderborn-based enterprise sales data platform acto, Munich-based data product management tool Mindfuel last week and Berlin-based EV charging infrastructure startup Enapi earlier this week.  

But considering European tech’s general struggles in the last year, and with Germany’s economy continuing to lag, I'm curious if this is a false start, or if dealmaking in the country is meaningfully heating up.

“I definitely think there's more activity than in the previous months,” says Anton Waitz, general partner at Berlin-based Project A, which recently invested in both Mindfuel and Enapi. He adds that the firm is seeing a lot of good activity in the pre-seed and seed stages, where it focuses. 

In particular, Waitz singles out climate and defence tech as two big areas of interest among German entrepreneurs, describing energy as “extremely busy” in Germany. For one, Frankfurt-based solar startup Enviria received a $200m cheque from BlackRock last month. Project A has also been a vocal proponent of defence tech among VCs and investors are becoming increasingly interested in the sector — although LPs are still holding back, as Sifted has reported. 

Meanwhile, emerging startup hubs like Munich have recently drawn more attention, particularly for deeptech startups. 

It’s still very early in the year to make any grand predictions about Germany’s startup scene. Waitz does point out that Project A is seeing some notable Series A and B rounds happening — Berlin-based green energy renovation startup Fuchs & Eule just announced its Series A this week — which gives confidence to investors earlier in the cycle that there will be follow-on funding available for their better-performing companies down the line. “I wouldn't say everything is great again, that the party is on again, but I definitely see signals of recovery,” he says. “I'm confident; we're pretty happy with our deal flow in Germany.” 

I’m curious to hear from you, DACH investors: Are you seeing more deal flow among German startups lately? Which industries are standing out? Do you have a different take on German startups from Waitz’s? Send me a line.

— Anne Sraders, senior reporter

🇩🇪 Berlin-based Enpal, which provides households with energy-saving tech like solar panels, batteries and heat pumps, has secured a €1.1bn debt vehicle from Barclays Europe, Bank of America and Credit Agricole CIB to cover its next 35k customers. It has so far supplied 60k homes.

👨‍💻 Stability AI is losing one of its leading members of technical staff, Sifted has learnt from two sources close to the company. Research scientist Robin Rombach, who joined the London-based startup in 2022, is departing from his leadership role on Stability's scientific and research team.

• Rombach was one of the two academics from the Ludwig Maximilian University of Munich who developed the image generation model Stable Diffusion  — the technology that helped Stability AI raise a $101m Series A round from Lightspeed and Coatue in 2022.

🇫🇷 Carbon accounting may not be the hot topic that it was in 2022 — but that hasn’t stopped French climate tech Greenly from bagging a $52m Series B. In a sector that’s only starting to mature after a VC funding bonanza, the startup is facing tough competition from an abundance of players, including France’s Sweep to Germany’s Plan A.

• Greenly, which focuses on serving SMBs rather than large industrial companies, lets businesses measure their carbon emissions and offers data-driven plans to help them decarbonise. 
• It plans to differentiate itself by specialising in certain sectors: tech, finance, industry and retail — a strategy adopted by many of its competitors, given the increasing number of players in the space.

🤖 French carbon accounting startup Sweep has announced that it’s acquired UK-based startup Consequence, which builds AI tools for carbon emissions tracking, to develop AI-powered analytics and recommendations for its customers.

• While discussing the crowded state of the carbon accounting market last year, Sweep’s founder Rachel Delacour told us, “We’ll see lots of smaller solutions being acquired by bigger ones.” Whether that was a prediction or teaser, it’s a move that reflects the growing consolidation trend in this once much-hyped sector.

🇵🇱 Warsaw and Amsterdam-based OTB Ventures has closed its second deeptech fund at $185m — making it the largest fund so far in central eastern Europe. With the fresh funding, the VC wants to back 15-20 Series A and 10-12 seed-stage startups operating in four areas: spacetech, enterprise automation and AI, cybersecurity and fintech infrastructure. 

• OTB Ventures is one of the first funds, after Germany’s spacetech VC Alpine Space Ventures, that secured the money from NATO Innovation Fund (NIF), the alliance’s new €1bn vehicle to back dual-use technologies. 

🐙 Octopus Energy spreads its tentacles in an acquisition spree.

🙋‍♀️ The role of governments in supporting women entrepreneurs (Sponsored by the European Innovation Council).

👨‍⚖️ The Entrepreneurs Network — a UK think tank — breaks down the policy areas the government should focus on to make Britain a better place to be an entrepreneur.

🤔 Rival nations seek to poach top UK and European AI startups (FT — subscription required).

Last year saw the highest number of startup insolvencies in the UK in a decade, according to new PwC analysis by David Kelly and John Baker. There were 12,841 startup insolvencies in 2023, up from the 12,629 recorded in 2022 and a huge increase on the 8,428 recorded in 2021. Startups are defined as companies less than seven years old.

• Regionally the two hardest-hit areas were London and the North West, which saw 2,813 and 2,425 startups go bust, respectively.
• “We are seeing an uptick in companies requiring broader strategic, funding and restructuring support and guidance as they continue to face challenges,” Baker told Sifted via email.

Berlin-based Solaris, a banking-as-a-service (BaaS) startup, raised €96m in Series F funding. SBI Group led the round.

Stockholm-based Ingrid, a delivery experience platform that allows retailers to offer personalised delivery options to consumers, raised €21m in funding. Verdane led the round and was joined by investors including Schibsted Ventures.

Paris-based Cure51, which is building a clinical and molecular database of cancer survivors to help develop more effective cancer treatments, raised €15m in seed funding. Sofinnova Partners led the round and was joined by investors including Hitachi Ventures, Life Extension Ventures and Xavier Niel.

Leeuwarden, Netherlands-based Hydraloop, which designs, sells and manufactures grey water recycling systems that can be used to recycle waste water in homes, raised €10.5m in Series B funding from investors including Invest-NL, NV NOM and Amavi Capital.

Colchester, UK-based Cathedral Studios, a gaming studio specialising in the development of horror games, raised $6.66m in seed funding. Arca led the round and was joined by investors including Hartmann Capital, LiquidX, IVC, 6th Man and Spartan.

Berlin-based Daato, an ESG management platform for organisations, raised €5m in seed funding. Kopa ventures led the round and was joined by investors including neosfer and IBB Ventures.

Hannover, Germany-based graswald.ai, a library of 3D content that allows brands to turn videos and images of real-world objects into 3D models, raised $3.3m in funding. Lakestar and Supernode Global co-led the round.

Valencia, Spain-based Imperia, a SaaS platform for supply chain management that aims to provide companies with personalised solutions in demand planning, production and purchasing processes, raised €3m in funding. Samaipata led the round and was joined by investors including All Iron Ventures, Accel Starter Programme, Draper B1 and Angels Capital.

Prague-based Flowpay, which uses predictive AI models and embedded finance to help SMEs access operational funding, raised €2.1m in seed funding from investors including Techstars, Soulmates Ventures and DEPO Ventures.

London-based Arrow Risk Management, an insurtech that provides insurance brokers and carriers with real-time data to streamline the underwriting and claim evaluation process, raised £2m in a round led by ACF Investors.

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