Sifted - Stability AI still raising

Good morning there,

Today we’ve got the scoop that London-based Stability AI is still looking to top up its latest fundraise, which it announced in June without disclosing the amount of money it had raised. Reuters reported that the round totted up to $80m, but sources tell Sifted the figure was significantly less than that, with the company now going to existing shareholders for more funding.

Elsewhere today, LinkedIn has become the favourite tool of founders and investors to build personal brands, glorify their successes and give their hot takes on tech matters. But the social networking platform has also become a place for founders to bear all about the things that didn’t go quite right in their businesses.

Startup closures have been mounting up in Europe — and with them, LinkedIn posts from founders telling us why they shut down their company and offering lessons for others in the same boat. Is it a sign that Europe is getting better at talking about failure? I get into that below.

Plus, readers, we love hearing your take on everything to do with European tech. But now we’d love to hear what you think about this newsletter. How valuable is it for you? What are your favourite bits? And what could we do to make it better? Please fill out this survey (it’ll only take a few minutes) — we’d really appreciate it.

Also coming up today:

• Who are the UK’s most active early-stage investors?
• Meet the French startup taking on Disney and Pixar — with AI
• Sifted Scout: 20 digital banking startups to watch

— Miriam Partington, reporter

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The growing phenomenon of LinkedIn failure posts 

Over the last few years, LinkedIn has become a place for founders and investors to develop their personal brands, glorify their successes and offer unsolicited advice to their peers. But, increasingly, the social networking platform is being used for founders to discuss what previously would have been considered a dirty word: failure.

Startup closures have been mounting up in Europe — in the UK and Germany, startup insolvencies reached a record high in 2023 — and so have the number of LinkedIn posts from founders detailing their stories of shutting down their companies, with a tone of honesty and transparency that’s rare in Europe’s tech industry.

Are European founders finally opening up?

Triin Kask, an Estonian entrepreneur who closed her social app Soulie this month, thinks so. 

“When the market situation got really bad last year, a lot of startups [realised] they were running on steam, but now the steam is gone and there’s nothing left to run their startups on,” she says. “I think it really started to hit that it’s okay to say that you’re closing as a matter of transparency.

“We want more of this human aspect in the startup sector,” she adds. “Showing vulnerability is part of building an anti-toxic bro culture. Saying ‘Hey, we didn’t make it, we are closing down, yes it’s sad but we will manage’ gives a lot of comfort to others who are failing now.”

Others think the “culture” of discussing failure isn’t quite there yet in Europe.

Budapest-based Zoltan Patai found closing his company Eversync particularly tough as, especially in Hungary, it isn’t deemed normal to discuss failure. “It felt like we were the exception rather than the norm,” he says. 

The attitude towards failure is starkly different in the US, Patai thinks. “Entrepreneurs are very open about their experience. They have started maybe 10 businesses, two of them worked out and one of them became a unicorn. They speak about it positively.

“Also, investors or employers take it very positively if someone has a failed startup experience: you have to learn from it, so that’s important.”

Founders do seem to realise that failure, while painful, can propel you towards greater success. In the discussions I’ve had with founders over the last week — and in many LinkedIn posts I’ve seen — it’s clear that founders who start a business once feel compelled to do it again, even if their first venture failed. 

“My next journey will be different, guided by the wisdom gained from these experiences and now with the label of a second-time founder,” said Rasmus Bruus Larsen, who closed his startup Make Influence, a startup helping brands and influencers manage their influencer campaigns, on LinkedIn this week.

“They say that the third time’s the charm,” said another founder, Martí Gou, in a lengthy Medium article on his startup Gretel’s recent closure. “I hope they’re right and I’m better prepared to take off with my next company, and thus be able to share the learnings of scaling a company firsthand soon as well.”

To read more on why founders decided to shut up shop, how they coped with the experience and their advice for starting again, you can dig into our full feature here.

— Miriam Partington, reporter

🇬🇧 London-based startup Stability AI is still on the hunt for fresh funding, Sifted has learned. Last month, the company announced it had raised a new financing round led by Lightspeed and Coatue, with a new CEO and executive chairman of the board joining the business, but did not disclose how much it had raised.

• Reuters reported that Stability had raised $80m in the round, but sources tell Sifted that the company has actually only secured $50m, and is seeking an additional $30m from existing investors.

💰 London-based fintech Cleo — which has built an AI-assisted financial advice chatbot — doubled its revenues for the year ending December 2023, according to its latest accounts. It reported turnover of $65.9m in 2023, up from $29.7m in 2022. Over the same period it reduced losses by 31%, to $17.1m.

• As part of our series on expanding to the US last year, we asked: Is the company is the only European fintech that’s managed to crack North America? 
• Its founder Barney Hussey-Yeo told Sifted that as of October 2023 it had 7m customers stateside.

🤝 Buyout firm EQT AB and Kühne Holding AG, the investment vehicle of logistics entrepreneur Klaus-Michael Kühne, are set to acquire a 35% stake in German mobility giant Flix, subject to regulatory approval.

• According to Bloomberg, the value of the transaction is worth €1bn, and will value Flix at more than €3bn.

The Sifted 30 — our latest report

Dive deep into our top-listed founders in Central Europe, as we explore the interesting trends behind the region’s fastest-growing companies. We’ll also feature interviews with the startups so you can follow their success stories. 

🎥 What if the next huge success story in animated film was (partly) AI-made? That’s the bet that Sixte de Vauplane, the founder of secretive Paris-based startup Animaj, is making. Animaj uses AI models to produce kids content faster — and it has very ambitious goals. 

• “We want to build kids franchises that are as big as those we’ve known over the past 10 years — Pokémon, Peppa Pig, PAW Patrol, Cars, Frozen, and so on,” de Vauplane tells Sifted.
• Animaj is taking on Hollywood behemoths like Disney and Pixar — and showing early signs of success. Just two years after launch, the startup has raised €100m in debt and equity, makes more than €10m in annual revenue and is profitable. “There is a real opportunity to create a player that will dominate the market for the next 100 years,” de Vauplane says.

💰 The UK’s most active early-stage investors — Mercia Ventures and Maven are in third and second place, but who took top spot?

💳 Sifted Scout: 20 digital banking startups to watch. (Sifted Pro subscribers)

📣 Readers, we want to hear from you. What’s the best thing on European tech you’ve read recently? Drop us a line.

Madrid-based Citibox, which manufactures "smart" mailboxes for large apartment blocks, raised €80m in debt funding led by Growth Credit Partners and CoVenture. 

London-based Natcap, which helps companies collect data on their environmental impact, raised €9.2m from investors including André Hoffmann, Norinchukin Capital, Yeo Ventures and Pelican.

Lecce, Italy-based BionIT Labs, which develops prosthetic limbs, raised €5.5m from investors including CDP Venture Capital, RIF Srl, Sefea Impact, Simest, and ENEA Tech e Biomedical.

London-based Fy!, an AI-powered home and living marketplace, raised £3m in a media-for-equity deal from Channel 4 Ventures.

Dublin-based Solidroad, which has developed an AI-powered platform for hiring, onboarding and training customer-facing teams, raised €1.1m from investors including the cofounders of Wayflyer and Intercom.

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