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What do you think of when you hear Slovenia? Beautiful lakes, great wine, perhaps. But the country is angling to be known for something else, too: its startups. Although similarly-sized ecosystems still dwarf its tech scene in terms of VC funding, and policy could be a lot friendlier to founders, things are moving forward. Today, my colleague Zosia Wanat digs into how the government and local startup groups are aiming to put it on the map. 

Elsewhere today: 

• Accel raises new $650m fund
• Is AI solving the loneliness epidemic or making it worse?
• Enspired secures €25m for battery storage energy tech

—Anne Sraders, senior reporter

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Revamping a struggling startup scene

Slovenia is known more for its tourist spots than it is for tech. Despite the best efforts of the country’s entrepreneurial groups, startups in this nation of 2 million people don’t attract much investment. Though Slovenia broke its record for startup funding in 2023, according to data platform Dealroom, the $88.9m raised is lower than other countries in Europe with similarly sized populations. Lithuanian startups, for example, raised $250m in 2023, in a year where funding in the country was down 43% compared to 2021’s record-breaking $438m.

There have been some success stories. Crypto fintech Bitstamp exited for $400m in 2017, and apps and games developer Outfit7 was bought for $1bn in 2018. Investors have written some good-sized cheques too. Fintech NAKA raised a $20m Series A in 2022 and smart bird feeder Bird Buddy raised $8.5m in 2021 from investors including General Catalyst. But the country is yet to leave a mark on European tech.

There are signs things are getting better. More local VCs are raising early-stage funds. The government is also trying to make the country more startup-friendly — but it has work to do.

According to the Startup Nations Standards Report, coordinated by the European Startup Nations Alliance, in 2023 Slovenia was marked as the worst in Europe for implementing startup friendly policies. It was given a score of 23%, compared to the European average of 55%, based on things like the ease of startup creation, their access to finance and ability to attract and retain talent. Hand in hand with local startup groups, the government in Ljubljana wants to triple that score by 2030. Speaking at PODIM, one of central eastern Europe’s major startup events, in Maribor today is Matevž Frangež, the minister in charge of that goal. He is expected to announce the Slovenian Startup Strategy, a proposal outlining how the country is going to get there.

The strategy proposal, the communication of which has been seen by Sifted, is expected to cover five areas: improving the startup ecosystem (for example, by introducing a legal definition for a startup, creating new governmental initiatives and grants); introducing a startup visa for foreign talent; launching new tax relief and exemptions for investors as well as solutions for attracting money from pension funds into venture capital; drafting favourable regulation of employee stock options; and introducing a new form of legal entity for startups.

It also sets out some ambitious goals. By 2030, the ministry wants Slovenia to have at least 476 startups per million inhabitants — twice as many as today — and for its startups to raise 10 times more money than they currently do (€41 per capita now versus a target of €410 per capita). It also wants its startups to reach the European average acceptance rate when applying to European Innovation Council programmes — the EU vehicles that give grants to and invest equity into European deeptech startups. The majority of existing beneficiaries tend to come from western Europe. Another goal is to create a database that measures the number of startups, the number of employees they have, their generated revenues and taxes paid. Based on these indicators, it is also aiming for the startup sector to have an annual growth rate of at least 25% from 2026.

Urban Lapajne, programme director at PODIM and Start:up Slovenia, an industry initiative, says the aim is to make founders’ lives easier and to put Slovenia on the European tech map.  

“With all five initiatives implemented, there will be no need for incorporation in the US, UK, or any other country,” he says. “Moreover, these measures are expected to facilitate increased capital flow into the startup ecosystem.”

It sounds similar to the actions of other governments in Europe — like French President Emmanuel Macron’s targets for unicorn creation or Germany’s recent improvement on stock options — which have been warmly welcomed by tech folk. I’m keeping my fingers crossed that this will also be the case in Slovenia. In the meantime, I want to know: do you think that government support schemes work? What should be their main focus area? Or maybe… the best way for governments is to sit back and not disturb? I’m all ears.

— Zosia Wanat, senior reporter

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💰 Accel, one of Europe’s most deep-pocketed foreign investors, has raised a new $650m fund to back early-stage startups in Europe and Israel — its eighth in nearly 25 years. 

• The new fund will target seed and Series A companies in various sectors, including cybersecurity, enterprise software and artificial intelligence.
• It’s a reflection of the American VC's continuing commitment to the region after several international firms cut down on investments or relocated their European teams amid a slowdown in European tech last year. “We are super excited to be investing [in Europe] right now. If some people have gone home, so be it,” says Accel partner Harry Nelis. 

🇫🇷 Corporations have pledged to invest €15bn in France at the “Choose France” summit — an annual event held since 2018 to facilitate foreign investments in the country. A large chunk of the money will be dedicated to AI.

• Microsoft stole the show after announcing its largest investment in France to date, a €4bn cash envelope to build more data centres — and expand existing ones — across the country by the end of 2025. The focus is on increasing the capacity of GPUs, which are needed to run large AI models. Amazon also announced that it’ll invest €1.2bn to further develop its French cloud and AI infrastructure.
• Quantum computing was also on the agenda. IBM pledged to invest €45m to expand the company’s research efforts in France. Up to 50 quantum researchers and engineers will be recruited in the country in the next year.

🇦🇹 Enspired, a Vienna-based company which helps owners of energy storage assets to sell their capacity, has secured a €25.5m Series B round. As more renewables are hooked up to the electricity grid, energy storage solutions are ever more critical – and investors are cottoning on to the opportunity. 

🤖 Synthetic intimacy: Is AI solving the loneliness epidemic or making it worse?

🤔 Can Europe’s economy ever hope to rival the US again? (Financial Times)

Toulouse, France-based Infinite Orbits, which refuels and repairs satellites, raised €12m in funding. Newfund Capital led the round and was joined by investors including EIC Fund, IRDI Capital Investissement and Space Founders France.

London-based tiney, which uses tech to retrain people as childminders, raised £7.2m in Series A funding from investors including Mustard Seed Partners, Rubio Impact Ventures, PortfoLion Capital Partners and Sparkmind.vc.

Amsterdam-based Magic Lane, a mapping and navigation services platform for micro-mobility, specialised vehicles and apps, raised €3m in funding from No Such Ventures.

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