Sifted - Old money, new tech

Good morning there,

Today contributing editor Éanna Kelly unpacks the story behind Italy’s startup scene waking up. The country boasts nearly half of the 50 fastest-growing companies in southern Europe (according to Sifted’s recently published leaderboard) and the heirs of some of its wealthiest families are turning their eyes towards tech.

Elsewhere:

• UK quantum startup Riverlane raises $75m Series C
• Could this French fintech be the country’s answer to Revolut and Monzo?

— Tom Nugent, newsletter editor

How to expand with an M&A mindset

90% of executives expect an increase in foreign M&A targets in 2024. If you’re looking to go global, our Sifted Guide will help you better understand how to navigate the complexities of moving to a new market, from finding the right talent to bridging the cultural divide.

Italy climbs tech table

The home of Serie A football is suddenly doing quite well with Series A and other funding stages.

Italian tech started 2024 in strong fashion, with megarounds apiece for Milan-based software developer Bending Spoons and Pisa-based robotic surgery company Medical Microinstruments. The country also dominates Sifted’s recently published southern European leaderboard, with 24 startups in our list of the 50 fastest-growing companies in the region by revenue. 

One reason for Italy’s catchup? Old money is beginning to find new tech. Exor, the holding company of the billionaire Agnelli family that owns Ferrari and Stellantis, set up a new seed investing vehicle, Vento, in 2022 to focus on Italian-founded companies. Alessandro Benetton, the heir of the billionaire Italian family behind fashion brand United Colours of Benetton, is the main backer of new VC firm 2100 Ventures. Experienced techies, moreover, are coming home to set up new ventures. 

VC money is flowing into Italian tech. As recently as 2021, the country was 16th for volume of VC investment in Europe — today it's firmly in the top 10, according to Dealroom figures.

Italians would love to see that momentum grow, and for a few tech champions to emerge in government who can help blast annoying obstacles out of the way for companies. “It’s still quite cumbersome to create a company and hire people,” says Lorenzo Franzi, founding partner of VC Italian Founders Fund. “It’s pretty old school.”

Companies like Milan-based iGenius, which says it’s developed the first large-language model fully trained in the Italian language, could also help the country catch the GenAI wave. While most companies wait until they’ve secured funding to talk about it, the company did something different: in June it announced how much it wants to raise from investors to develop its AI models — a whopping €650m. 

“I think the company needs to make some noise, they’re trying to play all the cards they have,” says Niccolò Sanarico, a general partner at Milan-based early-stage investor Primo Ventures. Still, some feel a round this size may be out of reach for Italy. “It’s hard to see it happening here for now,” says Franzi. Sanarico adds: “If they manage to pull it off, it will put our AI ecosystem on the map.”

In the meantime, global VC funds continue to discover Italy. “I see four or five GPs coming to Milan every week for deal flow,” says Andrea Gennarini, managing partner of 2100 Ventures. And why wouldn’t they come? “We’re smaller than London and Paris, but an hour away from beautiful lakes and in a couple of hours you can get to the Med or the Alps,” Gennarini says. “Drive two hours in London, meanwhile, and you’re probably still in London.”

Do you have some Italian tech stories to share? Get in touch!

— Éanna Kelly, contributing editor

🇬🇧 UK-based quantum computing startup Riverlane has raised $75m in a Series C equity funding round — Europe’s first Series C in the sector — and received a “significant uplift” from its Series B valuation, which stood at $200m.  

• The company develops a chip that helps quantum computers make fewer errors, which is key to enabling the devices to scale. It has secured partnerships with a dozen companies building quantum computers, including Rigetti, Infleqtion, QuEra and Alice & Bob.
• The round was backed by Planet First Partners, a growth firm that focuses on sustainable investments, with participation from climate fund ETF Partners and Singaporean investor EDBI.

😯 Klarna is having preliminary discussions with investors to sell secondary shares prior to a potential IPO, in a deal that could value the Sequoia-backed buy now, pay later giant at $10bn, according to The Information. Klarna declined to comment.

🇫🇷 France — Europe’s third largest economy — is yet to produce a leading consumer neobank in the mould of Germany’s N26 or the UK’s Monzo or Revolut. But that might be about to change. 

• Lydia, a French payments app founded in 2013 with 8m users, wants to become France’s consumer banking app of choice, and in May committed €100m to launch Sumeria, its digital banking brand; cofounder and CEO Cyril Chiche told Sifted last week that it has started the application for a banking licence. 
• But it’s set to face stiff competition from overseas companies already operating in the country (with banking licences) — as well as from France’s legacy banks. Regulators, which took three years to approve the banking licence for SME bank MemoBank, could also stand in its way.

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

👀 The Kry founders factory: meet 15 employees-turned-founders.

🏭 GoCardless founders factory: meet 10 former employees-turned-founders.

🩺 Meet 16 startups founded by French digital healthtech Doctolib.

🤝 Meet 17 startups founded by former Monzo employees.

Meet Europe’s Rising 100 2024

A new tech era has begun and, for now at least, it belongs to AI companies. Find out more in our latest ranking — the ultimate list of B2B SaaS startups we believe will reach $1bn-plus valuations. So who made the cut?

August 21 | Online. Subscriptions 101: What you need to know. Want to turn one-time customers into lifelong advocates? Looking to boost your revenue consistently? The key could be subscriptions. Join us for our next free Sifted Talks to learn the ropes of a successful subscription strategy. RSVP.

August 28 | Online. Sorting your stock: Global strategies for employee equity. In the era of remote work and global teams, startups are grappling with the challenges of cross-border equity compensation. Join our panel of experts discussing how finance and people leaders can present solid opportunities to their employees, wherever they’re based. RSVP.

September 4 | Online. Pond-skipping: How to navigate M&A in the UK & USA with ease. M&A remains a pivotal cornerstone for founders looking to successfully build and exit their businesses - so where d'you begin? In this talk we’ll weigh up the key differences between UK & USA markets to sketch out the many paths your business can take. RSVP.

Vilnius-based Biomatter, which uses generative AI to design new enzymes, raised €6.5m in seed funding. Inventure and UVC Partners co-led the round and were joined by investors including Practica Capital and Metaplanet.

Stockholm-based Impactpool, a career platform that uses AI to connect professionals with job opportunities in impact-driven sectors, raised €3.6m in Series A funding. Mediahuis and Fort Knox led the round.

Lausanne, Switzerland-based DemoSquare, which develops AI tools to help companies anticipate political and regulatory changes, raised €1.3m in pre-seed funding. QBIT Capital led the round and was joined by investors including High-Tech Gründerfonds.

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.