Where is Europe's next digital health unicorn?

Good morning there,

For the past two days, I’ve been at US healthtech conference HLTH’s first European event in Amsterdam. It’s as flashy as you’d expect for a well-established gig from across the Atlantic, with DJ decks, air hockey tables and a once-upon-a-time big-name band headlining the afterparty (which I was en route to last night while writing this, in a boat along Amsterdam’s extensive waterways).

From the chats I’ve had on the conference floor, what’s been keeping everyone guessing right now is where the next European digital health unicorn will come from. I dig into that below.

Also today, we have news that the co-CEOs of Amazon aggregator SellerX are departing the business, three years after cashing out $7.1m in shares each. Scroll on for more details.

Elsewhere:

• Google and DeepMind alumni lead GenAI startup creation in Europe
• Northvolt secondaries secured by member-driven investor Tioex
• Micro-robots, carbon nanotubes and an underground factory: Quantum startup C12 raises €18m

— Kai Nicol-Schwarz, reporter

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😯 The co-CEOs of Amazon aggregator unicorn SellerX are departing the business three years after taking at least $14m off the table. The founders of the Berlin-based company are set to step down on July 1, according to an email sent to staff yesterday. SellerX confirmed the news to Sifted.

• The founders of SellerX sold shares worth at least $7.1m each at the end of 2021, during the Amazon aggregator boom. The company laid off employees in 2022, as the wider industry took a hit during the downturn.

🇸🇪 Swedish member-driven investment company Tioex — which invests based on what its 6,000 members want — has announced that it has acquired 5m SEK (about $500k) of existing shares in gigafactory giant Northvolt. 

• Tioex members who want in on a deal need to invest a minimum of 50k–100k SEK (€4.4k–€8.8k). They will be allocated shares depending on how much interest there is among other members and how many shares Tioex can secure. Only a dozen high-value members were asked if they wanted in on the Northvolt secondaries deal.

🇵🇱 Poland’s Quantum Innovations has raised €9.5m (41m złoty) to set up a production facility for its devices that monitor organs during surgery. The round — a part of which is a convertible loan — was raised from Vinci IQ, a Polish fund established by the country's National Development Bank, and MedTech Holding, a private initiative.

🇫🇷 Paris-based quantum computing startup C12 has raised €18m to continue developing the technology that underpins its quantum processors — ultra-pure carbon nanotubes that are produced in-house and which are used to trap qubits (quantum bits) on semiconductors. 

• The company says that trapping the qubits makes them more stable and less prone to errors, and addresses a key challenge currently holding back the development of large-scale quantum computers. 

📺 BBC Ventures, an investment arm set up by the UK’s public service broadcaster in 2022, announced its first investment — into Bristol, UK-based 3D video streaming platform Condense. 

• The BBC is putting £500k into the startup, which has previously raised from VCs including LocalGlobe and 7percent Ventures, and angel investors including Tom Blomfield, founder of Monzo, and Ian Hogarth, founder of Songkick and now partner at London VC Plural. 

🇩🇪 Hamburg-based atmio, which offers a software platform to automate the detection and reporting of methane leaks in the oil and gas industry, has raised €5.1m in seed funding led by Notion Capital. Other investors included SquareOne and previous backers HCVC, Robin Capital and VOYAGERS. 

🇩🇰 Danish banking and accounting software company Ageras has announced that it has entered exclusive talks with Société Générale to take over all of Paris-based fintech Shine’s activities, for an undisclosed sum, just four years after Shine was acquired by the French bank. The acquisition is expected to be finalised in early 2025 and all of the neobank’s employees will be retained.

💪 Lazard Elaia Capital, the European growth and buyout firm launched jointly by private investment bank Lazard and French early-stage VC Elaia, has unveiled the first three partners that will be leading its future fund’s investments. Elaia’s cofounder Xavier Lazarus will be joined by Alexandre Pergoline, who previously led French investments for global PE company Permira, and Anna Vershebeniuk, a former partner at US VC Headline.

Where's Europe's next digital health unicorn?

Almost exactly one year ago today, behemoth US healthtech conference HLTH, organised by the same people who put on fintech conference Money20/20, held a controversial launch party in Munich ahead of its 2024 event in Amsterdam that kicked off this week — its first on European soil.

The party took place on the first night of Bits & Pretzels’s healthtech conference, also in Munich, and drew several attendees (including this reporter) from that event’s speaker dinner for its own bash. The party was packed and when I arrived a baying mob of conference goers who weren’t wearing wristbands adorned with the HLTH logo were being turned away at the door. 

It was a bold entrance to Europe — and it was a sign of things to come. This week its main event in the Dutch capital is similarly showy. Exited founders are playing 8am DJ sets in the “vinyl lounge”; there’s a gaming area with pinball and air hockey; and the Libertines headlined an aftershow party yesterday evening. One VC told me that “everyone is here”. 

But one thing that’s struck me is the absence of founders who everyone is talking about on the speaker bill. While a lot of the chatter beforehand was about Babylon’s Ali Parsa being there, he pulled out before doors opened. I haven’t heard much about upcoming digital healthtech darlings who have raised or are about to raise a sector-defining funding round.

Don’t get me wrong, there have been plenty of promising startups on stage creating excited chatter off it. Virtual ward startup Doccla, alongside AI copilots for doctors Corti and Nabla are among the few that came up in conversations. The companies that everyone was talking about when they burst onto the scene a few years ago — the likes of Kry, Doctolib and Owkin — were also there.

But digital health startups hitting some serious, unicorn valuations for the first time now? They weren’t at HLTH Europe because, currently, they don’t exist in European digital health, VCs tell me.

The funding figures for the sector paint a telling picture. Digital health startups picked up $1.2bn across Europe in 2023, according to Dealroom — the lowest amount since 2018 and a long drop from the record $3bn in 2021. 

Yes, funding across European tech fell across the board, but it fell further in digital health. Halfway through 2024 the numbers aren’t looking more positive. One seasoned founder, who’d just managed to close a round, told me that raising now was more difficult than during the 2008 financial crisis.

So where’s the money gone? 

Talking to VCs on the conference floor, broadly speaking there are two schools of thought. 

One is that generalist investors who piled into the sector during 2021 have taken flight, put off by long sales cycles and the absence of the kind of revenue growth they’re used to seeing in enterprise SaaS startups. The other is that specialist healthtech VCs are themselves struggling to raise new funds, and are slowing down deployment to make their cash go further. 

VCs and founders tell me that they’re not panicking about the low patch, and they think investment will pick up in the next six months to a year. 

And there are real areas of promise in the sector. Investors are genuinely excited about the potential of AI to automate processes in healthcare, the future of remote patient monitoring and the rise of preventative care.

Right now, though, it’s difficult to pick the winners. 

But what do you think? Am I missing something here? What are the digital health companies that I should have on my radar? Which could be the sector's next unicorn? Get in touch and let me know.

— Kai Nicol-Schwarz, reporter

Google, DeepMind and Meta are spawning the most GenAI startups in Europe and Israel, according to a new report from US VC Accel and data platform Dealroom.

• The report found that a quarter of the 221 GenAI startups it analysed across Europe and Israel have one or more founders with work experience at Google, DeepMind, Meta, Amazon, Microsoft or Apple. This increases to more than a third (38%) when looking at the top 40 GenAI companies in terms of funding and 60% for the top 10 GenAI companies by funding. 
• London is home to over a quarter (27%) of GenAI startups in the region, followed by Tel Aviv (13%), Berlin (12%), Paris (10%) and Amsterdam (5%).
• Google is the most prolific talent hotbed, with 11% of the companies analysed by the report started by its alumni. London-based DeepMind — which was acquired by Google in 2014 — comes second, with 5% of the analysed companies founded by people who worked there.

Sifted 30: Central Europe Leaderboard

What do Yokoy, Neustark and Resistant AI have in common? They’ve all made the top spots in our leaderboard — a regional ranking of the fastest-growing companies across Central Europe.

London-based Zilch, a buy-now-pay-later provider, raised £100m in debt funding from Deutsche Bank.

London-based SurrealDB, a multi-model database that helps developers store and model data, raised $20m in funding. FirstMark and Georgian led the round and were joined by investors including Crew Capital and Alumni Ventures.

Stirling, Scotland-based iGii, which develops 3D carbon nanomaterials, raised £8.8m in funding from the Scottish National Investment Bank, Archangel Investors and Par Equity. 

Madrid-based FOSSA Systems, which provides IoT satellite solutions and space technology, raised €6.3m in Series A funding. Indico Capital Partners and Nabtesco Technology Ventures led the round and were joined by investors including Newmind Venture and Sabadell Venture Capital.

Munich, Germany-based StoryBox, a video creation management platform for enterprises, raised €5.5m in Series A funding. Wille Finance led the round and was joined by investors including BayBG, High-Tech Gründerfonds, CK Ventures and G8 Way Ventures.

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