Another French AI startup eyes the Bay Area

Good morning there,

Judging by conversations I've been having with investors lately, all eyes seem to be on Munich as the centre of German tech. Now that the consumer boom in Berlin is over (remember the days of speedy grocery hype?) VCs are increasingly looking to back deeptech companies, and in particular, hardware. 

Munich’s strong industrial base, top universities and tight-knit community are a big pull factor for those kinds of startups to set up a base there — as is the amount of capital. Many VC firms have opened offices in the Bavarian capital this year; so too has Goldman Sachs, which some investors told me sends a strong signal that Munich is where it’s at for startup deals. 

Today, I look at which startups in particular investors have got their eyes on. (Spoiler: nearly all of them are working on AI solutions). 

Elsewhere:

• Parisian AI startup Pathway on moving to the US: 'We need to be in the room where it happens, and it happens in the Bay Area'
• Iconic London coworking company Second Home looks to appoint administrators

— Miriam Partington, senior reporter

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🇺🇸 Paris-founded AI startup Pathway, which builds tools to enable developers to feed AI models with real-time data, has raised $10m in fresh funding and moved its headquarters to Menlo Park in the US.

• The startup is keeping an entity in France but focusing its efforts where its customers and users are growing the fastest. “We need to be in the room where it happens — and it happens in the Bay Area,” says Pathway cofounder Zuzanna Stamirowska.

🇬🇧 Second Home, the iconic London-founded coworking company, has applied to appoint administrators, according to court records accessed via Caseboard.

• Founded in 2014 by Rohan Silva, one-time policy advisor to former UK prime minister David Cameron, Second Home swiftly became a favourite meeting spot among founders and investors in London’s then-nascent startup scene. Its backers included LocalGlobe cofounder Robin Klein, president of Tencent Martin Lau, the Russian-Israeli billionaire Yuri Milner and VC firms Index Ventures and Atomico.
• However, it struggled with overrunning costs — even before Covid forced most of its potential customers to work from home. In the first half of 2024, its Los Angeles, Clerkenwell and London Fields sites were removed from its website. Sifted approached Second Home for comment.

🇫🇷 After months of negotiations against a tense political background, French prime minister Michel Barnier has pushed through the first part of the country’s 2025 budget without a vote in the lower house of Parliament.

• Several left wing parties as well as the far-right Rassemblement National immediately called for a vote of no confidence, which is expected to take place on Wednesday — and if successful, could lead to France’s freshly-formed government collapsing again.
• It’s a bleak prospect for France’s budget, as well as the country’s overall economy. And with business and political chaos rarely mixing well, it’s likely French founders are keeping a close watch of this week’s developments.

🪖 German defence tech Helsing — which until now has been known for building AI software for drones and fighter jets — has released a new type of strike drone, HX-2, which can carry ammunition and manoeuvre without the need for a pilot’s instructions. 

• The company’s CEO Torsten Reil — who sits in a leadership team made up of alumni from US software company Palantir and European defence prime Airbus — told Bloomberg that connecting the drones via software to other weapons, tanks and artillery systems “has the capability to create a deterrence level that currently isn’t feasible.”
• The drones will have the capability to assemble into swarms controlled by a single human operator. The company is aiming to produce tens of thousands of them a year and is pitching them to Ukraine and NATO member countries. It hasn’t signed any contracts yet though, according to Bloomberg.

🇩🇪 11 Munich startups to watch, according to VCs.

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London-based 9fin, an AI-powered analytics platform for debt capital markets, raised $50m in Series B funding. Highland Europe led the round and was joined by investors including Spark Capital, Redalpine, Seedcamp, 500 Startups and Ilavska Vuillermoz Capital.

Berlin-based Carbmee, which provides carbon management software, raised €20m in funding. CommerzVentures led the round and was joined by investors including Fly Ventures.

Warsaw-based Coding Giants, a hybrid coding school for children, raised €8.5m in funding. True Global Ventures led the round.

Madrid-based Jotelulu, which supports IT companies moving to cloud service providers, raised €6.8m in funding. Kibo Ventures led the round and was joined by investors including Adara Ventures, Bankinter, G2A and Big Sur Ventures.

Turin, Italy-based Reefilla, an energy storage and mobile power generation platform that uses second-life batteries, raised €4.5m in funding from investors including CDP Venture Capital, Azimut, HCapital and Motor Valley Accelerator.

Helsingborg, Sweden-based Acorai, which specialises in devices for heart failure management, raised $4.5m in funding from investors including the European Innovation Council and Taiwan Medical University.

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