Female Foundry Week 102: Europe: getting in front or falling behind. Nonlinear. Second-time lucky. Female Foundry x START Summit
Welcome to The Week 102, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
Paris-based Sorella, co-founded by Clémence Lejeune and Jeanne Theuret, lands a €5m Series A round led by blisce for its women healthcare platform; London-based Vitrue Health, co-founded by Alex Haslehurst raises €3.7m Seed round led by MMC Ventures to digitally tackle neck and back pain; Berlin-based Yendou, co-founded by Zina Sarif, picks up a €1.2m Pre-Seed round led by b2venture for its clinical operations automation platform; London-based VR platform MOONHUB, co-founded by Hannah Sutcliffe, snaps a €1.3m Seed round led by Unconventional Ventures for its immersive training platform.
Spotlight
Europe: getting in front or falling behind.
Microsoft announced a deal with French Mistral AI this week - in what it described as a ‘push beyond OpenAI’. Even though financial details have not been disclosed, the deal is meant to boost R&D collaboration between the two companies to build applications for governments across Europe and to ‘use the same AI models to address public sector-specific needs’. It is a big deal for Mistral AI and for sure invigorating news for the European tech ecosystem, despite many raising competition concerns.
As of today, the R&D spend in Europe is just a fifth of that of the US and half of that in China. To give you more context, AI investment is currently 50 times (yep, 50 times) higher in the US than it is in Europe. While at first glance, the difference might seem to be solely about the amount of capital invested, the underlying reasons likely stem from a more profound disparity in the structural agility of the US and European innovation ecosystems.
Quick workforce turnover (resulting in ongoing tech layoffs) has enabled big US tech companies to quickly repurpose their capital (salaries always take a big part of cost base) to take advantage of the most lucrative investment opportunities.
To give you an idea, in 2023, to quickly hop-on the AI wagon, Meta decided to shut down its Metaverse division, laying off 20,000 employees and paying an average of 4.2 months of median pay to each one of them. Microsoft, Google and Twitter paid their laid-off employees 5.9 months, 7.5 months, and 3 months of severance package respectively, allowing them to immediately commit to deploying an average of $30bn into AI projects.
Europe lacks this sort of capital turnover capability. In its move to compete on the global microelectronics scene, and defy the slump in its annual sales, the biggest tech player in Europe, Nokia, has recently revealed its bold plans to slash 14,000 jobs globally - the move with the objective to boost its innovation capital but only to-be-completed by the end of 2026. Country-by-country specific and Europe-wide regulations, employee protections, social norms and top-down lengthy procedures make workforce turnover in Europe a lot more complicated and that does not align with the agility needed to match the volatility of the technology frontier. ..Meanwhile the innovation gap is widening.
Fundraising
Nonlinear.
I took part in a couple of startup pitch events this week, and there was one observation that struck me. Despite many companies delivering strong pitches, every four out of five business that presented were based on the assumptions of the world we experience today, where societal evolution is assumed as linear - it’s influenced by presidential elections, fiscal years.. and every now and then by the outliers (read: pandemics). What’s wrong with that?
In reality, our evolutionary process is not linear. It accelerates, as it builds on past progress and the resources it requires continue to improve exponentially. To learn more, read here about the The Law of Accelerating Returns.
Increasingly, Gen AI is going to be integral to how we go about our lives; it will fundamentally transform how we communicate, what problems we face, what drives us, what excites us, how we think about our wealth, how we spend our time.. and though, it’s quite hard right now to anticipate the speed with which those changes will occur - one thing is clear: regardless of how the world (and the fundraising conditions) in the next three, five, eight years will look like, ultimately, the digital domain will be ever-expanding and only the founders with the highest levels of curiosity, agility and ability to leverage AI to their advantage, will be able to succeed. Here are a few ideas on how you can start building your AI-stack.
If you haven’t already, I also strongly encourage every one of you to allocate time to stay up-to-date on the AI developments in your space (I will share my lists here in the coming weeks), forming and regularly reassessing your view on what your core competence is, how your value proposition will need to evolve, and how flexible your tech stack will have to be to stay on top.
If you are a founder of an early-stage startup today, in order to be competitive, or even relevant (!), more than ever, you must build for the future - and for a future that won’t be linear.
Analysis
Second-time lucky.
Raising a VC fund is not easy, especially for emerging fund managers. Despite the headwinds, however, it is estimated that from 2006 to 2018, 63% of first-time managers managed to raise a second fund. Newly released report indicates, however, that an influx of first-time funds, fluctuating valuations, and a difficult fundraising climate are making it harder than ever for first-time fund managers to raise subsequent funding.
In 2021, first-time fund managers (US) secured $14.7bn across 318 funds, but by 2023, this number plummeted to 97 funds, raising only $6.5bn. What is also important to note is that established managers (funds 4+) have captured over 70% of total committed capital for the second consecutive year. Will it drive even more consolidation among firms in 2024?
Community
Female Foundry x START Summit
Female Foundry is an official partner of START Summit taking place on the 21-22nd March 2024 in St. Gallen, Switzerland and we have 2x €748 General Passes to give away to the Female Foundry community!
To enter the FREE ticket draw, submit your interest below. Deadline: March 7th, 10pm GMT. T&C of START Summit apply. I will announce the winners here next Sunday. Good luck!
Don’t want to wait and prefer to get a discounted ticket? We also have a 20% discount on all ticket types: use code FEMALE20 to redeem it at the checkout. Again, T&C of START Summit apply.
Hiring
This week hiring:
Filu ➯ Founders Associate Internship | einwert ➯ Werkstudent Business Development | Lassie ➯ Customer Service Specialist.
See more jobs on the Female Foundry Job Board.
Founder & Investor Meetups
Monday, March 04, Paris ➯ Opening Neo Deeptech CCI Paris, ➯ Paris Startup Night Edition 2 | Thursday, March 07, Amsterdam ➯ Impact Founder Meetup | Friday, March 08, Amsterdam ➯ AI and tech insights from female leaders.
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To celebrate the International Women’s Day, next week, I will be speaking at the Fintech Fringe event (in-person) and Le Wagon event (online) on Thursday, see you there.
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Lastly, Ashurst, one of our sponsors of the State of Gender Diversity in European Venture report has just launched its applications for the 2024 edition of the Fintech Legal Labs. If you are a fintech or a climate tech founder in Europe and want to take advantage of a unique opportunity to get free legal advice and gain access to investors and an expert network over a 3-day legal workshop from 21-23rd of May in London, drop me an email or directly apply here.
That’s all for this week. Have a great week ahead and see you next weekend!
Agata
Written by Agata Leliwa Nowicka, an investor, a startup adviser, a two-time entrepreneur, and a founder of Female Foundry based in London.
Suggestions? Drop me an email.
Check femalefoundry.co for more fundraising tools and investor content. View previous Female Foundry newsletters.