Sifted - Family offices on de-fence

Good morning there,

My colleague Anne Sraders has spent the last six months reporting on the growing number of VCs who want in on defence tech in Europe. But it’s not been as easy as opening up the chequebook and backing founders left and right; red tape from their LPs in some cases has made it more difficult for VC firms to get involved, with some banning investments into military tech.  

Those red lines don’t really affect family offices though, which industry folk say are also increasingly keen to back defence startups — even if they’re doing it quietly, as Anne and Miriam Partington report today. 

“We're facing, basically, a sea change in attitudes as well as [an] openness to defence,” says Nicholas Nelson, partner of UK-based defence VC MD One Ventures (which has family office LPs). 

Mikolaj Firlej, who has a family office called Firlej Kastory, says he’s seen more interest from family offices in the sector since the war in Ukraine started: “Particularly on the eastern flank of NATO, there are many people with a real sense of urgency who would like to contribute to the cause — so there is both this financial element and mission element combined.” 

Elsewhere:

• ‘Europe is the funny little cousin’ — 11x on why it’s moving to Silicon Valley 
• How to raise a Series A

— Tom Nugent, newsletter editor

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💸 Synthesia more than tripled its spending in 2023 as the race to secure market share for GenAI startups targeting enterprise customers rages on. 

• The UK-based company — which uses generative AI models to let businesses automatically create videos for company training, internal comms and marketing purposes — saw administrative expenses rise from £13m in 2022 to £47.7m in 2023, according to its latest company accounts. 
• A big portion of that was down to increasing staff costs, which rose from £10.8m in 2022 to £23m in 2023. The company's average monthly headcount grew from 78 to 198.
• Turnover increased from £8.6m in 2022 to £25.7m in 2023, as did losses, which rose from £4.5m to £23.5m after tax.

👀 Family offices are increasingly interested in defence tech — but they’re keeping it quiet.

🤝 11x was — for a short while — one of Europe’s hottest GenAI startups. In an interview with Sifted, SoftBank’s Europe partner Sumer Juneja namechecked the company, which develops automated sales agents for enterprises, as one of the players that the firm had its eyes on in Europe.

• But, last month, the company told Tim Smith it “had to move to Silicon Valley” as part of a $24m Series A round, with investors saying it was a necessary condition of the deal.
• Now, the company’s head of partnerships Guillaume Roux-Romestaing goes into more detail on what was behind the move, and why US investors see Europe as a “funny little cousin” at the party, rather than a grown up.

🙌 How to raise a Series A.

🐶 Tracked: The future of pet wearables.

GenAI startups are driving the recovery of VC funding into cloud software, according to Accel’s latest Euroscape report on cloud and AI trends. The report finds that around 40% of the recovery is driven by companies in the space; removing GenAI from the equation reduces 2024’s predicted funding to $47.3bn from $79.2bn — back to 2020 levels ($46.1bn).

• The report also includes Accel’s top 100 companies (valued at less than $1bn), which together raised $5.1bn in 2024 compared to $7.6bn raised by companies on 2023’s list. Apart from startups in sales and support, GenAI startups are the only ones that raised more in 2024 ($1.07bn) than in 2023 ($712m). On average they grew headcount 80% in the last 12 months.
• Philippe Botteri, Partner at Accel, said: “AI is rewriting software — literally and figuratively. We expect to see another leap in productivity next year as the first generation of agentic models come to the market, enabling the next wave of task and workflow automation in the enterprise.”

Genoa, Italy-based BeDimensional, which produces graphene and other super-thin crystals for industrial use, raised €20m in debt funding from the European Investment Bank.

London-based Inforcer, software for managing and automating Microsoft 365 policies across multiple tenants, raised $19m in Series A funding. Meritech Capital led the round.

Paris-based Dottxt, which helps existing digital ecosystems interact with LLMs, raised $11.9m in funding.

• The funding is split between a $3.2m pre-seed, completed in December 2023 and led by Elaia, and an $8.7m seed round completed in August 2024, led by EQT Ventures.
• Other backers include Seedcamp, Common Magic, Kima, FSJ, Roxanne Varza (Station F), Erik Bernhardsson (Modal Labs CEO), Julien Chaumond (Hugging Face CTO), Bob van Luijt (Weaviate CEO) and Jean-Louis Quéguiner (Gladia CEO).

Prague-based E2B, which builds infrastructure for AI code interpreting, raised $11.5m in seed funding. Decibel Partners led the round.

London-based Cult Mia, a sustainable online luxury fashion marketplace, raised $2m in seed extension funding from investors including H&M Group Ventures, Morgan Stanley, Fuel Ventures and David Wertheimer (son of Chanel owner Gérard Wertheimer). 

• It brings Cult Mia’s total seed raise to $5m. The first $3m was raised in November 2023 in a round led by Fuel Ventures, with participation from the other investors mentioned above. H&M Ventures was the only new investor in the seed extension round.

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