Female Foundry Week 112: What's up, fintech? Unfinished. Short wins, long incentives. Female Foundry x SuperVenture.
Welcome to The Week 112, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
Very strong couple of weeks for fundraising by female founders. London-based Radiant Matter, co-founded by Elissa Brunato and Cyan Williams raises a £1.2m Seed round led by Sustainable Ventures; Estonian medtech startup Nanordica Medical, co-founded by Anna-Liisa Kubo and Olesja Bondarenko raises a €1.75m round led by Specialist VC; London-based work-payments platform Native Teams, co-founded by Aleksandra Mitrevska raises a €6.2m Series A round led by Eleven Ventures and Fil Rouge Capital; London-based Peachies, co-founded by Rima Suppan and Morgan Mixon, picks up a £1.4m Seed round led by Anotherway Ventures and Antler; German Cylib, co-founded by Lilian Schwich lands a €55m Series A for its lithium-ion battery recycling solution from Porshe Ventures and World Fund; London-based Purple Dot, co-founded by Madeline Parra raises a €9.2m Series A led by OpenOcean to allow brands to take control of their sales timelines; London-based climate-tech startup UniBloom, co-founded by Anna Sandgren raises a £650k Pre-Seed round; Denmark-based Cellugy, co-founded by Isabel Álvarez-Martos and Deby Fapyane raises €4.9m Seed round led by ICIG Ventures and Unconventional Ventures for its substitute to petrochemicals; Paris En-Carta, co-founded by Margot Karlikow, fetches a €1.5m Pre-Seed round led by CentraleSupélec Venture for its Lyme-disease platform; Tallin-based CARÁ Health co-founded by Anna Strubel and Carina Vantsi, picks up a €620k Pre-Seed round led by Tera Ventures to expand to Germany; French biotech HEPHAISTOS Pharma, co-founded by Martine Caroff lands €4.5m round led by Elaia for its anti-cancer treatment.
Congrats also to Tove Larsson, Agate S. Freimane, Denice Carbell from Norrsken VC on raising €320m for the biggest impact fund in Europe.
Spotlight
What's up, fintech?
The co-founder of PayPal and Palantir Technologies, and renowned backer of fintech companies such as Stripe, Wise, Coya, Stash, BitPanda, and dozens of other high-growth companies, Peter Thiel, announced the close of the new fund of Valar Ventures at $300 million—half the size of its last fund. There is a lot of talk about a big slowdown in fintech, but what does the data say? As per the Female Foundry report published earlier this year, fintech is the second largest category of innovation for female founded companies. I have pulled up some stats on fintech fundraising to provide more context - *data from Dealroom and Crunchbase.
Fundraising: VC investment into fintech startups reached $42bn in 2023, a 63% drop from the previous year. The US, however has held better than Europe, with a 45% drop in funding in 2023 from a previous year compared to 66% drop in Europe. Fintech funding is now at ~⅓ of its 2021 peak and at its lowest since 2018. Median round size is down at all stages in 2023, but Seed and Series A show more resilience decreasing 12% compared to 31% for Series C+.
Valuations: In 2021, a record high 148 new unicorns were minted. In 2023, only 8. Today there are 378 fintech unicorns and $1B exits in US & Europe. 222 unicorns were created in the 2019-2021 period. 31 of them have lost their unicorn status. It is now estimated that fintech companies founded in 2000 and onwards (both the US and Europe) are now worth $2tn and 66% of the value is still private hands with less than 20% being public.
Exits: The last two years saw nearly no public listings. There was only one fintech IPO in 2023, ReAlpha, down from 51 IPOs in 2021 (!) and a SPAC of Better Mortgage. 2023 has been one of the most active year to date for fintech M&A with 241 recorded in fintech.
Sub-sectors: Payments have attracted nearly 3x the funding as any other sub-industry and were the most resilient segment in 2023. Climate fintech funding even though dropped 55%, but is still 2.4x higher than pre-pandemic levels with Crypto and DeFi seeing the biggest decline in funding 72%.
Geography: The US and Europe accounted for 68% of global fintech funding in 2023, up from 40-50% in 2016-2018. US attracted 5x more funding than the next country, the UK. In Europe, London attracted 4x more funding than the second hub, Paris. Madrid and Munich showed the least decline from 2022.
The most active European VC investors in the past 12 months include SFC Capital (10 deals), BPi France (10 deals), Outlier Ventures (9 deals), Kima Ventures (8 deals), Notion Capital (8 deals) and Speedinvest (8 deals).
Fundraising
Unfinished.
What a great week! It was fantastic meeting many of you on Monday in London to discuss the latest investing trends. Thank you for the inspiring conversations. One stat that stood out this week: only 17% of seed-stage companies manage to secure a Series A financing round.
Too often, I meet early-stage founders who, as part of their fundraising pitch, focus on showcasing beautiful decks, past performance but fail to articulate their future growth objectives in detail. The ‘Next 12 Months’ slide often doesn’t even make it into many founders' pitch decks! Budgets, revenue projections, or hiring plans can only get you so far. However, identifying growth opportunities that can be unlocked with the new cash injection—what I call ‘wedges’—that have the potential to accelerate your company's growth are equally, if not more, important.
There are two business concepts I pay extra attention to: your unit economics and your velocity of growth. And so, if your month-on-month growth has been consistently sitting at 1.2x and you are now raising more cash, talking about your team, product and past performance is not going to make me excited about your company’s potential as much as your commercial understanding of what happens post-fundraising. Never consider a new financing round as a goal in itself. As a founder you must continuously demonstrate growth. And so, as a startup founder your journey is never finished.
Analysis
Short wins, long incentives.
There are early signs that the fundraising market for VCs is thawing. However, the interest of institutional LP investors often comes at a price, especially for emerging fund managers who are more likely to offer favourable co-investment terms to attract LPs. Granting co-investing rights, which allows LPs to invest directly alongside general partners, appears to be one of the increasingly attractive ways to lure new LPs. As per the recent data, emerging fund managers consistently raise less than half of the total fund value, and while offering LPs the optionality of the upside can be an attractive tactic, the strategy can also create challenges - In the long term, LPs might end up prioritising direct deals over fund commitments ..potentially misaligning incentives between LPs and new fund managers.
Community
Female Foundry x SuperVenture
Female Foundry is an official partner of SuperVenture 2024 taking place on the 4-7th June 2024 in Berlin and we have a 10% promo code on all tickets for the Female Foundry community! To receive a 10% discount on your ticket, quote a FKR3549FEMALE promo code at the checkout.
Hiring
This week hiring:
Dreamfarm ➯ Customer & Logistic specialist internship | LAPSO STUDIOS ➯ Becario en Operaciones y servicio al cliente | einwert ➯ Office Manager | FlowSpace ➯ Demand Generation Lead
Founder & Investor Meetups
Wednesday, May 29, Paris ➯ Apéro Startups | Thursday, May 30, Paris ➯ Demo Day 2024 French Tech Tremplin à Paris-Saclay, Amsterdam ➯ Impact Founder Meetup, Berlin ➯ Accelerate Circularity - A Pitch Event by the Circularity Hub.
Enjoy the rest of your Sunday!
Agata
Written by Agata Leliwa Nowicka, an investor, a startup adviser, a two-time entrepreneur, and a founder of Female Foundry based in London.
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Check femalefoundry.co for more fundraising tools and investor content. View other Female Foundry articles.