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France is strengthening its position as one of the EU’s leading tech hubs, with the amount of VC money invested in homegrown AI startups almost doubling to €1.9bn in 2024, according to a new report from investor Alexandre Dewez. 

The 82% increase on the previous year helped Paris retain its position as second-best European city for startup investment, with only London ahead. But at the national level, France is still stuck in third place, behind Germany and the UK. My colleague Daphné Leprince-Ringuet and I have all the details here. 

In other news, applications are now open for Sifted Leaderboards 2025 — our rankings of the fastest-growing startups, by revenue, in Europe. If you work for or with a fast-growing European startup, or have a portfolio company that’s gaining lots of traction, please suggest they apply. More information can be found here.

Elsewhere today:

• Bavaria overtakes Berlin in startup fundraising for the first time 
• French-American spacetech Loft Orbital hits billion-dollar valuation with €170m funding round 
• Belgium’s Vertical Compute raises €20m seed to develop more efficient AI chips 

— Martin Coulter, news editor

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🇩🇪 Bavaria overtook Berlin for the amount of startup funding raised for the first time ever in 2024. Berlin tends to be seen as Germany’s trendy software hub — home to fashion retailer giant Zalando and delivery giants HelloFresh and Delivery Hero — while Munich has earned its stripes as the country’s deeptech powerhouse.

• A new report by consultancy Ernst & Young found startups in Bavaria raised more than €2.3bn in 2024, compared to Berlin startups’ €2.2bn.

💸 Ahead of a hotly anticipated public listing in New York, Swedish fintech Klarna announced it had signed a major distribution deal with Stripe, granting it access to thousands more potential customers across 26 countries.

• The buy now, pay later (BNPL) giant is also hoping to unlock capital ahead of its IPO by selling on some of its 'pay in four' loans in the US, the Financial Times reported. Citigroup and Nordea are said to be among the potential buyers.

🚀 French-American spacetech startup Loft Orbital has raised a €170m Series C round, pushing the company’s valuation to more than $1bn.

• Investors include global asset manager Tikehau Capital, Singaporean sovereign wealth fund Temasek and French public bank Bpifrance.

💻 Belgian startup Vertical Compute raised an all-equity €20m seed round just three months after launching, hoping to develop more efficient chips for AI.

• The startup was cofounded by Sylvain Dubois, who previously spent four years at Google in San Francisco, and Sebastien Couet, who for the past 10 years led semiconductor programs at Imec, an R&D centre in Belgium focused on nanotechnology.

🤝 Flexible workspace booking platform Hubble has been acquired by US real estate software company Yardi. The terms of the deal are undisclosed. Founder Tushar Agarwal tells Sifted he and his entire team (of around 50) will be staying on. “This acquisition is really about improving and scaling the Hubble platform,” he says, adding that the UK-based company began receiving inbound acquisition interest about a year ago. 

• Hubble has raised just over $20m in venture capital since launching in 2013, from investors including Seedcamp, Pi Labs and JLL Spark.

Your edge in European startup investing

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🙋 I survived the tech layoffs. Now how do I figure out what I really want from my career? Sequoia's VP of talent Zoe Hewitt shares her advice on how to refocus your career goals after a turbulent few years in tech.

🦄 A complete and updated list of all of Europe’s 152 startup unicorns at the start of 2025 — including the latest to join the ranking, Loft Orbital.

🛥️ What’s behind Revolut’s push into private banking? Tom Matsuda dives into the challenges the financial superapp will face in its bid to bank the rich in this week’s Fintech newsletter. Want more of this in your inbox? Sign up here.

🌽 How to pitch a climate tech startup to a corporate venture capital fund. (Sponsored by Shell Ventures)

Putting AI startups to one side, investment in French startups would have fallen 11% in 2024. The chart below comes via Alexandre Dewez's State of the French Tech Ecosystem report, published on Tuesday. 

The report says that while France managed to recover from the 2023 "correction" when VC money dried up, the near-doubling of AI investment shows how vital the technology is to the French ecosystem. 

Zurich, Switzerland-based Sygnum, which offers digital asset banking services, raised $58m in funding. Fulgur Ventures led the round.

Berlin-based Formo, which develops fermentation processes to make cheese alternatives, raised €35m in debt funding. The European Investment Bank led the round.

Paris-based Robeauté, a developer of neurosurgical micro-robots, raised €27m in Series A funding. Plural, Cherry Ventures and Kindred Ventures led the round and were joined by investors including LocalGlobe, Think.Health, APEX Ventures and Brainlab.

Surrey, UK-based NatureMetrics, which specialises in biodiversity monitoring technology, raised $25m in Series B funding. Just Climate, EDF Pulse Ventures and Monaco ReOcean Fund led the round and were joined by investors including 2150, BNP Paribas, Ananda Impact Ventures and SWEN Blue Ocean.

London-based RocketPhone.ai, an AI-powered video processing platform, raised $10.5m in funding. It's not raised from any VCs; its investors include board members and advisors Iliana Paskova, Diane Groell and Niluka Ratnayake.

Barcelona, Spain-based Genesy, a platform for AI-powered sales agents, raised €5m in seed funding. Samaipata led the round and was joined by investors including KFund and Itnig.

Eindhoven, Netherlands-based PHOTON IP, a manufacturer of advanced optical chips, raised €4.75m in seed funding. Innovation Industries led the round and was joined by investors including Faber, Brabantse Ontwikkelings Maatschappij and PhotonDelta.

Riga-based Naco Technologies, which specialises in nano-coatings and materials for hydrogen system producers, raised €1.5m in funding. Radix Ventures, Impact Ventures and The Untitled Ventures led the round.

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