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As many Sifted readers will know all too painfully well, raising a first-time VC fund is no mean feat. But neither is running a VC fund, as Carmen Alfonso Rico, solo GP at VC firm Cocoa, has discovered the hard way. 

Today, in her second piece for Sifted on what it takes to get a new VC fund up and running, she details all the various costs associated with a fund — along with some sound budgeting advice for others following in her footsteps. 

Also in need of advice is the London Stock Exchange, which has seen a swath of companies delist or transfer their primary listings elsewhere this year — and is on track to have the lowest number of fresh IPOs in 15 years, as the FT reported over the weekend.

Below, Anne Sraders digs into what European investors make of the seeming dwindling appeal of the stock exchange, and what Europe could fix to make it a more attractive venue for would-be public startups.

Elsewhere today:

• The breakthrough making MRI scans quick, cheap and much more likely to save your life
• Who do Europe’s startups bank with?
• “We have to find the Europeans who’ve gone to the US and drag them back here”: Highlights from the Sifted Podcast with Proxima Fusion’s Francesco Sciortino 

– Amy Lewin, editor

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🩻 Swedish startup Corsmed has developed software that makes MRI scans cheaper, faster and much more likely to prevent you getting seriously sick in the first place. 

• The startup has raised a $3.5m seed round, led by Luminar Ventures and Big Pi Ventures, to commercialise its technology, which is already used in simulators to train medical staff in cancer hospitals in the UK and the US.
• Next challenge? Getting regulatory approval in the US, tapping into (slowly) growing preventative healthcare budgets and getting the product ready for private and public healthcare institutions. 

😇 Work is underway to boost the number of female angel investors in the UK — and a new report from The Entrepreneurs Network and the Invest in Women Taskforce, published yesterday, lays out some recommendations for how to achieve that. They include: 

• Increasing awareness and uptake of the UK’s SEIS and EIS tax relief schemes, which are designed to encourage more people to invest in startups by reducing the risks associated with investing in high-risk businesses.
• Allocating grant funding from public funds (like the British Business Bank) to emerging angel groups.
• Making it easier for angels and angel groups to share deals and co-invest, either via an existing platform or a new one.
• Creating a hub of educational resources for angel investors. 

🪙 Revolut’s plans to expand into the $200bn stablecoin market have hit some speedbumps, two people familiar with the financial superapp’s crypto operations tell Sifted. 

• Stablecoins, a type of cryptocurrency pegged to the value of a fiat currency that is largely used by traders to more easily convert between different tokens, are booming at the moment amid a wider crypto comeback. 
• Revolut's stablecoin is expected to be denominated in Euros, according to Sifted's two sources. That means it will have to comply with the European Union’s new Markets-in-Crypto-Assets (MiCA) regulation, which includes stringent requirements on stablecoins. 
• If the plans don't come off, it won't be the first crypto product Revolut has explored and then decided to park; plans for a native token ('Revcoin') and a non-custodial crypto wallet made in 2022 never materialised.

Can Europe's stock exchanges reverse their dwindling IPO appeal? 

Ask IPO-ready startups in Europe where they’d consider listing their company, and chances are they’ll name New York as their city of choice. It’s by no means a new trend, but lately the London Stock Exchange, one of Europe’s preeminent exchanges, has looked particularly unappealing — and it’s kicked off a fresh debate about Europe’s competitiveness with the US. 

A Financial Times piece published over the weekend painted a bleak picture: ‘88 companies have delisted or transferred their primary listing from London’s main market this year with only 18 taking their place, according to the London Stock Exchange Group. This marks the biggest net outflow of companies from the main market since 2009, while the number of new listings is also on course to be the lowest in 15 years as initial public offerings remain scarce and bidders target London-listed groups.’

Ouch. That’s even after the UK’s Financial Conduct Authority (FCA) relaxed listing rules for companies earlier this year (though this may take some time to actually work its way through the ecosystem). Its most recent blow: Swedish BNPL titan Klarna opting for a New York debut over a London Stock Exchange listing. 

The story didn’t go unnoticed by Europe’s VC set, who are funding that next set of IPO candidates. And some didn’t hold back. As outspoken Paris-based VC Michael Jackson put it: “Friends don’t let friends list in Europe. European public markets desperately need an overhaul. They’re the minor leagues.” 

The arguments at this point are well-trodden, but they include regulatory hurdles and lower liquidity in Europe, and better valuations for US-listed companies. 

“We’d like for the UK and Europe to become the go-to choice, but capital markets and regulators need to ensure the right incentives are in place,” Peter Specht, London-based general partner at Creandum, tells me when asked what he makes of the FT piece.

But how could the LSE — or any other European exchange, for that matter — lure more of Europe’s scaleups now? 

For one, “the UK’s stamp duty on the purchase of UK shares is holding back the market and hampering liquidity. In a side-by-side comparison this simply makes listing in the UK more expensive than the US,” Specht says. 

According to Nirwan Tajik, a growth investor at French firm Revaia, a proposed capital markets union, which could help simplify things like tax structures and regulatory requirements across different EU countries, could make Europe a more appealing venue. “Cross-border listing and investments have high barriers due to different regulatory requirements” — which include know-your-customer (KYC) and investment thresholds, withholding tax on dividends and market infrastructure, Tajik says. “Harmonising these, obviously, would encourage the free flow of capital.” (This, of course, wouldn’t help the UK post-Brexit.)

Tajik also points to initiatives like exchange Euronext’s Tech Leaders index aimed at highlighting high-growth tech companies as “a step in the right direction”, although it’s “crucial” to have a single European tech exchange — like a European Nasdaq, as many have called for. “Special listing incentives (for example reduced fees or fast-tracked processes for high-growth sectors) could further differentiate it,” he suggests. 

But I’ve also wondered: for entrepreneurs and VCs, does it really matter where a startup lists? They're still getting their returns, after all. 

“Let’s face it: in the short term the people directly affected [by] European tech companies listing in the US are mostly local bankers and exchanges,” Specht says. However, longer term, as many VCs argue, Europe risks losing potentially billions in revenues as well as losing talent to the US, tax money on public companies and the feedback loop of employees or angel investors giving back to the local ecosystem. 

From Specht’s point of view, startups should of course make the best choice for themselves: “Companies are optimising for the best financial markets 'product', which is a mix of liquidity and attractive regulation,” he says. Going public stateside comes with requirements like minimum size, which might disqualify some startups, he adds; for others “it may be the better option.”

“I do not believe that all roads lead to Nasdaq or NYSE,” Tajik adds.

I’m curious to hear from you, VCs: what are you advising your startups when it comes to where to go public? Do you think it’s actually a problem that most opt for New York? What could the LSE (or other European exchanges) do to improve their competitiveness? What are the ramifications of most of Europe’s startups flocking to the US? I’m planning to include some responses in our weekly VC newsletter Up Round on Friday (you can sign up to that here), so send me a note.

— Anne Sraders, senior reporter

Here come the builder bots

It’s an elusive dream. Robots hold promise for construction but the technology has proven difficult to perfect. The founders and investors in our report with Leonard, say this is all going to change. Meet the most innovative builder bots from across Europe and beyond. 

💶 The things nobody told me about launching a fund: The ops and costs of running a first fund. Solo GP Carmen Alfonso Rico is back with the second part of her wildly popular series for Sifted on what it actually takes to set up a first-time VC fund. Today, she runs through what newbie GPs need to budget for, which third-party advisors you’ll need to work with and how to have enough left to a) invest and b) pay yourself!

• Read Part I: How to set up a fund structure.

🫵 “We have to find the Europeans who’ve gone to the US and drag them back here,” says nuclear fusion startup Proxima Fusion’s CEO and cofounder Francesco Sciortino.

• Nuclear fusion technology could provide us with clean, cheap and abundant energy — and be the making of some very, very valuable businesses — but, unless Europe “steps up” its competitiveness and entices fusion talent back from the US to work on the challenge here, it’s at risk of missing a huge opportunity, said Sciortino on the Sifted Podcast. Read highlights of the conversation here.
• Munich-based Proxima has raised more than €27m from VC firms Plural, Redalpine, Visionaries Club and UVC since it was founded in early 2023, and is a spinout from the Max Planck Institute for Plasma Physics. 

🏦 HSBC is the most popular bank with Europe’s startups. 7.5% of startups that applied to the Sifted 250, a ranking of the fastest-growing startups in Europe, told us they work with HSBC. In second place? Revolut, with 7.1%.

• Find the top 25 organisations banking Europe’s startups here.

📝 Europe has a deeptech talent gap. Here’s how the EIT plans to solve it. (Sponsored by EIT Deep Tech Talent Initiative)

Brussels-based Bnewable, which develops and implements renewable energy storage and management solutions, raised €40m in funding. RGreen Invest led the round and was joined by investors including Wallonie Entreprendre and Dovesco Fund Investments.

Istanbul-based Agave Games, a mobile gaming company, raised $18m in Series A funding. Felix Capital and Balderton led the round and were joined by E2VC.

London-based Volume, which provides one-click online checkout solutions, raised $6m in a seed funding round led by United Ventures.

London-based TG0, a technology platform for designers and engineers to quickly build products, raised €5.4m in Series B funding. NetmindAI led the round and was joined by investors including WP Health.

Stuttgart, Germany-based Synthavo, which makes software to help technicians identify parts on machines using their mobile phones, raised €4m in seed funding. Samaipata and Senovo led the round.

Évora, Portugal-based Meight, a data platform for freight transport, raised €3.4m in funding. Cusp Capital led the round and was joined by investors including Grupo Lusiaves, Faber and EIT Urban Mobility.

If you’d like to submit a deal, get in touch. 

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