Sifted - How dealmaking fared in Q1

Good morning there,

Many of my conversations with VCs recently have been more chipper; they talk about deals picking up and more excitement in the market. That may well be, but it hasn’t quite shown up in the data yet. Today I dig into some early Q1 dealmaking data, compiled by Sifted — and highlight a few sectors worth paying attention to (and no, it’s actually not AI). 

But on the other end of the table, some founders are struggling. A recent Sifted survey found that 45% of founders described their mental health as ‘bad’ or ‘very bad’ right now. In a new feature out today, my colleague Sadia Nowshin spoke to several of them, digging into how they’re trying to cope with the pressure and finding themselves mentally and physically worn down. As one founder told Sadia: “Last year was one of the hardest years for me.” Read on for that. 

Elsewhere, we also take a look at the big gender pay gap at top UK tech companies like Revolut and Starling and Paddy Cosgrave’s return as Web Summit’s CEO.

— Anne Sraders, senior reporter

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How dealmaking fared in Q1

For all that VCs tell Sifted reporters that things are picking up, it hasn’t quite shown up in the data yet. There were 1,379 equity funding rounds in the first quarter of this year, according to Sifted data (which includes undisclosed rounds and excludes deals with grants or a debt component). Across those deals, startups raised €12.3bn in Q1. 

That figure is down from last quarter, with roughly €13.8bn worth of deals in Q4, based on Dealroom data. 

Although AI continues to be a lively area, the top sector for dealmaking in Q1 was the somewhat less sexy B2B SaaS cohort. It’s an area that continues to prove popular with investors, with 358 deals raking in €1.6bn in Q1, according to Sifted data. Those deals include Dutch cybersecurity and insurtech subscription service Eye Security’s €36m Series B round led by J.P. Morgan Growth Equity Partners along with Bessemer Venture Partners in March; and Danish whistleblower software company Formalize’s €15m Series A last month. And VCs are keeping their eye on a host of other B2B SaaS startups in 2024. 

But, as predicted, it’s climate tech deals that raised the lion’s share of funding in Q1 — nearly €3.7bn. Climate tech also ranked as the second-most-popular sector with investors in Q1 with 288 deals. That includes the Bill Gates-backed CemVision, which recently raised €10m to create a more sustainable cement using recycled industrial waste from the steel and mining industries; and Copenhagen-based EV charging infrastructure startup Monta, which raised an €80m Series B from investors like US-based Energize Capital and Denmark’s Export and Investment Fund early in the year. 

As Melina Sanchez, principal and VP of impact at climate tech VC firm AENU, told Sifted at the start of the year: “There is still dry capital in the first generation of climate VCs in Europe, and there is an increasing appetite from generalist VCs in climate as well.” 

Geography-wise, the UK led the pack with 358 deals in Q1, followed by France’s 151. There’s also been a flurry of deal announcements in Germany in recent weeks: the country saw 144 deals this past quarter. 

All in all, my conversations with investors seem to be getting more upbeat lately. As I recently reported, even late-stage deals seem to be warming up. Is it just an early bout of activity, or is a recovery in the books for 2024? And what other sectors do you see heating up so far in 2024? Let me know what you think. 

— Anne Sraders, senior reporter

Why the UK & Ireland show renewed hope in the market

Our latest report explores the dynamic sectors driving economic growth in the UK and Ireland. Hear firsthand from groundbreaking founders featured on our ranking and gain insights into investors’ strategies to support their portfolios during turbulent times. 

🤝 UK unicorn Multiverse has acquired US-based AI talent platform Searchlight. Multiverse — which runs apprenticeships schemes and upskills workers for companies — has announced its second acquisition in the past 12 months as it looks to bolster its AI capabilities.  

• Y Combinator alum Searchlight uses AI to conduct skills assessments of job applicants. Multiverse said that the company would “lead” its AI initiatives, in a statement.
• Multiverse previously acquired edtech Eduflow in May 2023.

👀 Paddy Cosgrave, cofounder of tech conference company Web Summit, is returning as CEO after stepping down six months ago amid controversy. Cosgrave had resigned in October following backlash to comments he made about the Israel-Hamas war. 

• He shared the news on X yesterday.

💰 Raiffeisen’s CVC has launched a new €70m fund. Elevator Ventures, the venture capital arm of Raiffeisen Bank, has launched its second fund, to back startups in the DACH and CEE regions.

• Its average investment ranges from €1m-€3m, and it usually backs startups at Series A and B. 
• Elevator Ventures has already invested in Poland’s Autenti, a platform for electronic signatures, goUrban, an Austrian SaaS for shared mobility services and Romanian fintech Finqware. It has also had two exits: from Czech BNPL app Twisto and Austrian regtech Kompany.

“It felt like if I stopped for a second to look after myself, then everything else would collapse.” After a recent Sifted survey found that 45% of founders would describe their mental health as ‘bad’ or ‘very bad’ right now, Sifted reporter Sadia Nowshin spoke to four founders about the mental health toll of running their startups over the past year — and how they brought themselves back from breaking point. 

• Martina Viduka’s founder stress meant that when she ended up in the emergency department with a herniated disc, all she could think about was making it to a client meeting in Canada a couple of days later. After months of recovery, she finally drew a boundary and forced herself to disconnect on holiday. “It was the first time in four years that we didn’t have laptops,” she says. “I realised it was possible, and nothing was on fire.” 
• But for others, a summer break wasn’t enough. Stephanie Melodia shut down her startup marketing agency after the toll of five tough years — and the industry needs to change its mentality to reduce the pressure on founders, she says. “We talk about resilience, which is another big buzzword in the startup ecosystem — but for me, the word resilience actually feeds into the toxic hustle culture as well,” she says.

The gender pay gap at Revolut, Checkout.com, Starling and the majority of the best-funded UK tech companies is wider than the national average, according to the government’s latest filings. Sifted dug into pay gap data — which all UK companies with more than 250 employees were legally required to submit by April 4 — for the country’s top 20 startups by funding raised. Here’s the state of play: 

• 15 posted bigger gaps than the national median amount that women earned (which sees companies pay women 9.1p less for every £1 earned by their male counterparts). 
• While a pay gap doesn’t necessarily mean a company pays women less for the same jobs as men, it does point to a lack of women in the highest-paid roles at startups. That’s certainly the case at the UK’s best-funded startups, less than half of which had more than 25% of roles in the highest pay quartile occupied by women.
• To make matters worse, the gap has gotten wider at many of those companies. Of the 18 that were also required to file gender pay gap data the previous year, 10 —  including edtech Multiverse, financial crime company Quantexa and fintech Checkout.com — posted a wider pay gap this year.

Edinburgh-based Prothea Technologies, which is developing imaging and laser ablation devices to condense lung cancer biopsy and treatment into a single hospital visit, raised €12m in Series A funding. Earlybird Venture Capital and Merieux Equity Partners co-led the round and were joined by investors including NRW.BANK and Old College Hospital.

London-based Log my Care, an app that lets carers record patient notes and access medical records, raised £3m in funding from Mercia Ventures.

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