Sifted - Does the Gulf love European tech back?

Good morning there,

Since getting back from my reporting trip in Dubai I’ve been reflecting on the complex relationship between European tech and the Gulf. There’s one question that has stuck in my mind: European tech is clamouring for Gulf investment, but are the region’s eyes elsewhere? More on that below.

Staying on the Gulf, we also have news that Saudi oil and gas giant Aramco has bought a quantum computer from French startup Pasqal, which is set to be deployed next year.

Elsewhere today:

• ETF Partners — a climate fund that’s been going since 2006 — has secured its fourth fund 
• 20 hydrogen and nuclear startups to watch, according to Sifted Scout (Pro subscribers)

— Freya Pratty, senior reporter

Building your dream finance team

↗️ Recruiting and retaining a solid finance team is no mean feat for any company, let alone startups. So how can budding CFOs tackle turnover and build a robust team to boot? Tune into our upcoming Sifted Talks midday, June 12th to find out.

European tech loves the Gulf; does it love us back?

I’ve recently returned from a few weeks in the UAE, where I met with European founders and investors who’ve gone to the country to build their businesses or to secure some of the Gulf's freer-flowing capital.

They spoke with fervour about the region. “I love the ambition here, they understand that the future needs ambition,” a Swedish founder told me, as we sat overlooking an infinity pool in Dubai Marina. 

“Every VC is touring the region,” one source said. “Any fund that tells you that they're not raising from here, it’s because they didn't manage; it’s not because they haven’t tried,” said another. 

The stats also suggest it's not just a one-sided love affair. In 2023, investors from Gulf countries put $3bn into European startups, according to data platform Dealroom — a 5x jump from 2018.

But, on the ground, the excitement with which European founders spoke about the Gulf didn’t quite feel like it was being equally reciprocated. 

“The region is standing on its feet now,” Omar Hassan from Global Growth Hub, which advises founders and VCs about the Gulf, told me. “Unlike before, the UK and Europe need the region more than the other way round.” With VCs after Emirati capital, the country has the pick of the funds. 

The UAE is historically somewhere with limited tech IP — hence its interest in overseas companies. But that’s also changing. Microsoft’s $1.5bn investment in Emirati AI company G42 last month proved, people in the UAE said, that the country is further ahead in AI than people outside of it realised. Numerous people pointed out that Microsoft backed an Emirati AI company before it backed a UK one.

Eyes on Africa

Europe has stiff competition for the Gulf’s foreign investment cheques and its eyes are increasingly straying towards newer axes of power. As Janan Ganesh wrote in the Financial Times recently: nothing symbolises the transference of power away from the West quite like the city of Dubai.

People I met there spoke excitedly about the potential of Africa, in particular. In 2022, the UAE pledged $53bn in foreign direct investment into the continent, exceeding China’s contributions 20 times over. In 2023, it pledged a similarly large $45bn.

Emirati investments have so far focused on the critical minerals the continent has to offer. For example, a company controlled by the brother of President Sheikh Mohammed bin Zayed recently paid $1.1bn for a 51% stake in a Zambian copper mining company. Tech funds are starting to invest too: Abu Dhabi sovereign wealth fund Mubadala recently backed the largest VC fund operating in Africa, French VC Partech’s €280m fund.

On the ground in Dubai, a chat I had with a local investor stuck with me. There’s an arrogance, he felt, in the way some founders approach the region, with the assumption that they’ll earn kudos just for being a London or Paris-based company. As competition for the region’s capital heats up, it’s an arrogance that will serve Europe poorly.

Read all my reporting from the UAE here. And if you have thoughts on the Europe-Gulf dynamic, email me.

— Freya Pratty, senior reporter

Applications are now open for Sifted's Leaderboards

We’re looking for startups in both the Southern Europe or Benelux region with a strong track record of revenue generation to feature on our inaugural leaderboards — rankings celebrating the region’s fastest-growing startups. Believe your startup deserves a spot?

🇫🇷 French remote cancer patient monitoring platform Resilience has raised $25m — six months after it was approved for reimbursement in France, meaning the government covers expenses allowing patients to access it for free. Resilience collects data from cancer patients remotely via questionnaires and lets medical professionals monitor them. 

• Existing investor Picus Capital and new backer Red River West led the round, with participation from Cathay Innovation, Singular and Seaya Ventures.

🇬🇧 UK drug discovery startup LabGenius has raised a £35m Series B led by the VC arm of pharma company Merck, M Ventures. Octopus Ventures and Atomico were among the investors to also join the round. 

• LabGenius, which uses machine learning to find and design antibody therapies to treat cancer, will use the capital to look for more strategic partnerships and invest in its drug discovery process for solid tumours. The investment brings LabGenius’s total funding to £58m.

💰 London-based climate VC ETF Partners has closed its fourth fund at €285m. It’ll invest tickets of €5m-€10m in companies working on digital solutions to the climate crisis. The fund’s LPs include the European Investment Fund and the British Business Bank. 

• Founded in 2006, it is one of the few funds to have seen through the ‘cleantech bubble’ — a period from 2006 to 2013 where several VC-backed climate tech companies collapsed.

🧐 An independent review of the challenges faced by disabled founders has found the UK needs a “radical” overhaul of existing services to meet their needs.

• Provisional findings of the government-backed Lilac Review said that challenges include navigating inaccessible business support and finance services; it highlighted several recommendations for the government to improve them, such as creating tailored programmes for disabled entrepreneurs.
• Disabled entrepreneurs run 25% of the UK’s 5.5m small businesses, and contribute 8% of UK GDP, according to The Federation of Small Businesses — and the report estimates that creating equal opportunities for disabled founders, which includes those without visible sensory or physical impairments, could unlock an extra £230bn in UK business revenue.

☀️ The UK government’s AI Safety Institute is opening an office in San Francisco this summer, its first overseas. 

🎓 TenU — the organisation made up of technology transfer offices — has released a guide advising best practices for spinning out software companies from academic research. Among its recommendations are for founders to retain 90-95% equity in their companies and for universities to take only 0-2% in royalties depending on IP and resource cost.

😯 French startup Pasqal has sold a quantum computer to Saudi Arabian oil and gas giant Aramco. It is the first time the state-owned Gulf company has bought a quantum computer, which it’ll use to explore efficiencies in the energy sector. Pasqal is set to deploy it in Saudi Arabia during the second half of 2025.

Sifted Scout: 20 hydrogen and nuclear energy startups to watch. (Pro subscribers)

Oxford, UK-based Oxford Endovascular, which develops treatments for brain aneurysms, raised £8m in Series A extension funding. Parkwalk Advisors led the round and was joined by investors including Norcliffe Capital, The University of Oxford, Oxford Science Enterprises and Vulpes Investment Management.

London-based Qomodo, which detects and prevents cybersecurity threats in Internet of Things environments, raised $1.6m in pre-seed funding. Expeditions Fund led the round and was joined by Auriga Cyber Ventures, Amadeus Capital Partners, Nio Advisors, McNally Capital, Ventures Together and Techstars.

Vilnius-based Pixexia, an AI platform which fully automates retail stores, raised €1.5m in funding. Coinvest Capital led the round and was joined by investors including Iron Wolf Capital, Omni Commerce Ventures and Open Circle Capital.

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.

Enjoying our newsletter? 

Forward it to your network so they can sign up here to stay informed with industry news and insights, just like you.