Sifted - Is funding drones now impact investing?

Good morning there,

I spent last week in Barcelona for Swedish foundation Norrsken’s annual Impact Week. As the event's name suggests, it focused on ‘impact’ — from plastic recycling to using MDMA to treat depression.

This year’s edition began as news of Donald Trump’s re-election started to trickle in. It left me thinking about what impact investing might look like in the coming years. Scroll on for my reflections, and get in touch to share your thoughts.

Elsewhere today:

• All the Article 8 and Article 9 VC funds in Europe: updated
• How to open an office in a new geography
• Why UK-based GPs are delaying fundraising plans

— Freya Pratty, senior reporter

The M&A negotiation - how to get the best outcome for your startup

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• Qonto was last valued at €4.4bn after a €486m Series D in 2022, from investors including Tiger Global, Eurazeo and Tencent.

🇪🇺 Europe’s Article 8 and 9 funds. We’ve updated our list of the European VCs that have secured Article 8 and 9 certification under the EU’s sustainable finance disclosures regulation (SFDR). 

• Article 8 funds are dubbed “light green”, meaning they “promote” ESG characteristics. Article 9, labelled “dark green”, goes further: investors must prove ESG is a core objective of the fund.
• New funds on the list include Italy’s first Article 9 fund and the first venture debt provider to secure Article 9 certification. 

🌍 International expansion is a goal for many startups — but how do you open an office in a new market? Ludmila Nikitina, Latvia country manager for Estonia-based fintech Wallester, has the answers.

Trump's win gives impact investing a different meaning

Last Tuesday, after scrolling on my phone for too long as the news started to show Donald Trump would win the US election, I arrived at Norrsken’s annual Impact Week, held this year at the Swedish foundation’s snazzy beach-front outpost in Barcelona.

My experience began with a surreal start. In the lift up to the event, a man whose badge said he was a philosopher and bard told me he convinced the Norrsken team to start the foundation by giving them Ayahuasca, the South American psychedelic now beloved by parts of the tech sector.

The event, focused on impact investing to tackle the world’s biggest problems, offered little respite from the election news. Talk on stage immediately turned to the incoming president. 

“There’s now even more urgency to build a European version of things, to build our own ecosystem,” Taavet Hinrikus, cofounder of Wise, told the conference. “One of the biggest concerns I have today is about Ukraine,” he said. Hinrikus’s VC fund, Plural, is a backer of European defence startup Helsing — the type of investment he said becomes more important with Trump returning to the White House.  

Chatter away from the stage echoed that sentiment. Investors who last year talked to me about climate tech now spoke about drones. The investors who did mention climate tech did so through the lens of European resilience: startups that can reduce the continent’s dependence on China for critical minerals, for example, rather than reducing carbon emissions. 

Danijel Višević, GP at climate fund World Fund, told me off the back of the Trump news the fund “will increase investments in innovation, especially in those that strengthen European resilience”. 

It strikes me that, under a Trump Presidency, “impact investing” — a broad definition at the best of times — will become broader. While two years ago impact was tied to climate and health investments, it now seems to include anything that bolsters Europe against external geopolitical threats in an increasingly turbulent world. 

Hinrikus summed it up well when he called for a broader definition of impact — one that includes any company that creates wealth for the continent.

“If we build more companies like Wise or Spotify, we boost the GDP of Europe,” he said, citing the impact of Estonia’s burgeoning tech sector on the country’s GDP. He concluded: “GDP in Europe is even more important after today.” 

— Freya Pratty, senior reporter

VC fundraising remains bleak 

A quarter of UK-based GPs have pushed back fundraising plans, according to a new survey from the British Business Bank, one of the country’s biggest LPs.  

It paints a picture I’m sure many Sifted readers are familiar with: fundraising remains tough for VCs. 

More than two-thirds (69%) of GPs said they thought the UK is currently a poor or very poor market to raise a fund in. Just one of the 42 fund managers surveyed said they thought it was a good time to raise a fund. 

The findings are more or less on par with last year’s — but markedly different from 2022’s when GPs were more ambivalent. 

As for why it’s so hard to raise a fund at the moment, GPs listed low LP liquidity, the macroeconomic environment, longer fundraising timelines and increased difficulty attracting investors as their most significant challenges. 

Despite that, the majority (67%) of GPs said they haven’t changed their fundraising plans.

You can read a full break down of the data — including fund manager sentiment on exits and deal quality — here.

This piece first appeared in Sifted's Up Round newsletter, which drops the latest VC news, analysis and people moves into inboxes every Friday. Not signed up yet? You can do that here. 

Sifted 30: Eastern Europe & Baltics

What do Jeff, Turing College and Ringy have in common? They’ve all made the top spots in our latest leaderboard — a ranking of the fastest-growing companies across Eastern Europe & the Baltics’ ecosystems.

Berlin-based HelloBetter, which uses AI tools to further research into and develop digital mental health therapeutics, raised €3m in non-dilutive grant and loan funding from Investitionsbank des Landes Brandenburg.

Stockholm-based DREM, which focuses on making it easier for residential customers to buy and operate heat pumps, raised €1m in funding from Peak VC, byFounders, Redstone and Futurum Ventures.

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