Sifted - Can AI turn you into Warren Buffet?

Good morning there,

I was in Luxembourg at the start of the week at the European Investment Bank’s (EIB) Venture Debt Summit, where Europe’s ongoing growth financing problem was a big topic. Venture debt — provided by the EIB and a fairly small crowd of other sources— is one solution. Unlocking pension fund capital is another. Launching state-backed funds to invest in infrastructure-heavy scaleups — as Germany is considering — is a third. 

For more on how to solve the growth funding gap, sign up to Up Round, the weekly newsletter on venture capital that I write every Friday. I have more thoughts to share in it today. 

As for companies that don’t seem to have a funding problem at any stage, news editor Tim Smith has a fresh piece on AI — and, specifically, how startups are using it to help investors make even more money. Scroll on for that.

• Digital healthtech startup Numan sold supplements unlawfully for years
• Benchmark backs legaltech Leya in $10.5m seed round
• How to transform your sales culture

— Amy Lewin, editor

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Can AI turn you into Warren Buffet?

Big investment firms have been using data and algorithms to make money for decades. Quant trading — which uses computer programmes to automate investment decisions in real-time — has been making wealthy investors richer since the 70s.

Suppose you were hoping the explosion of modern AI development might put some of these capabilities into the hands of regular folks looking to invest their hard-earned savings. In that case, you might be in for some disappointment.

The idea that GenAI models, which are trained on more information than any human could ever process, might be able to game our economic systems has been tested since the early days of ChatGPT. Viral experiments like HustleGPT tested whether language models could successfully run an e-commerce company, and founders started developing tools they thought might make consumer investors make better decisions.

Fast forward to today, and these experiments aren’t in great shape. HustleGPT never made any money and many startups using GenAI to build products for retail investors are struggling to make the business model add up.

One of those is Bristol-based Absurdia, which launched in 2022 to develop an AI tool to help investors assess the performance of different crypto trading bots. Cofounder Fayçal Arbai tells Sifted he’s pivoted his company to a B2B software product, after struggling to persuade enough customers to pay a high enough price for the investment product he was building.

Now, founders are building AI tools for institutional investors — at every stage of the market from early-stage VC firms, to private equity firms and large asset managers.

As large AI models improve, it’s likely that these tools will allow investment firms across the spectrum to make smart decisions while spending less money on expensive hires. And while it might be disappointing that the next wave of data-driven investment will have the same effect as the quant-trading revolution — to further line the pockets of wealthy investors — some argue that’s no bad thing.

Finster AI founder Siddhant Jayakumar, who’s building an AI tool for asset management firms, says he’s spoken with a lot of retail investment platforms and warns consumers against trusting an AI company that says it can give a non-expert investor trading tips.

“If you, as an AI company, claim that you are a reliable stock picker, then why are you selling your tech and why are you not a hedge fund?” he says, advising that the safest way to invest for regular folks is still to put your money in a passive fund and never touch it.

It might be a boring answer, but it’s probably better than a bunch of us trusting ChatGPT with how to grow our savings.

So for now, it seems, AI is pulling a reverse Robin Hood on us: as it automates the work of more junior roles across the economy while — once again — making wealthy investors richer. 

— Tim Smith, news editor

🇸🇪 Swedish legaltech Leya has raised a $10.5m seed round led by US VC Benchmark, with the participation of Y Combinator, Hummingbird and SV Angel. Having just finished the YC accelerator programme, the one-year-old startup said it was “bombarded with VC requests” when raising its round.

• Leya has over 70 customers, both law firms and in-house legal teams, across Europe. Its AI tool directly accesses files and documents and combines them with legal data, such as EU legal databases, regulations, case law and authority information from over 15 jurisdictions. It then provides citations and references from the material, including due diligence reviews and conversations. 

🇫🇷 Paris-based Roundtable has launched its ‘micro fund-as-a-service’ product. It allows investors to launch VC funds “in a matter of hours not months”.

• It enables investors to launch a fund with just a few million committed. Its platform also handles back office tasks like banking, legal docs and onboarding LPs.
• It also helps angels to pool capital, and founders to pitch to investors.
• Last year, Roundtable raised €3m from 100 angels who use its platform.

🇬🇧 London-based digital health startup Numan sold supplements without the correct registration for more than two years, Sifted has learnt. The company was selling testosterone, Vitamin D and fertility supplements in that time period, before getting registered in February 2024.

• Supplement vendors are required to register as a Food Business Operator in the UK, so that local authorities can inspect their premises. Some local authorities say that failure to register as a food business is a criminal offence. 
• Numan did not deny that it had sold supplements before getting registered.  

🤔 Britain’s got AI talent but that’s not enough. (FT) 

💪 How to transform your sales culture.

Berlin-based Caeli Wind, an online marketplace for wind energy site analysis and marketing, raised €11m in Series A funding. Notion Capital led the round and was joined by investors including Santander Alternative Investments.

London-based Native Teams, which provides employment and payment support for freelancers and remote workers, raised €6.3m in funding from investors including Eleven Ventures, Fil Rouge Capital, MFG Invest and Begin Capital.

Paris-based HEPHAISTOS-Pharma, which develops cancer therapies focusing on innate immunity, raised €4.5m in seed funding. Elaia led the round and was joined by investors including xista science ventures and Noshaq.

Oslo-based Spoor, which uses AI to prevent birds from getting caught in wind turbines, raised $4m in funding from investors including Futurum Ventures, Nysnø, Superorganism and Ørsted Ventures.

Tallinn-based Nanordica Medical, which develops products to cure severe wounds, raised €1.8m in funding. Specialist VC led the round and was joined by Superangel and Amalfi.

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