Sifted - Defence tech's hiring crunch

Good morning there,

If you think hiring for an AI startup is hard, try hiring for a defence tech startup. Investor interest in defence might be ramping up, but startups can't always find the talent they need to spend that funding on, say VCs and recruiters. "It's a knife fight" to hire the best people, defence VC Nicholas Nelson tells Anne Sraders. More on that in this issue, plus:

• Formo raises $61m in Europe’s biggest round for animal-free cheese
• Climate tech investor AENU closes fund at €170m — but moves away from evergreen structure

P.S. We’re now only three weeks away from Sifted Summit, our annual shebang which will bring together 3,000 founders, operators and investors from across European tech on October 2 and 3 in London. You can get your tickets here. And for 20% off, use the code: SS20

— Tom Nugent, newsletter editor

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🇩🇪 Berlin-based climate tech fund AENU has closed its fund at €170m — but moved away from its original plan to make it evergreen.  

• The "difficult market environment" made it hard to convince LPs to back a novel fund structure, partner Fabian Heilemann tells Sifted. He hopes that in two or three fund generation's time AENU might be able to convince LPs to back an evergreen structure. 
• LPs include the European Investment Fund (EIF) and German public fund KfW, along with Skype founder Niklas Zennström and Tier founder Lawrence Leuschner. 

🇬🇧 Exclusive: London-based fintech VC Outward has hit a first close of £51m for its second fund. The British Business Bank allocated £30m to the fund from its enterprise capital funds programme, and was joined by a range of LPs including family offices, financial institutions and high-net-worth individuals. 

• The firm generally invests between £2m and £5m in startups building in fintech and “connected sectors” such as healthcare or AI.
• This story first appeared in Sifted’s Fintech newsletter. You can sign up here.

🇩🇪 German foodtech startup Formo has raised a $61m Series B for its animal-free cheese alternatives based on koji protein — a naturally-occurring fungus typically used in Japanese cuisine. It’s Europe’s biggest funding round for animal-free cheese.

• The startup will use the capital to expand across the DACH region, branch into making hard cheese products and target the US market.
• Investors include FoodLabs, EQT Ventures and REWE Group, one of Europe's largest retailers.

💪 IBM’s former quantum computing lead Bob Sutor is joining the board of Nu Quantum, a deeptech that spun out of the University of Cambridge in 2018 and is building technology that allows quantum computers to network with one another and scale faster.

• Sutor spent more than 39 years at IBM in the US, and led the company’s research efforts in quantum computing from 2017. He left IBM in 2022 to join US quantum computing company Infleqtion, where he stayed for two years.
• The appointment comes after Nu Quantum opened an office in Los Angeles as part of the startup’s plans to expand into the US market.

🪖 Europe's defence techs face a hiring crunch — which looks set to worsen.  

• Defence tech companies often need to hire people with government clearances and experience scaling hardware — and that talent is in short supply, especially in Europe. 
• European governments haven’t done as good of a job working with defence startups (compared to, say, the US), so “when you get to this point of scale, as some of these defence tech companies are now doing, you don't have anyone in the market from a talent perspective who's ever done it before,” says Edmund Jones, partner at executive search firm True Search. And it's not as easy to just poach people from the US as in other sectors... Read the full piece here. 

Senior reporter Anne Sraders will be discussing the barriers to growth in defence tech at the Sifted Summit in October. You can get a ticket here.

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

Meet the startups revolutionising airports

The market for smart airport technologies is expected to grow from $7.1bn in 2022 to $24.3bn in 2032. Our report checks in on the startups at the forefront of innovation in airports right now, from AI predicting when a plane might develop a fault to autonomous vehicles moving luggage.

How do you tackle the work-life conundrum at a startup? Join our expert panel tomorrow to get the answers, in our very first in-person Sifted Talks, taking place at Riverstone Heights, Bromley-by-Bow. RSVP.

How to tap the Gulf for investment. As competition for the region’s capital heats up, how can European startups stand out to investors from the Middle East? Join our online Sifted Talks on September 18 to find out. RSVP.

London-based Form3, a cloud native payments-as-a-service platform, raised $60m in Series C extension funding from investors including British Patient Capital and Visa.

Berlin-based Habyt, a co-living provider, raised €40m in funding. Mars Growth Capital led the round.

Paris-based Brightflow SAS, which is developing an implantable cardiac medical device to treat end-stage heart failure, raised €16.5m in Series A funding. VIVES Partners led the round and was joined by investors Majycc Innovation Santé, BNP Paribas Development, GO Capital and Karista.

Dusseldorf, Germany-based Retraced, a platform that enables fashion companies to spot risks in their supply chains, raised €15m in Series A funding. Partech led the round and was joined by investors Alante Capital, Alstin Capital, Samaipata and F-Log Ventures.

Budapest-based PastPay, a B2B payment solutions provider, raised €12m in Series A funding. Platina Capital led the round and was joined by investors MBH Bank, Advance Global Capital, Quantic Financial Solutions, STRT, BNL Start Partners and angels Jared Schrieber and Mark Ransford. 

Coventry, UK-based NanoSyrinx, a synthetic biology startup developing nanosyringes for targeted drug delivery, raised £10m in funding. BGF, Octopus Ventures and M Ventures led the round and were joined by investors Eli Lilly, IQ Capital and Meltwind. 

Berlin-based Ucaneo, which provides direct air capture technologies for CO2 removal, raised €6.75m in seed funding. Energie 360° and IBB Ventures led the round and were joined by investors Plug and Play, Grantham Environmental Trust, Carbon Removal Partners, Nucleus Capital, Apprecia Capital, FlixFounders (the fund managed by the founders of FlixBus) and Pjotr van Schothorst.

Warsaw-based IN1, which enables users to manage all their cards and accounts in a single app, raised $6m in seed funding from investors including Brainstorm Ventures.

Zurich, Switzerland-based Cerrion, an AI software company developing computer vision technology for industrial automation, raised $5m in funding. Y Combinator and Goat Capital led the round and were joined by investors session.vc, Soma Capital, 10x Founders and Rebel Fund.

Prague-based Sloneek, an AI-powered B2B HR platform, raised €3.6m in seed funding. Purple Ventures led the round and was joined by investors Venture to Future Fund and Vision Ventures. 

Amadora, Portugal-based Bling Energy, which provides subscription-based solar panel installation services, raised €2m in seed funding. Joaquim Sérvulo Rodrigues (the founder of Armilar Venture Partners) led the round and was joined by the de Mello family office and Lince Capital.

Paris-based Actionable, which specialises in predictive analysis of customer satisfaction, raised €2m in pre-seed funding. Axeleo Capital led the round and was joined by investors Source Ventures, Stéphane Distinguin, Mathieu Azorin, Arthur Querou, Xavier Mariani, Emilien Eychenne, Guillaume Grimbert, Aurélien Georget, Véronique Pican, Thomas Jeanjean. 

Warsaw-based Petsy, a marketplace that connects pet owners with local petsitters, raised €1.1m in funding from investors including Piotr Wawrysiuk. 

Berlin-based Key Ward, which specialises in engineering data management and AI adoption across various industries, raised €1m in pre-seed funding. Wellstreet led the round and was joined by investors including Andy Fine, Edouard Lété and Eric Saint Frison.

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