Sifted - Graphcore employees’ share value wiped

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Today we have the scoop that employees of UK semiconductor startup Graphcore have had the value of their shares wiped as a sale to SoftBank has been agreed. Scroll on for more details. 

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Elsewhere today:

• All the new VC funds of 2024 (updated) 
• GenAI startup Dust’s founders on raising €15m, leaving Silicon Valley and launching in Paris
• How can I scale up as a startup CEO?

— Tom Nugent, newsletter editor

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Graphcore employees’ share value wiped

When I was told by sources earlier this week that Graphcore’s sale to SoftBank has been “conditionally agreed”, it wasn’t exactly surprising. 

While the Bristol-based chipmaker has been conspicuously silent over the past several months as rumours have swirled about an acquisition by the Japanese multinational investor — which also owns UK chipmaker Arm — the industry has been alive with chatter. 

The excitement is understandable. Graphcore was once a darling of the UK tech sector and billed as a potential rival to giant Nvidia when it raised a whopping $222m Series E in 2020. 

Now, after a bruising couple of years that have seen a landmark deal with Microsoft collapse and the company struggle to pick up commercial traction, things are looking less rosy. 

This week, multiple sources told me that employees have had the value of their shares, including stock options and restricted stock units (RSUs), wiped as Graphcore restructured its finances ahead of a takeover. 

It means the expected sale price of the company, should it go through, will be less than the $600m invested and only holders of preference shares (typically a company’s larger investors) will get cash from the sale, one source says.

While RSUs are given to employees for free, stock options are paid for — meaning a number of Graphcore workers have lost money. One former employee tells Sifted that they’d pumped “thousands” of pounds of their own cash into stock options. 

Several investors who put many millions behind Graphcore, including Molten Ventures, Baillie Gifford and Schroders, have written down stakes in recent times.

Five years ago, founder and CEO Nigel Toon projected that the company would make $1bn by 2024. In its 2022 accounts, the company reported revenue of just $2.7m.

At the same time, fellow chipmaker Nvidia’s revenue has only tracked in one direction. The Silicon Valley giant made $26bn in Q1 2024 — more than twice as much as the previous year — and became the world’s most valuable company in June. 

Could things have turned out differently? If you know more sides to this story, get in touch.

— Kai Nicol-Schwarz, reporter

🇸🇪 In its half-year report, the Swedish publicly listed investment company Kinnevik has increased the valuation of its stake in green steel startup H2 Green Steel to SEK 1.3bn (€113m); it owns 3% of the company. That equates to a company valuation of SEK 43bn (€3.76bn), up from SEK 9.5bn (€830m) in 2022 and SEK 28bn (€2.45bn) in the autumn of 2023. 

• Kinnevik also has Harald Mix’s two-year-old heat pump startup Aira in its portfolio; it owns 7% of the company. It values its ownership at SEK 355m (€31m), which gives the startup a total valuation of SEK 5bn (around €442m) according to the firm.  

🇫🇷 ‘France is the Silicon Valley of 30 years ago’: GenAI startup Dust, which was founded by ex-Stripe and OpenAI alumni Stanislas Polu and Gabriel Hubert, is hot stuff at the moment. The two-year-old company, which offers a platform for businesses to build custom-made AI assistants, has raised a €15m Series A from global investors Sequoia Capital, Seedcamp and Connect Ventures. It’s hit €1m annual recurring revenue (ARR) and counts 5k users across 250 enterprise customers. 

• After years of working in Silicon Valley, Dust’s founders tell Sifted that Paris is the place to build an AI company. And they are not the only ones to return to the homeland: the last few years have seen the launch of startups like Mistral AI, H and Nabla, all of which were launched by alums of Big Tech AI labs.

🙌 Most startup founders don’t set out to become CEOs. Rather, they find themselves in the role as a consequence of their success building an in-demand product or service. When they do, their leadership requirements change dramatically. 

• So how can you scale up as a startup CEO? Bottom line: It’s tough — but not impossible. In her latest advice column, Sequoia’s VP of talent Zoe Hewitt shares tips on navigating the transition from founder of a small startup to CEO of a much more complex scaleup.

👀 All the new funds of 2024 (updated).

🇪🇸 Why Spain is Nato’s laggard on defence spending. (Financial Times)

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Munich, Germany-based SciRhom, which is developing therapeutic iRhom2 antibodies for autoimmune diseases, raised €63m in Series A funding. Andera Partners, Kurma Partners, Hadean Ventures, MIG Capital and Wellington Partners led the round and were joined by Bayern Kapital, High-Tech Gründerfonds and PhiFund Ventures. 

Stockholm-based Phyron AI, which uses AI to automate content creation for car dealers, raised €10m in Series B funding. Round2 Capital Partners led the round and was joined by investors including Dahlgren Capital and Confidus Venture Capital.

Cologne, Germany-based epilot, a cloud software that supports utilities and grid operators in the energy transition, raised €10m in funding from Expedition Growth Capital.

London-based Byway, which creates flight-free customisable travel and accommodation packages, raised £5m in Series A funding. Heartcore Capital led the round and was joined by investors including Eka Ventures.

London-based Tracebit, which detects and contains cloud security threats, raised $5m in seed funding from investors including Accel and Tapestry VC.

Tipperary, Ireland-based ZeroMission, an electric vehicle fleet management platform for commercial EVs, raised $3m in funding. Delta Partners and Greencode led the round and were joined by investors including Vireo Ventures. 

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