Sifted - The maturation of Munich

Good morning there,

Last week I was in Switzerland, but I may as well have been in Munich. I found myself surrounded by a bunch of investors and founders from the city, and some of my conversations got the wheels turning. Today, I take a deeper look at how the Munich ecosystem, still the smaller sibling to Berlin, has been growing up in recent years.

Beyond just Munich, I’ve also recently been thinking a lot about a comparison we often make on this side of the Atlantic: “So-and-so city or country is the next Silicon Valley”. Certainly, the California tech hub has earned its reputation as the epicentre of the startup world over the years. But I wonder if that comparison is all that helpful — or desirable — for how venture and startups work in Europe. 

Does Europe need the next Silicon Valley, or should we be striving for another kind of marker of success? And for those who are eager to tag the Silicon Valley label on a city, what’s the logic? I’m really curious to hear your thoughts — send me an email, as I hope to write about this topic in the coming weeks.

Elsewhere today, we dig into a big Series A raise for a Belgian startup working on industrial automation and explore the potentially game-changing search for underground hydrogen deposits.  

Also, the Sifted team will be off for the Easter holiday. But don’t fret! We’ll still be dropping into your inbox every morning on our normal schedule. On that note, if you’re also taking some downtime, have a wonderful long weekend!

– Anne Sraders, senior reporter

The maturation of Munich 

If the emails I get these days are any indication, the VC world is enamoured with Munich. 

As we’ve recently reported, the southern German city has long been vying to become a startup capital, with Bavaria minister president Markus Söder recently branding it as the “California of Europe”. Hot startups like AI defence firm Helsing and HR tech unicorn Personio count Munich as their home base, while the city’s famous Technical University of Munich is churning out deeptech companies. And local industry giants — like Siemens and SAP — are deep-pocketed potential clients for them.

Now, growth and late-stage investors are increasingly moving to the city, or opening up offices there — along with big banks and international law firms; another sign of its maturation as a startup hub. 

“You can really notice that the international funds are trying to build up resources to have a bit more local presence,” one Munich-based growth investor recently told me. Nordic growth investor Verdane opened a Munich outpost in 2023, while Belgian private equity/VC firm Fortino Capital also set up shop in Munich two years ago. International law firms focused on M&A and private equity like Reed Smith and Morgan, Lewis & Bockius opened or added partners to their Munich offices last year. Banking giant Goldman Sachs has also opened a Munich hub. 

Munich’s share of new VC funds raised in Germany has been on the rise for the last two years, following a drop in 2021, according to PitchBook data. That would track with the broader shift of investor interest into more B2B companies — compared to historically consumer-focused Berlin. The capital does, however, still receive the most investor euros. 

Dominik Schwarz, who joined Verdane last year as partner to head up its new Munich office, says the decision to open a hub there had less to do with companies and more to do with potential hires. “You have a tremendous deep pool of talent coming out of the private equity world” in Munich, he says, noting the city has grown into a top hub for growth and mid-market private equity firms. “Proximity to deal flow is less important than proximity to talent.” 

In the last couple of years, “Munich has become much more mature in that sense and is much more noticed by the investor scene,” the Munich growth investor told me. “New York investors come here every year to visit and meet the teams,” says Herbert Mangesius, founding partner of Munich-based deeptech firm VSquared. 

Banks and law firms are increasingly setting up shop in the city to help late-stage companies with the next part of their journey, be it M&A or IPO. Dan Dees, Goldman Sachs’ co-head of global banking and markets, recently told Bloomberg he believes the region is primed for more deal flow and investments in infrastructure.

“This is really massive and I think this is the strongest signal; forget VCs,” Mangesius tells me, adding he’s been invited to Goldman Sachs’ office opening in June and has spoken with the managing directors there. “This is a long-term commitment and it signals something else than some funds, small or big, [opening] an office with one, two people.”

I’d love to hear from you, investors: have you thought about opening a Munich office, or have plans to open one? What are you seeing in terms of late-stage deal opportunities in the region? In what ways do you think Munich is still lagging other European tech hubs? I’m all ears. 

– Anne Sraders, senior reporter

🇬🇧 UK healthtech Numan has recalled vitamin D supplements from customers containing restricted ingredients. The company informed customers this week that its vitamin D supplements contained Propylparaben and Methylparaben — which are restricted for use in food (including supplements) in the EU and UK.

🤯 Disgraced FTX founder Sam Bankman-Fried was sentenced yesterday to 25 years in federal prison in the US for fraud; he plans to appeal. Bankman-Fried’s former crypto empire spanned far and wide, including Europe with his research firm’s European startup investments. 

💰 Ghent, Belgium-based Robovision, which helps integrate AI-powered computer vision with robots, has raised a $42m Series A round led by Target Global and Astanor Ventures. The funding round will help accelerate Robovision's US expansion — the company is hoping to address the growing labour force shortage stateside.

• Robovision’s funding is one of the largest Series A rounds recorded in Belgium’s developing startup ecosystem, according to data platform Dealroom.

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Paris-based Surge, which aims to discover immune biomarkers for precision drug development, raised €7.5m in funding. Eurazeo led the round and was joined by investors including Boutique Venture Partners, HCVC, Kima Ventures and MH Innov'. 

London-based Metaview, an AI-powered interview note-taking platform for recruiters, raised $7m in Series A funding. Plural led the round and was joined by investors including Vertex Ventures US, Seedcamp and Village Global.

Paris-based The Mobile-First Company, which is developing a suite of B2B mobile apps for businesses, raised €3.5m in pre-seed funding. Lightspeed Venture Partners and Emblem led the round. 

Dublin-based Wellola, which provides a digital patient communication management system, raised €2.2m in funding. Elkstone led the round and was joined by Enterprise Ireland and Bay Advisory.

London-based ayora, an AI revenue management platform for lawyers, raised $1.6m in pre-seed funding. J12 led the round and was joined by investors including Twin Path Ventures. 

Frankfurt, Germany-based Bavest, which uses AI to analyse investment portfolios and provide financial data, raised €1.1m in pre-seed funding from investors including ReZoom Capital.

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