Sifted - Return of the megaround?

Good morning there,

This time last year Europe had played host to just 17 megarounds (rounds of $100m+), according to Dealroom data — and the late-stage funding scene in general went on to have a year to forget. But 2024 has started on better footing, based on Sifted data covering Q1. We get into that below.

Elsewhere today, we’ve got the climate ideas VCs want to be pitched, an interview with the head of the European Innovation Council Fund and news that prominent French investor Jean de La Rochebrochard has been removed from Newwave, the early-stage VC he cofounded in 2020.

Plus… on April 23, we’re putting on an event exclusively for Pro subscribers that will see Sifted’s head of research, Jonathan Sinclair, present the key takeaways and data points from Q1, followed by a pitch session from the highest scoring early-stage startups we scouted over the past three months. RSVP here.

— Tom Nugent, newsletter editor

/A message from our sponsor Notion

Try unlimited AI out for free on Notion

Ask literally anything. Notion will answer. Get answers, write better and autofill tables with Notion's AI. Try unlimited AI out for free — with the rest of Notion Plus — for six months (a value of up to $6k).

Return of the megaround?

Europe has the taste for megarounds again. There were 42 equity, debt and grant rounds of $100m+ in Q1, according to new Sifted data — the busiest quarter for so-called megarounds since Q2 2022 when checked against Dealroom data. 

The surge was led by climate tech startups, which accounted for 43% of those rounds and boasted 13 of the biggest 20 fundraises in the first three months of the year. 

A total of €17.4bn was raised across the 42 rounds — €5bn of which belonged to equity-based deals — and represented a big climb on the 17 megarounds recorded in the same period last year. 

It’s a welcome sign for European tech — which saw the late-stage funding scene typically associated with larger rounds dry up last year —  and chimes with an investor telling my colleague Anne Sraders in Berlin last month that they were seeing more attractive growth-stage opportunities hitting the market. 

Where are the hotspots?

Germany saw the most megaround action in Q1 with 12 rounds, followed by Sweden with eight and the UK with six. 

Berlin and Stockholm both had five each to their name. Berlin saw big rounds for solar company Enpal, smartphone rental site Everphone, e-commerce service Razor Group and fintechs Solaris and Pliant. Sweden's capital hosted giant deals for heat pump startup Aira, green steel plant H2 Green Steel and battery maker Northvolt — all three of which were started by Vargas, the company builder and investment company of Swedish financiers Harald Mix and Carl-Erik Lagercrantz.

Those three deals also epitomise the growth of the infrastructure startup in Europe — capital-intensive businesses that have turned to alternative financing instruments like debt, rather than using just equity to fund their construction projects.

Seventeen deals in the quarter surpassed the $200m mark — including a $5bn debt financing round for Northvolt and a $4.5bn debt and equity package for H2 Green Steel.

The most active VCs

The most active investors by number of megadeals done (which also consists of debts, convertibles and grants) during Q1 include the European Investment Bank — backers of Northvolt, H2 Green Steel and Sunfire’s (€100m) debt fundraising — and Sweden’s Kinnevik, which invested in Stockholm-based heat pump supplier Aira’s €145m Series B, the $110m deal for Dutch hospitality software unicorn Mews and the $104m for Barcelona travel management site TravelPerk. 

They were followed by High-Tech Gründerfonds (Tubulis and Ineratec), London-based Planet First Partners (Sunfire and Finn), Stockholm-based EQT Ventures (Heart Aerospace and 1X) and BNP Paribas (H2 Green Steel and Polestar) — who were all involved in two megarounds each.

Looking at the wider picture, Sifted tracked 1,453 funding rounds in Q1 (1,386 of which were equity). Across those deals, startups raised €25.6bn in Q1.

— Tom Nugent, newsletter editor

🇫🇷 Prominent French investor Jean de La Rochebrochard has been removed from Newwave, the early-stage VC fund that he cofounded in 2020 with former Accel vice president Pia d’Iribarne.

• De La Rochebrochard, who also manages French billionaire Xavier Niel’s investments in pre-seed and seed startups through Kima Ventures, says that he decided to leave Newwave because of differences with D’Iribarne — but that following disagreements regarding the terms of his departure, he was eventually removed by his associate. 
• A source with knowledge of the matter, however, tells Sifted that the investor was removed for “good reasons” that were not linked to the terms of his departure. D’Iribarne declined to comment.

🇬🇧 UK gut health startup Zoe — one of Europe’s best-funded direct-to-consumer healthtechs — has announced it will reduce its costs by 20%  and detailed redundancy packages in a LinkedIn post from cofounder and CEO Jonathan Wolf. Zoe confirmed to Sifted that it is intending to “reduce the size of its organisation”.

🇪🇸 The European Investment Bank’s (EIB) VC arm will back a new fund in Spain looking to put €1bn into growth stage tech companies, according to Bloomberg. An EIB spokesperson told the publication the deal is currently being structured and is expected to be done before the summer.

• The fund is part of the 2023 European Technology Champions Initiative, a €3.75bn fund of funds managed by the European Investment Fund and financed by the EIB, as well as the governments of Germany, France, Spain, Italy and Belgium.

💸 Singaporean VC Temasek, a backer of French unicorns Alan and ManoMano, opened a new office in Paris this week in an effort to continue growing the firm’s presence in Europe. It is the investor’s third office in the region after London and Brussels, and the VC says that it will enable more access to European investment opportunities and talent — with plans to invest up to $18bn across the region over the next five years, according to Bloomberg.

💰 Hundreds of millions in revenue and prepping for an IPO — what’s behind Bending Spoons’ success?

👀 The climate ideas VCs want to be pitched.

😮 Europe can be a world leader in quantum, says EIC head.

London-based Mimo, a financial management platform that automates B2B payments admin, raised £15.5m in funding. Northzone led the round and was joined by investors including Cocoa Ventures, Seedcamp and Upfin VC.

Amsterdam-based Renewaball, which manufactures recyclable tennis balls from wool and cotton, raised €3m in funding. Rubio Impact Ventures led the round. 

London-based Veremark, a developer of background screening technology that helps companies run checks on prospective employees, raised $3m in pre-Series B funding. Samaipata and Stage 2 Capital led the round and were joined by investors including ACF Investors and Vulpes Investment.

Glasgow, UK-based Clyde Hydrogen, which is working on electrolyser tech to produce green hydrogen, raised £1.5m in pre-seed funding (split between equity and grant funding) from investors including Zinc and the University of Glasgow.

Berlin-based Scavenger AI, a personal AI business consultant for companies, raised €1.1m in pre-seed funding. High-Tech Gründerfonds led the round and was joined by investors including Calm/Storm Ventures, Femventix and B4i Investment Fund.

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

For more deals, analysis and M&A insight, become a Pro subscriber to receive our weekly Deals newsletter.

• Sign up to our specialist newsletters if you want more on fintech, climate tech, startup life and VC.
• Tune in to Sifted’s podcast, Startup Europe.
• Join the Sifted team along with 3,000+ startups, founders and investors at Sifted Summit this October. Get your ticket now!
• Join Sifted’s journalists for live Sifted Talks with industry experts, diving into the biggest questions facing startup Europe.
• Access investment-grade research on the hottest sectors, rising stars and success stories from across European tech by subscribing to Sifted Pro.
• Follow us on LinkedIn and X.