Sifted - AI talent wars 

Good morning there,

It’s a well-known fact that AI-related PhDs are likely to land some pretty comfortable salaries these days. In France, where buzzy AI startups have been multiplying for the past two years, founders are finding that hiring talent — and more importantly, retaining it — comes at a high price.

A ‘talent war’ is on, I am told, between AI startups, and deep-pocketed Big Tech companies that are trying to poach scientists and engineers with attractive pay packages. I dig into that below.

Elsewhere: 

• Private equity comes for fintechs as exits and funding dry up
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Ps. I'll be hosting a discussion on how startups are cleverly using GenAI at the Sifted Summit on October 2. Use the code SS20 for 20% off on tickets when you get to the checkout here. 

— Daphné Leprince-Ringuet, reporter

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💆 Swedish employee benefits platform Benify has been acquired by UK-based payroll software maker Zellis Group. The deal values Benify between €300m and €400m, according to Bloomberg. 

• Benify was founded in 2004. In 2011, PE firm Vitruvian Partners acquired a majority stake (71%) in the company, leaving the three founders with a 23% ownership stake. That's now valued at €70m to €88m, according to Swedish media Di.  
  

🤳 The Dutch data protection authority, Autoriteit Persoonsgegevens, has issued US facial recognition startup Clearview AI with the largest privacy fine ever in Europe, of €35m, for breach of GDPR.

• Clearview AI has built a database of 30bn selfies, some of which were scraped without user consent.

The AI talent wars

A VC recently told me: “If OpenAI opened an office in Paris, it would be catastrophic.”

We were discussing whether or not the months-old rumour that the California firm is eyeing the French capital is true — and for this investor, French tech is better off while OpenAI stays at arm’s length. When I asked why, she said: “It’s been hard enough hiring since Mistral’s been around, because they have more money. OpenAI would take all the talent.”

For the past 18 months, Paris has been the stage of what’s often described to me by founders and VCs as an ‘AI talent war’, spurred by the emergence of AI startups like Mistral, which has raised nearly €1bn, Poolside — and its $126m seed — and H, which closed a $220m seed round in May.

Not only are these companies competing against each other for talent, but they are also up against the AI research labs launched by Google and Meta in Paris in 2015 and 2018 respectively.

A few high-profile entrepreneurs came straight from the ranks of the US firms: Mistral’s three cofounders are DeepMind and Meta alumni, while four out of five of H’s original founding team are ex-DeepMind scientists. And it’s not just the founders — many employees in these startups’ fast-growing teams are Big Tech alumni too. 

“There’s a real exodus [from Big Tech],” one AI scaleup founder tells me. 

Now, I’m hearing that AI startup employees are being courted by Big Tech companies that are trying to poach back the best talent — with handsome packages that include high-above-market salaries. 

All roles are targeted, from junior data scientists to C-level directors, the same founder tells me. 

“If you want to keep a good employee, you have to align with the offer,” he says. “Most scaleups can do this, but it’s a big problem for startups.” 

Until now, the market has been relatively cheap. A study carried out earlier this year by tech recruiter The Product Crew found that the median salary for a senior data scientist in France is €71k. That’s a way off the salaries advertised in Silicon Valley for similar roles: OpenAI’s offers for data scientists in San Francisco can reach nearly $400k. 

But with a growing number of AI startups in France, and Big Tech taking an interest in the French capital, the bids are on — and the price of talent is on the up. “I don’t think you can say that talent is cheap in Paris anymore,” says the same founder.

Readers, I want to hear from you. Are you an employee at an AI startup who’s been offered a tasty package from a Big Tech company? Or a founder watching this happen in their own startup? If this sounds familiar, I want to write about it — get in touch here. Let me know if you’d like to remain anonymous. 

— Daphné Leprince-Ringuet, reporter

🔋 The Northvolt alumni building new companies. Alumni from the unicorn Swedish battery maker are starting to launch ventures of their own.

🏦 Private equity interest in fintechs is on the up amid the venture industry's push for profitability. Data from Dealroom shows that 14 European fintechs raised funding rounds with PE firms as the sole backer in the first quarter of 2024 — the highest since Q3 2022 when 23 such deals were closed.

• In March this year, savings platform Flagstone closed a £108m funding round from American PE firm Estancia. In July, Morgan Stanley Expansion Capital, the American banking giant’s PE platform, led a $31m investment into international payments fintech Sokin.
• Read on to learn more about why PE is so interested in fintech — and what that means for founders.

💸 ‘An unsung hero’: Why every company should invest in their payment stack (Sponsored by Primer)

August was the worst month for European startup funding since April 2017, according to deals tracked by Sifted. It's always a quiet month — but rarely this quiet. Startups raised just €1.8bn across 247 funding rounds. In August last year, more than three times as much (€4.8bn) was raised. 

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Today | Online. Maximising the value of a potential M&A deal begins with choosing the right location. With firms from both the US and UK competing for your business, where should you focus your efforts? Join our expert panel to find out. RSVP.

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Reykjavik-based Treble Technologies, which specialises in sound simulation and synthetic audio data generation, has raised €11m in Series A funding. The funding round was led by KOMPAS VC, with participation from Frumtak Ventures, the European Investment Bank, Omega Venture Partners, St. Gobain, L-Acoustics and angel investors.

Berlin-based Monda, an all-in-one data monetisation platform, has raised $5m in seed funding. The round was led by Senovo and Acrobator Ventures, with participation from Techstars.

Oslo-based Stackx.me, a social investment app, has raised €2.12m.

Lipomo-based Involve, an Italian startup specialising in stratospheric Earth monitoring, telecommunications and infrastructure, has raised €2.5m in seed funding. The round was led by Earlybird, with participation from Takeoff, Unicredit, Fondazione CRT, Plug and Play and TLI Space.

Milan-based HR tech startup Skillvue, which has developed an AI-driven skills assessment platform to help companies evaluate job candidates and employees, has raised €2.5m in pre-seed funding. The round was led by Italian Founders Fund and 14Peaks Capital, with participation from Orbita Verticale, Ithaca 3, Kfund and several business angels.

Belgium-based Ventory, which develops smart inventory visibility and control systems, has raised €1.75m in seed funding. The round was led by Finindus and Matterwave Ventures.

Paris-based Steerlab, which offers an AI platform to automate responses to requests for proposals (RFPs) and security questionnaires, has raised €1.7m in pre-seed funding. The round was led by Dreamcraft VC, with participation from Heartfelt_, Lumière AI Ventures and Station F.

Mölndal-based Amferia, a Swedish medtech company developing antimicrobial healthcare solutions, has raised €1.2m in funding. The round was led by Chalmers Ventures, as well as the company’s existing owners.

Turkey-based Magfi, an adtech company that enables advertising on Telegram and Discord, raised €1m from lead investor Eleven Ventures, with Boğaziçi Ventures — as well as angel investors Zoran Arsovski and Horia Manda — also participating.

If you’d like to submit a deal, get in touch. 

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