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ℹ️ European VCs outperform US VCs over 10 and 15 year horizons
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© Venture capital might have been born in the US — but Europeans aren’t too bad at it nowadays.

European VC returns are better than North American VC returns over 10 and 15 year horizons, finds a new report from industry body Invest Europe, based on data from investment firm Cambridge Associates.

European VC yielded 20.77% net IRR (internal rate of return) over 10 years, compared to North American VC’s 18.18%. Over a 15 year period too, European VC has better returns: 16.57% IRR to North American VC’s 16.09% IRR.


© However, over a 20-year period, North American VC’s IRR edges past European VC’s: 13.03% compared to 12.87% for Europe. North American funds are also faster to pay back their investors — with LPs getting their money back in 4.5 years, on average, compared to 6.7 years in Europe.

IRR is an (imperfect) measure used in private equity to compare fund performance. It shows the expected annualised return a fund should generate; the higher the IRR, the better the performance. Most early-stage VC funds will be aiming to get an IRR above 30%.

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🔔 Europe's profitable startups
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💻 Two years ago, the US stock market tanked, growth-at-all-costs went out the window and get-to-profitability-ASAP came in.

Startups scrambled to follow the new VC mantra. More than 140k tech workers were laid off around the world in 2022; expansion plans were put on ice and markets were shut; and getting into the black became priority number one for founders.

Now, after an undeniably tough few years for our industry, more and more scaleups are announcing profitability.

Sifted hopes to track Europe’s biggest profitable private tech companies in this new database. We’ve included companies that have raised £100m+ and made an annual profit of £10m+. Data comes from news articles and data platform Dealroom.


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⭐️89% of corporate investors plan to increase or maintain level of startup investments
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💡 Back in 2010, corporates were by no means a go-to investor for European startups, accounting for just 10% of the funding they raised. Nowadays, the picture is quite different; so far, in 2024, corporates account for over a quarter of startup funding, in terms of volume of capital invested, according to data platform Dealroom — a huge uptick in interest.

⭐️ And that share is likely to only increase, finds a new report from advisory firm Mountside Ventures and VC firm Love Ventures published today and exclusively shared with Sifted. 89% of corporate investors plan to increase or at least maintain the number of startup investments they do in the next three years compared to the last three years.

The report surveyed 104 CVCs around the world, with a collective £20bn in assets under management. Over 60% invested via the balance sheet; less than a third have a separate fund vehicle. Respondents include Aviva, DMG Ventures, BMW i Ventures, FT Ventures, ING, Legal & General, Schenker Ventures, Societe Generale and Wayra.


💡 The report found that most corporate VCs like to invest between seed and Series B. 91% said they like to invest at Series A, while just 20% are keen to invest at pre-seed, and just 11% at Series D+.

Looking at sectors, B2B companies are the favourite destination for corporate capital, followed by AI and machine learning and fintech. B2C and healthtech startups are less in favour. 93% of respondents said they had a very specific sector focus.

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ℹ️ Corporate venture firms are a steadily growing presence in Europe's startup scene
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© Most CVCs don’t have a long shelf-life: their median life span is a mere four years, according to business school LBS. The reasons for that are well-trodden. If the parent company has a tough year, or has a change of leadership or strategic direction, the CVC can be one of the first things to get the chop.

© Recent victims include British telecoms giant BT’s venture arm, which has stopped making new investments, and UK software and IT services provider Capita’s venture arm Scaling Partner, which has dropped from 16 to 4 employees over the course of this year, according to LinkedIn, and also stopped new investments. The parent company’s share price has also plummeted since January.

This year German software giant SAP also shut its CVC arm SAP.io — which has invested in five unicorns and seen 70 exits — although it still invests in startups via VC firm Sapphire Ventures.

Danish shipping giant Maersk is another which has shaken up the focus (and team) of its CVC, Maersk Growth, in the past year. The move came as a new CEO took the helm of the parent company, and thousands of job cuts were announced.


© In 2022 and 2023, CVCs were involved in more than one in five deals — and so far in 2024, the share is only going up, according to PitchBook data.

Corporates and corporate venture arms have invested in 771 deals so far this year, worth a combined €12.31bn. In 2023, CVCs invested in 2,133 deals, worth a combined €26.16bn.

© Last year, pharmaceutical giant Novo Holdings was the most active CVC in Europe — doing 32 deals. In a sign of the times, two more of the most active CVCs were connected to pharmaceutical companies, while three were connected to oil and gas behemoths.

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🔔 Deep tech startups with very technical CEOs raise larger rounds, research finds

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💻 SaaS founders trying to figure out what it takes to raise their next round can refer to Point Nine’s famous yearly SaaS Funding Napkin. (The term refers to “back of the napkin” plans or calculations.)

Now, European hardware deep tech teams have a similar resource from First Momentum, a pre-seed fund investing in technical B2B and deep tech startups.

💻 With its Deep Tech Hardware Napkin, the German VC firm hopes to democratize knowledge and benchmarks on funding, team, product and commercialization, broken down by stage.

Benchmarks are particularly helpful to first-time founders or those without a big network in startups and VC. This is especially true in deep tech, where many entrepreneurs come from a research background. “They don’t know what’s a wrong decision or a good one, because they don’t have data on it; they are not in entrepreneurial circles, they don’t have 10 to 15 friends who have started companies before,” general partner David Meiborg told TechCrunch.


First Momentum conducted a survey of 30 deep tech VCs from eight countries to counter this lack of knowledge and opaqueness, Meiborg said. The results are compiled not only in a “napkin” but also a full report.

💻The firm kept its observations to a minimum in the report, as it wanted it to be objective. But Meiborg and Ochs agreed to discuss with TechCrunch one interesting finding: “At Seed and Series A, teams led by very technical CEOs (with no business background) raise significantly more funding than teams led by CEOs with a business-related background.”

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ℹ️ Iceland is dodging the VC doldrums as Frumtak Ventures lands $87 million for its fourth fund
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© Iceland’s startup scene is punching above its weight. That’s perhaps in part because it kept the 2021 hype in check, but mostly because its tech ecosystem is coming of age. Iceland attracted the most venture capital per capita of all Nordic countries in 2023, but that stat is somewhat skewed by its relatively small population of fewer than 400,000 inhabitants.

More tellingly, foreign co-investments in Icelandic startups reached a record in 2023. In this context, it makes sense to see VC firms raise more funding.

© Frumtak Ventures is a perfect example. The firm just closed an $87 million fourth fund that was oversubscribed — and significantly larger than its third $57 million fund.

Most of Frumtak’s limited partners are Icelandic pension funds. “We were in a very good position that all our existing LPs were happy to back us again,” Kristinsson said. As for geographic scope, he added, Frumtak will back Icelandic founders, but “focus on local innovation with global potential.”


© Iceland’s tech scene skews toward early-stage startups, as does Frumtak, whose name roughly translates to “early catch.” But Kristinsson is confident that as the scene matures, more exits will follow. “Looking 10 or 20 years forward, my vision is that we will have fueled some of the biggest listed companies in Iceland in the next decades,” he said.

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⭐️AI startup Hebbia raised $130M at a $700M valuation on $13 million of profitable revenue
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💡 Hebbia, a startup that uses generative AI to search large documents and respond to large questions, has raised a $130 million Series B at a roughly $700 million valuation led by Andreessen Horowitz, with participation from Index Ventures, Google Ventures and Peter Thiel.

⭐️And its funding demonstrates that 50x annual recurring revenue (ARR) is becoming the norm for AI startups, especially ones that have booked millions of profitable revenue early in their journey.

The formal funding announcement confirmed most of the details previously reported by TechCrunch, although Hebbia continued to raise more funds, another $30 million, after our report. But Hebbia has not yet filed an updated disclosure on this funding round to the SEC, and the latest one at this time still says it was raising around $100 million of new equity.


Hebbia, which was founded by George Sivulka while he was working on his PhD in electrical engineering at Stanford, had ARR of $13 million and the company was profitable when it was pitching investors on the deal, according to a person with knowledge of the matter.

⭐️ The $700 million valuation implies that investors valued Hebbia at about 54 times ARR. Such heady valuations were common at the height of the pandemic-infused boom and are now routinely assigned to buzzy AI startups. Hebbia’s closest analogues, Glean and Harvey, had valuations of slightly over 60x ARR, according to the Information’s reporting.

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💎 Index Ventures raises $2.3bn across two new funds to double down on AI
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💻 Global VC investor Index Ventures, a backer of German AI unicorn DeepL and UK neobank leader Revolut, has raised $2.3bn across two new funds to double down on AI investments.

Along with its new $800m venture fund and $1.5bn growth fund, Index is also still investing out of a separate $300m seed fund.

💻 The firm says that the new funds will have a strong focus on AI, at a time when the technology is developing at pace and the availability of talent globally is increasing.

“AI alone will revolutionise virtually every sector of the economy and open up whole industries to venture that have remained virtually untouched,” said Shardul Shah, partner at Index Ventures. “Meanwhile, hundreds of thousands of people have worked in hypergrowth startups globally and can transfer those lessons to the next generation of companies.


💻Index has historically focused on enterprise software, SaaS, fintech, marketplaces and consumer; but has done several AI deals recently. It was an early investor in French AI darling Mistral — which is now Europe’s most valuable startup in the field, at €5.8bn.

At a combined $2.3bn, these two funds are smaller than the equivalent funds raised at the top of the market in 2021; a $900m venture fund and a $2bn growth fund, totalling $2.9bn.

💻 Index has also slowed down its pace of deployment; the two new funds have arrived three years after the previous ones. In 2021, Index raised its venture and growth funds just one year after its predecessors.

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📎 Central eastern Europe’s most active early-stage VCs
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📱 In central eastern Europe’s young startup ecosystem, early-stage investments make up the vast majority of VC transactions. In 2023, 92% of the 818 deals closed in the region were at pre-seed (611) or seed (144), according to data platform Dealroom.

Europe’s economic downturn has hit the region hard — and 2023 saw startups raise less early-stage funding than 2022. In 2022, CEE startups raised €140m in pre-seed funding and €324m in seed funding; in 2023, that dropped to €99.8m at pre-seed and €278m at seed, according to Dealroom.

📱 Local investors have been involved in most of those deals, with two Bulgarian VCs — Vitosha Venture Partners and Innovation Capital — doing more deals than any other investors in the region in the past 12 months.

Using data from Dealroom, Sifted has selected the CEE investors that did the most new (not follow-on) pre-seed and seed deals in the last 12 months:

1/ Vitosha Venture Partners

2/ Innovation Capital

3/ Baltic Sandbox Ventures

4/ Metaplanet

5/ SMOK Ventures

6/ Specialist VC

7/ Sofia Angels Ventures


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🍔 AI received 30% of global investments in Q2 2024
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👍 In the second quarter of 2024, the venture capital market revived slightly. The volume of global startup financing amounted to $79 billion, which is one of the largest figures since 2023. AI has become the leading sector — for the first time since the launch of ChatGPT.

The results of the last quarter can be found in the Crunchbase analysis.

👍 In the second quarter of 2024, global startup financing increased to $79 billion, which is 16% more than in the previous quarter and 12% more than in the second quarter of 2023, when $71 billion was invested. Most of the growth in this quarter is accounted for by mega-rounds — investments in excess of $100 million.

According to Crunchbase, the volume of financing has been at a low level for the eighth or ninth consecutive quarter. Although the past quarter was one of the highest investment volumes since the first quarter of 2023, this does not necessarily indicate a revival of the venture capital market.


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ℹ️ The growth of investments in AI
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© As the Crunchbase data analysis showed, And became the leading sector for the first time since the launch of ChatGPT from OpenAI. Despite investor concerns about revenue and high valuations, total funding in the second quarter was $24 billion, the largest amount raised in the AI sector in recent years.

© AI companies have received five of the six rounds of funding in the amount of $1 billion or more.

💎 Elon Musk's xAI raised $6 billion, and AI infrastructure provider CoreWeave raised $1.1 billion.

💎 The developer of Wave driverless driving technologies, the Scale AI data preparation campaign and the BioTech company Xaira Therapeutics have each raised $1 billion.

💎 Beyond And the $1 billion round was closed by the cybersecurity company Wiz.


© Healthcare and biotechnology became the second largest sector, which attracted $17 billion. Hardware manufacturers have raised $11 billion, largely due to investments in AI infrastructure and semiconductors. Fintech companies (at the peak of the market in 2021, they were usually one of the two leading sectors) received $9.8 billion.

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⭐️Investments in the late-stages have increased
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💡 Financing for late-stage startups reached $36 billion, compared with $33 billion in the second quarter of 2023. Large sums were received by companies that work in the field of developing basic AI models and infrastructure, autonomous driving, electric vehicles, cybersecurity, drug development and quantum computing.

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ℹ️ From Ethan Choi to Spencer Peterson, venture capitalists continue to play musical chairs
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© When Keith Rabois announced he was leaving Founders Fund to return to Khosla Ventures in January, it came as a shock to many in the venture capital ecosystem — and not just because Rabois is a big name in the industry.

© It was surprising because unlike in many other fields, venture capitalists don’t traditionally move around very much — especially those who reach the partner or general partner level as Rabois had.

VC funds have 10-year life cycles and partners have good reason to stay that course. In some instances, they may be a “key man” on a firm’s fund, meaning that if they leave, the fund’s LPs have the right to pull their capital out if they choose. Many partners and GPs also have some of their own money invested in their firms’ funds, which gives them further reason to stick around.


© So, while big-name investor moves in venture capital aren’t common, they seem to have become so in recent months. So far this year, there have been notable instances of investors returning to old firms, striking out on their own or taking a pause from investing entirely.

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🍔 AI-powered Regard nabs $61M to find missed illness, boost hospital revenue
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👍 People in tech often say that data is the new oil. That phrase, coined by British mathematician Clive Humby, of course implies that data is valuable.
The results of the last quarter can be found in the Crunchbase analysis.

👍 Data about a person’s health can also provide meaningful insights and improve outcomes, but only 3% of patient data is currently used by physicians, according to the World Economic Forum. Although doctors know they can glean useful information from patient data, they don’t have the time to review every detail in the medical record.

Regard, a digital health startup founded in 2017, wants to help physicians save time and increase the accuracy of diagnosis by analyzing patients’ health data using AI. Regard announced on Thursday that it raised a $61 million Series B round led by Oak HC/FT, with participation from Cedars-Sinai Health Ventures and existing investors TenOneTen, Calibrate Ventures and Techstars. The company is now valued at $350 million, according to a person familiar with the matter.


The company grew its revenue by 4.5 times in 2023 and is on a path to do a “similar amount of growth this year,” Ben-Joseph said. The company expects to reach profitability within the next two years.

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💎 More ex-military officials are becoming VCs as defense tech investment reached $35B
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💻 The distance between Silicon Valley and the Pentagon just keeps getting smaller. As venture capitalists continue to pour money into defense tech startups, they’re turning to a new hiring pool: veterans and ex-Department of Defense officials.

Andreessen Horowitz hired Matt Shortal, an ex-fighter jet pilot, as its chief of staff; Lux Capital brought on Tony Thomas, former head of U.S. Special Operations Command, as an adviser; and Shield Capital’s managing partner Raj Shah served in the Air Force.


💻 Hiring ex-military personnel can be a major advantage for firms, giving them “an understanding of what problems are actually on the battlefield,” instead of just “sitting in Silicon Valley and theorizing,” Ali Javaheri, PitchBook’s emerging tech analyst, told TechCrunch.

💻Silicon Valley pumped almost $35 billion into defense tech startups in 2023, and over $9 billion so far this year, according to a report released last week by PitchBook. This trend is anchored by some blockbuster fundraises.

💻 Shield AI, which produces an AI-powered drone pilot system, raised $500 million last year, and Anduril, Palmer Luckey’s defense tech startup, reportedly secured a fresh $1.5 billion in funding last month.

Although funding into the sector has slowed this year, Javaheri said it’s still shown “resilience” in the context of a brutal overall fundraising environment.

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⭐️'BOOOM' - the new €17m fund from solo GP Felix Plapperer
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💡 This week Felix Plapperer is officially joining the ranks of Europe’s solo GPs, as his VC firm, BOOOM, announces a final close of its first fund at €17m.

⭐️ The Berlin-based fund will invest in European B2B software startups at pre-seed and seed, with a particular focus on supply chain and procurement tech startups.

If you’re thinking that sounds familiar, it is — this is far from the only B2B SaaS-focused solo GP fund in Europe — but BOOOM has a twist. The three founders of German logistics unicorn sennder — David Nothacker, Julius Köhler and Nicolaus Schefenacker — “co-initiated the fund” and have committed to mentor all of its portfolio companies, Plapperer tells Sifted.


BOOOM will write cheques of €100k-€400k in around 30 companies. Like many solo GP funds, it won’t seek to lead deals.

⭐️ Investors in the fund include partners from well-known VC firms Accel, Index and Creandum, along with a handful of institutional investors and founders of tech companies including Celonis, King, Flix and sennder.

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🟢 Halo Industries Secures $80M for AI-Driven Semiconductor Innovation

➡️ Thomas Tull's US Innovative Technology Fund has led an $80 million Series B funding round for Halo Industries, valuing the company at $300 million post-money. Founded by Stanford researchers in 2014, this Bay Area startup is revolutionizing silicon wafer production for semiconductors using cutting-edge laser manufacturing technology.

➡️Halo's innovative approach to creating silicon carbide wafers is crucial for powering AI data centers, EV charging infrastructure, and electric grids. The company's environmentally friendly and cost-effective process offers a significant advantage over traditional mechanical and thermal methods. With revenue generation beginning in Q2 2023, Halo aims to scale its technology commercially and potentially go public within 3-4 years.

📌 This investment highlights the growing interest in next-generation semiconductor startups, driven by the increasing energy demands of AI technologies and the push for onshore semiconductor production. As AI continues to reshape various industries, the need for more efficient and powerful semiconductors becomes ever more critical.

The substantial funding secured by Halo Industries underscores the potential for significant growth in the AI infrastructure sector. As we witness the rapid advancement of AI technologies, investments in companies like Halo become crucial for sustaining this progress.

Keep an eye on this space, as innovations in semiconductor technology will play a pivotal role in shaping the future of AI and its applications across industries.


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