Sifted - Dubai yachts and missing megarounds

Good morning there,

Today, Freya Pratty and Tom Matsuda bring you a story that involves English Premier League Hall of Famer Didier Drogba, yachts in Dubai and millions in missing funding.

Elsewhere:

• The OpenAI alumni building startups in Europe 
• 20 legal and regtech startups to watch 
• UK chancellor plans Canada-style pension model

— Tom Nugent, newsletter editor

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Dubai yacht trips, Didier Drogba and $200m that never arrived: the bizarre story of crypto startup 5ire

Three years ago, two friends scribbled down an ambitious plan on a napkin in a tea shop: make crypto environmentally friendly. 

That idea became 5ire, a company with a mission to build a blockchain that prioritises environmentally-friendly projects — an endeavour it terms “the 5th Industrial Revolution”. 

Since launching in August 2021, it’s announced $221m in funding, claims a unicorn valuation and even convinced football legend Didier Drogba to join its advisory board. (Sifted contacted Drogba via his agent but did not receive a response.)

But it’s not all Premier League hall of famers and billion-dollar valuations. Insiders tell Sifted that two megarounds it announced never actually hit 5ire’s bank account — with one of the deals collapsing because of the criminal past of an investor. That spooked some of its earliest investors, who asked for their money back, and prompted its advisory board to quit. 

Crypto’s growing pains

This year has seen landmark digital asset regulation come into force across Europe, increasing institutional confidence in the asset class — but the situation at 5ire suggests the industry still has some growing up to do. 

The first of two $100m cheques that didn’t come to fruition was a “capital commitment” from alternative investment group Global Emerging Markets (GEM), which was shelved because 5ire chose not to pursue a previously touted IPO.

The next tranche of $100m came from UK conglomerate Sram & Mram. That was returned after 5ire learned about the fraud convictions of its chairperson Sailesh Hiranandani. Hiranandani did not respond to multiple requests for comment. 

After the Sram & Mram deal, 5ire’s entire advisory board quit, two sources told Sifted. 5ire said it was a challenging time for the industry and that some people were “sceptical” of its ability to build the blockchain technology it had promised. 

5ire delayed its blockchain launch twice. That, combined with growing concern that investors’ money hadn’t arrived in its bank account, led some backers to ask for their capital back, says one person who invested in the seed round. 

“Millions [of investors’ money] have been lost,” says a former 5ire advisor.

5ire told Sifted that 20% of its “200+” investors asked for refunds in mid-2023, “because they thought we would not be able to list the token on a crypto exchange”. However, the token was eventually listed in December 2023, so no refunds were issued. 

Read the full piece here.

— Freya Pratty, senior reporter and Tom Matsuda, fintech reporter

🇬🇧 UK chancellor Rachel Reeves is set to announce plans to create a Canada-style pension model in the UK which would see retirement funds investing in equities and infrastructure, according to the Financial Times. Reeves met the heads of big pension schemes in Toronto yesterday; she wants to unlock the investment potential of the £360bn local government pension scheme, which is currently fragmented into 86 individual funds in Wales and England. 

🧱 The OpenAI alumni building startups in Europe.

👩‍⚖️ 20 legal and regtech startups to watch. (Sifted Pro subscribers)

👨‍⚖️ Legal and regtech startups: early-stage market map. (Sifted Pro subscribers)

🤔 Why European tech needs a ‘buy local’ mentality. (Sponsored by OVHcloud)

😯 Mubadala races to salvage European startup investments. (Financial Times)

Startup founders, this one’s for you

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Cambridge, UK-based OW Smell Made Digital, which creates digital smell technology, raised £2.2m in pre-series A and grant funding. Parkwalk led the round; Innovate UK provided the grant funding.

Dublin-based MixRift, a gaming studio developing mixed-reality games, raised $1.6m in pre-seed funding from investors including Outsized Ventures, Underline Ventures and SOSV.

Rungsted, Denmark-based ABH Optics, an eyeglass lens maker, raised €1m in pre-seed funding. High-Tech Gründerfonds (HTGF) led the round.

Zurich, Switzerland-based KNIME, which uses AI and machine learning to help organisations make sense of data, raised €27.5m in funding. Invus led the round.

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