Female Foundry Week 132: Boom and bust. On quality of revenue. European AI funding is up. First Prize Drop.
Welcome to The Week 132, 2024 Edition of the Female Foundry newsletter!
Female Foundry - the Future of Venture is Here.
In the news
London-based AI KAT, founded by Katrien Cruz Grobler, picks-up a £290k Pre-Seed round led by SFC Capital to automate the brand agency process; Also London-base R.Grid, co-founded by Amber Michelle Hill, bags a $6.5m round led by Fuel Ventures for to automate back-office admin for clinical trials; Paris-based Theremia, founded by Iris Maréchal and Chloé Geoffroy, secures a €3m Seed round to advance personalised medicine; Luxembourg-based fundcraft, co-founded by Olga Porro, bags a €6m Series A round led by 3VC and MiddleGame Ventures for its digital fund operations platform; Amsterdam-based SeaO₂, co-founded by Dr. Rose Sharifian, picks up a €2m Seed round to advance its CO₂ removal technology; London-based Miros, co-founded by Diana Saarva, lands a €6m Series A round to profile customers' tastes using image analysis; Berlin-based HelloBetter, founded by Dr. Hanne Horvath and Dr. Elena Heber, raises €5m from HSBC Asset Management’s Financial Technology Venture Capital for its digital therapeutics platform.
Hague-based 4impact Capital, co-founded by Pauline Wink, closes a €68m fund II to drive digital innovation and sustainability.
Spotlight
Boom and bust.
Since 2019, global venture capital investments in AI have reached $332bn.
Just a few weeks ago, OpenAI announced a new raise of $6.6bn, nearly doubling its valuation to $157bn. The valuation seemed lofty for a company that is losing significant money but has a 46x revenue multiple. Last week, it was reported that Elon Musk’s Burlingame xAI is in early talks with investors for a new $5bn funding round, which would value it at around $45bn—one billion dollars more what what he paid for Twitter (!) For context, xAI has only recently closed a $6bn round at a $24bn post-money valuation in May, meaning if it does raise the new round, its value would have nearly doubled in five months — making it the 9th most valuable VC-backed startup. Meanwhile, Anthropic is also in conversations with investors about raising at a $40bn valuation — again, doubling the valuation of $18.5bn it reached in February.
Eventually, the relentless rise in AI valuations will level off, forcing VCs to consider how they’ll actually profit from these deals. While large corporations may gain strategic benefits, VCs face real concerns about liquidity, especially in today’s slow IPO and M&A market.
Despite the AI boom, exit values in the US are actually dropping. Newly-released data shows that while the IPO market is at a virtual standstill, M&A for venture-backed companies has totalled just $47bn so far in 2024, down from $72bn in 2023, and $148bn in 2021.
There were 479 global M&A deals for VC-backed startups in Q3. While this is only a slight dip from the 500 deals in Q2, it indicates that M&A activity remains below expectations.
The deal numbers for AI startups are closely mirroring the overall trend. There were 70 deals announced involving AI-related startups last quarter. That, again, is down just a smidge from the 75 deals in Q2, but it is up 46% from the same quarter last year.
While the percentage of deals involving AI has been increasing year over year—a year ago only 11% of global M&A deals were of AI startups, compared to 15% this year— the sharp contrast between a booming AI funding market and limited exit opportunities raises a crucial question: how can AI startups rise above the competition and position themselves for a successful exit?
Fundraising
On quality of revenue.
Every corporate decision-maker I’ve spoken with recently—from legal and banking to asset management and consulting—has mentioned the exploratory AI spree their companies have been on, eager to buy and test AI products. —Many startups have been looking to seize this opportunity, luring CIOs with new business-generation possibilities and automation features. The spending spree, however, may soon be over, and investors know that. So, if you’re a B2B AI startup planning to fundraise in the coming months, remember: all that fast-generated revenue might be one-time only unless proven otherwise—and now it’s time for you to prove it.
Your startup might actually be better off with fewer customers and modest revenue if those customers stick around, as it’s a strong indicator of revenue quality. High-quality revenue has three main characteristics: predictability, profitability and diversity. You want to prove that you have a high quality customer base that is going to generate revenue over and over and over again once you have more capital. Are your customers sticking around once they’re on board? (predictability) Do they tend to increase their spending? (profitability) Who are they? Are they high-profile trend-setters that will drive your customer loyalty and spending? If so, how diverse is your customer group (size, sales cycles).
Quantity doesn’t always mean quality, and in the coming months, expect increased scrutiny from investors on the quality of your revenue.
Analysis
European AI funding is up.
European AI startups are set for a record-breaking year in venture capital funding, newly-released data shows.
After a dip in 2023, when AI investment fell to €11.4bn from its €16.4bn peak in 2022, it looks like the market has now rebounded. So far in 2024, AI companies have attracted around €11bn across 1,605 deals, and total funding is expected to reach €13.2bn by year-end—a 20% increase from last year. Mega funding rounds, including London-based Wayve’s record-setting $1.05bn round, Paris-based Mistral AI’s $640m raise, and a recent Poolside AI’s $500m funding round, have certainly helped to put AI funding back on an upward track.
Community
📣 First Prize Drop: Female Innovation Index 2025 x SLUSH
Thanks to everyone who has taken part in our annual Female Innovation Index Survey so far! Your insights will help us create a vivid and accurate picture of the state of innovation and investment driven by female-founded companies when we publish the report in early March.
It’s time for the first Prize Drop!
The Winner of the Slush ticket is Ella (KJ6BrI) - Runner up 1: E-J (bIoAUD), Runner up 2: Lisa (pdebMg), Runner up 3: Emilie (oY6bYE), Runner up 4: Ozlem (9Lii7Z). You can view the draw here.
*If the winner does not claim the prize, it will be awarded to the runner-ups in the order listed above.
Next Prize Drop: 24th of November
We are 5 weeks away from closing the Survey, make sure you share your thoughts!
*The survey takes only 3 minutes, but your voice will speak volumes when we publish the report in early March.
Google Cloud Startup Hub is here!
Google Cloud has just opened Startup Hub in London - a new community space dedicated to in-person education and engagement for startups and developers in the local ecosystem. The space is open five days a week, 9am-6pm.
Check it out! With programming such as, VC talks, developer roundtables, and hands-on labs with engineers, the Google Cloud Startup Hub is a fantastic opportunity to meet like-minded founders looking to take the next step in building the future with AI.
Hiring
This week hiring:
Rivero ➯ Senior Product Manager/Owner | Aegir Insights ➯ Senior Market Analyst | SAPI ➯ Customer Success Specialist.
Founder & Investor Meetups
Monday, November 11, London ➯ Women in Impact Demo Day | Tuesday, November 12, Paris ➯ Emerge X Le Wagon Paris meetup, Berlin ➯ Berlin AI Safety Meetup | Wednesday, November 14, London ➯ Scaling to Exit, ➯ The LDN Tech Mixer | Friday, November 16, Paris ➯ ExperienceAI: Femmes Scientifiques et IA.
That’s all this week. 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.
♡
Thank you Alice for the research!
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