Female Foundry Week 121: AI M&A heats up. Join Female Foundry this autumn! Staying flat. Meet Visionaries.
Welcome to The Week 121, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
It’s great to be back after spending a fantastic time soaking up the sunshine, collecting seashells, and overeating berries. I hope you’ve also taken some time off (if not - make sure you do!) and are indulging on slow late summer days. I’m back. Recharged, and ready for the months ahead!
In the news
While I was away, so many new rounds have been closed! Congratulations to all the female founders.
London-based PHINXT Robotics, co-founded by Yanwen Chen (the Female Foundry Visionaries AI Incubator’s Cohort I participant ;-)) raises a €2.3m Seed round led by Sure Valley Ventures to redefine warehouse automation; Cardiff-based travel platform Lovetovisit, co-founded by Georgia Aubrey and Alice Aubrey, picks up a €3.8m Seed round led by Venrex to champion local tourism; Berlin-based clare&me, founded by Emilia Theye and Celina Messner fetches a €3.7m Seed round led by YZR Capital to develop an empathic Clinical LLM; London-based Female Invest, founded by Anna-Sophie Hartvigsen, Camilla Cloëtta Falkenberg and Emma Due Bitz bags a €10.3m Series A co-led by Educapital and Rubio Impact Ventures to become the top finance app for women globally; German radiology AI startup deepc, co-founded by Dr. Julia Moosbauer lands a $13m Series A extension round co-led by Sofinnova Partners and Bertelsmann Investments to accelerate deployment of healthcare AI; London-based Clearly, co-founded by Danielle Walsh picks up a €3.9m Seed round co-led by Pace Ventures and Nine Realms to drive Net Zero targets in supply chains; London-based health tech Hexarad, co-founded by Farzana Rahman and Amy Davis bags a €13m Series A round led by MTIP for its teleradiology platform; Cambridge-based OW Smell Made Digital, co-founded by Emanuela Maggioni and Marianna Obrist secures a £2.2m round led by Parkwalk Advisors for its digital scent production solution; Vienna-based Syntropics, co-founded by Sandra Siegert raises a €1.1m Seed round led by The Austrian Research Promotion Agency for its brain stimulation device to treat neuropsychiatric disorders; Zurich-based Netfabric.ai, co-founded by Marlene Brakhane raises a €2m Pre-Seed round led by Founderful and Playfair Capital to accelerate development of its network observability platform; French Meddenovo, co-founded by Ilke Ugur Marion secures €1m Pre-Seed round led by ACT Venture Partners to enhance drug development process; UK-based ESG management platform FuturePlus, co-founded by Alexandra Smith closes a £2.7m Seed round; Swedish Melt&Marble, co-founded by Anastasia Krivoruchko secures a €2.5m grant from European Innovation Council.
Danish VC Nine Realms, co-founded by Christy McCaig lands €50m from EIF to decarbonise supply chains.
Spotlight
AI M&A heats up.
Although M&A activity for VC-backed startups is definitely on the rise (check here), this year hasn't yet delivered the wave of deals many anticipated after a sluggish 2023.
It looks like, however that AI-related startups are defying that trend - much like they previously did with the downturn in venture funding. Deal activity involving AI startups is surging: in Q2 this year 65 AI-related startups got acquired, including Nvidia’s acquisition of Run:AI for $700m, and of Deci AI for $300m within a day of each other and JFrog’s acquisition of AI management platform Qwak for $230m. How do the totals compare with previous years?
65 AI-related deals from Q2 mark a 55% increase compared to Q2 of the previous year and a 15% rise from Q1. To give you more perspective, so far this year, 145 M&A deals involving AI VC-backed startups have been recorded, putting 2024 on track to surpass last year's total of 189 deals.
But apart from straightforward M&A deals involving AI startups, there has also been an uptick in big tech companies entering into licensing agreements with AI startups. This is a more opaque territory, not easy to navigate even for seasoned tech giants and time will tell whether some of those deals fall though (read on).
A few examples. In March, Microsoft agreed to pay Inflection AI approx. $650m in a licensing deal and hired away most of its staff while buying out investors - the deal that is currently under investigation. In June, Amazon struck a similar deal with Adept AI for about $330m. - The FTC is also probing this deal.
Apart from the regulatory headaches, AI M&A deals can cause disappointment for investors too. Just last month, Google entered into a "non-exclusive" licensing agreement with the AI chatbot startup Character.ai for its LLM technology. The agreement emerged after reports that Elon Musk’s xAI was considering acquiring Character.ai to support its Grok AI models. As part of the deal, the company’s co-founders, who had previously worked at Google before founding Character.ai, also returned to the firm. Although money was distributed back to investors, the returns fell short of the 10x or more that many likely anticipated when they invested a year or two ago. (Andreessen Horowitz led the $150m round last year).
And so, while early exits of promising AI companies are on the rise, early-stage investors may be getting further sidelined.
Announcement
Join Female Foundry this autumn!
The last portion of the year is approaching fast, and I am looking for an Analyst Intern to join us to help with the exciting projects we have scheduled until the end of the year, including support with the newly launched Female Foundry Visionaries AI Incubator in partnership with Google Cloud. If you know someone, or if you are passionate about innovation and startups and have at least a basic understanding of how venture capital works, apply now.
*This is a hybrid internship (London/remote) with a minimum time commitment of 20hrs/week. Applications closing next Friday, 23rd of August.
Analysis
Staying flat.
There are hardly any signs of the 2021 venture capital boom, as many companies now face significant valuation cuts, newly released report confirms. In the first half of 2024, flat and down rounds reached a decade high, accounting for 28.4% of all deals. Down rounds rose sharply from 7% in 2022 to 14% in 2023, with flat rounds also increasing from 4% to nearly 10% during the same period.
The same report points out that investors are now favoring leaner startups with clear paths to profitability over those focused on rapid growth. As a result, many startups that last raised during the venture bull market have aggressively cut costs to achieve the cash-flow break-even or profitability that investors now expect.
Will we see a rebound in valuations anytime soon? That’s hard to predict. Historical data suggests that startup valuations could fall even further—down rounds made up 36% of VC deals immediately following the 2008 financial crisis.
Meet Visionaries
Our inaugural Programme of the Female Foundry Visionaries AI Incubator in partnership with Google Cloud is over - I am introducing a short weekly section showcasing seven innovative companies from our Cohort I. If you would like to be considered for our upcoming cohort, our applications are open ➯ apply here.
PHINXT Robotics
“Our vision is to create a safe and efficient environment for everyone using robots.”
Automation is key for warehouses operations, yet, 90% of warehouses are currently not able today to adopt robots and small and medium businesses are the most impacted. Co-founded by fantastic duo Yanwen Chen and Quirino Zagarese, who shares three PHDs, 27 years of combined experience in the robotics industry and a patent, PHINXT Robotics aims to deliver an end-to-end universal platform for all robots through its decentralised edge AI software solution.
PHINXT Robotics is already generating £200k in ARR, based on two signed customers in the UK, and has over 20 customers in its pipeline. Team’s focus? Growth! Three weeks ago, the team secured a €2.3m Seed round led by Sure Valley Ventures (see this week’s news). So if you would like to join the next fundraising round, you might need to wait 12 months. In the meantime, follow them ➯ here and connect with the team ➯ here.
Hiring
This week hiring:
Prewave ➯ Business Development Representative | Abound ➯ Underwriter | AUAR ➯ Full Stack Software Engineer | Cozero ➯ Founders Associate.
Founder & Investor Meetups
Wednesday, August 21, London ➯ 11:FS Fintech Insider Run Club, ➯ Rise FinTech Mentoring, ➯ Network Focus Lunch, Saturday, August 24, London ➯ Founders Running Club.
That’s all for this week. Enjoy the rest of the weekend! See you next 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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