Sifted - UK founders rush to sell before budget

Good morning there,

For many in the UK’s startup sector, the biggest litmus test for whether or not the country’s new government is pro-tech will come on October 30 — when top finance minister Rachel Reeves announces her Autumn Budget. 

But after speaking to founders recently about what they expect from the chancellor, the general feeling is worry. A chief concern is that tax increases could mean less money for them at exit, and some founders are trying to push through a sale sooner rather than later as a result.

“We’re working on a deal and trying to get it done before the budget announcement,” one fintech founder tells me — adding that they’re trying to “accelerate” the process because of potential capital gains tax increases. “I’m petrified that the news isn’t going to be good.”

It’s not the only response. Other founders say they’d consider relocating overseas if capital gains taxes increased substantially, and one tax advisor tells Sifted that she’s seen the number of enquiries about overseas relocation double or triple in recent months. I get into all that here.

Elsewhere today:

• 'We're building the UK's first $1tn company' — Amazon Alexa creator's new startup
• Seedcamp, Balderton and Kindred-backer Legal & General doubling down on spinout investments
• 12 startups from Spain and Portugal to watch

— Kai Nicol-Schwarz, reporter

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🇫🇷 Blockchain-based fantasy sports startup Sorare is facing charges of providing unlicensed gambling services by the UK’s Gambling Commission, the Financial Times reports. 

• The company is backed by the likes of Accel, Atomico, Bessemer and SoftBank.

🇬🇧 Some UK founders are rushing to sell their startups ahead of the Autumn Budget — while others are considering relocating overseas. It comes as concerns mount that potential tax increases could lower the value of an exit further down the line.

• There are fears that changes could impact Business Asset Disposal Relief (previously known as Entrepreneurs’ Relief), which currently sees founders pay 10% tax on exit takings of up to £1m and 20% tax on business assets over that threshold.

🗣️ William Tunstall-Pedoe is arguably one of Europe’s most notable entrepreneurs working in AI, having founded Evi — a voice recognition startup he sold to Amazon, which went on to power the US Big Tech company's Alexa devices. Now he’s working on a new startup called Unlikely AI — which he believes could become the continent's first $1tn tech company.

• The company is building an AI system for enterprises that it says will solve the problems around reliability and trust that make generative models unreliable for many use cases.
• The team features expertise from companies like Google, Amazon, Microsoft and IBM, and Tunstall-Pedoe says Unlikely AI will target clients in sectors like finance, health, insurance and legal.

🎓 Insurance giant Legal & General — which has backed the likes of Seedcamp, Balderton and Kindred as an LP — is planning to double down on its investments into university spinouts and up its direct investments into startups. 

• “There are more companies now coming out of the [university] system, particularly at that early scaleup stage, than there ever has been,” Alastair Stewart, head of healthcare and life sciences in the VC team at L&G Asset Management, tells Sifted, “we've seen increasing amounts of international capital and a large increase in institutional capital like L&G looking at this area [...] so we think all of those pieces are coming together.”
• Its strategy will be twofold: LP investments in VC funds that back spinouts at the earliest stages, and direct investments in startups alongside its fund partners at Series B onwards.

👀 12 startups from Spain and Portugal to watch. 

🧭 How to navigate regulated markets — Patrick Newton, cofounder of Form Ventures, an early-stage fund which invests and supports startups working in traditionally regulated markets like fintech and healthtech, shares his tips.

• Patrick is also speaking at Sifted Summit (taking place this Wednesday and Thursday). If you’ve not got a ticket yet, you can grab one here. 

💰 Top AI startups are making money more quickly than earlier waves of software companies, according to an analysis of payments information from fintech Stripe covered by the Financial Times. 

• The AI startups in the cohort Stripe analysed took a median 11 months to hit $1m in annualised revenue after their first sales on Stripe, compared with 15 months for the previous generation of SaaS companies, according to the data.
• AI startups that have grown to more than $30m in annualised revenue did that in 20 months.

🌌 Shoot for the stars: It turns out celebrity angels do impact a startup's success. (Sponsored by ESADE)

🛫 Mapped: Europe’s aviation startup sector, and beyond. (Sponsored by Groupe ADP)

Could you be the number one startup? 

Apply to feature on our Nordics leaderboard — a ranking celebrating the region’s fastest-growing startups. Boost your credibility to set you apart from your competitors and access new investment opportunities — don’t miss out.

Network with the best of European tech. Sifted Summit is back this week, bringing 3,000+ founders, operators and investors together at Magazine London on Wednesday and Thursday. Hear from industry experts, connect with potential investors and meet the whole gang of Sifted journalists. If you've not got a ticket yet — you can get one here!

Como, Italy-based D-Orbit, a space logistics scaleup, raised €50m in Series C extension funding, taking its total for the round to €100m. Marubeni Corporation led the round and was joined by investors including CDP Venture Capital, Seraphim Space Investment Trust, Indaco Venture Partners, Neva SGR and Primo Ventures.

Bristol, UK-based Anaphite, a manufacturer of green EV batteries, raised £10.4m in funding. World Fund and Maniv co-led the round and were joined by investors including EEI, Nesta, Elbow Beach Capital and Wealth Club.

Innsbruck, Austria-based DeepOpinion, a low-code platform for creating enterprise AI apps, raised €11m in Series A funding. Red River West and Alpha Intelligence Capital led the round and were joined by investors including Lunar Ventures and Stride VC.

Palma-based Hotelverse, which develops digital twins for hotel room selection, raised €5m in funding. Ged Conexo Ventures led the round and was joined by investors including Faraday Venture Partners, Eoniq, Banco Sabadell and Archipélago Next.

Berlin-based Briink, an AI-based platform for ESG reporting, raised €3.85m in seed funding. EquityPitcher Ventures and 13books Capital co-led the round and were joined by investors including Merantix and seed + speed Ventures.

Madrid-based XRF, a mixed reality AI solution for defence, security and emergency response, raised €2.3m in funding from JME Ventures, Kfund and GoHub Ventures.

London-based Quin AI, a startup which uses AI to help e-commerce sites predict customer behaviour, raised £1.5m. Blackfinch Ventures led the round and was joined by SFC Capital, Logo Ventures and Finberg. 

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