Female Foundry Week 86: The tale of mega rounds. Unpopular. Operating in a Gen AI era. Specialist vs generalist funds. Female Foundry x European Blockchain Convention.
Welcome to The Week 86, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
London-based Treefera, co-founded by Caroline Grey raises a €2m Pre-Seed round led by Concept Ventures to transform forest conservation with AI; Berlin-based Plan A, co-founded by Lubomila Jordanova bags a $27m Series A round led by Lightspeed Venture Partners to scale its business decarbonisation platform; Amsterdam-based Pal, founded by Nara Moripen and Azi Doost, fetches a €300k Pre-seed round Plug and Play Ventures and angels to provide accessible digital palliative care; German HelloBetter co-founded by Dr. Elena Heber and Dr. Hanne Horvath, raises €5m from HSBC Asset Management’s Financial Technology VC to secure its way to profitability; Reykjavik-based mobile gaming startup Rocky Road Games, co-founded by Vala Halldorsdottir picks up a €2.8m Seed round led by Luminar Ventures; Spanish startup Codee, co-founded by Rosa Vázquez Rogel, snaps a €5m round led by Swanlaab Venture Factory.
European climate tech growth equity fund Blume Equity, co-founded by Clare Murray, Eleanor Blagbrough and Michelle Capiod gets a €40m backing from the European Investment Fund. Blume Equity follows Nordic-based Unconventional Ventures, founded by Thea Messel and Nora Bavey that nears €30m fund close to back diverse European teams.
Spotlight
The tale of mega rounds.
Generative AI platform Writer, co-founded by May Habib, that helps businesses use large language models to generate writing and content across different departments, such as operations, product and HR, raised a $100m Series B round led by Iconiq Growth this week. Writer had previously raised $5m seed and $21m Series A funding, and the current round values it at $500m.
Writer joins an increasing number of AI startups that have raised $100m+ rounds.
Only last month, San Francisco-based Anthropic — a ChatGPT rival with its AI assistant Claude — raised a $100m round from SK Telecom, after just raising a $450m Series C in May. Adept AI raised a $350m Series B round in March and gave the San Francisco-based startup a post-money valuation of at least $1bn.
But what might appear as an AI craze, from a capital-deployment perspective, might not be a craze after all - at least not just yet.
Mega-rounds used to be a rarity and became a new ‘normal’ during the 2021 boom. So far this year, 97 US-based companies, and 200 globally, have landed a round of $100m+ or more at Series A through Series D. To give you more perspective, over the past two years, more than 800 such rounds closed.
Fundraising
Unpopular.
There are at least four founder events I get invited to each week; some of them are demo days, and many of them are dinners, drinks, and meetups. There is such great power in a healthy debate, in exchanging ideas, and so much potential learning that stems from knowing other people’s experiences. What inhibits that learning is familiarity and seeking approval. These days, I see more and more founders that want to belong, and to belong, they try to fit in.
That’s not interesting.
Great things do not usually get built out of consensus.
As in the words of Buddha: ‘You must not accept my words out of respect, but must analyse them the way a goldsmith analyses gold – by cutting, scraping, rubbing, melting’.
Operating in a Gen AI era.
As a startup founder you constantly feel the battle of having not enough time (and resources). So, in an era when many mundane tasks can be automated, hiring for purely operational functions is not efficient. Remember, the success of your startup is highly correlated with the quality of people your bring on board. In a small team, there should be no compromise on that. So how should you be hiring for the future? Have a look at the Microsoft’s new Work Trend Index report. - I know that it might be biased (after all, Microsoft has recently invested $10 billion in OpenAI), but if we assume that AI will indeed play an integral role in how businesses operate (which I think is a safe bet), evaluating the analytical and process-driven thinking of your hires should not be limited to just data scientist roles; it should also include your product, marketing, and HR hires. And so, I believe that every person you bring onto your team today should be AI-literate, capable of identifying operational bottlenecks, and resolving those that do not require human expertise with AI.
Analysis
Specialist vs generalist funds.
Does specialising in a particular sector yield better returns compared to being a generalist fund? Currently, specialist funds account for only 26% of all fund vehicles, but according to the analysis released this week, in terms of overall performance, while there is not a significant difference between specialist and generalist funds, specialist funds DO outperform generalist funds when it comes to TVPI. This can be explained by several factors. Specialist funds, especially in areas like biotech or deep tech, tend to have longer investment horizons. Their investments appreciate significantly over time as startups tend to need more time (and capital) for commercialisation. Those startups also tend to be more capital-intensive early on, which can spread returns out over time. Specialist funds also build deeper knowledge and networks in their sector, making it easier for them to find and identify the most promising startups.
When looking at IRR, specialist funds also show better performance compared to generalist funds. However, generalist funds have the advantage of diversification, which allows them to spread risk effectively and capture opportunities across various sectors. This diversification can lead to a more stable IRR, especially if certain industries underperform. So while there has been a shift towards higher IRR for generalist funds in recent years, most likely driven by the boom in venture dealmaking that started in 2017 when valuations across all sectors soared, we are in a bear market now, so time will tell whether generalist funds can maintain their position.
From the Community
Female Foundry x European Blockchain Convention
Female Foundry is an official partner of European Blockchain Convention, Europe’s largest blockchain event taking place on the 24-26th of October in Barcelona and we have 2x €999 General entry tickets to give away to the lucky winners in our community!
To enter the FREE ticket draw, submit your interest above. Deadline: September 30, 10pm BST. T&C of EBC apply. I will announce the winners here next weekend. Good luck!
Ticket draw: Sifted Summit | 5-6th of October 2023 | London
The complimentary ticket winner is: Annabell (LO3psZ). You can view the draw here. Congratulations! I will get in touch with you shortly.
Hiring
This week hiring:
Luna ➯ Founder’s Associate (1 day/week) | Kamma ➯ Product Manager | Strise ➯ Sales Account Executive | Female Invest ➯ Senior Fintech Product Designer.
See more jobs on the Female Foundry Job Board.
Founder & Investor Meetups
Tuesday, September 26, Berlin ➯ ScaleUP Europe Berlin | Wednesday, September 27, Paris ➯ Apéro Startups, ➯ La création de contenu en e-commerce à l'ère de l'IA | Thursday, September 28, Amsterdam ➯ The Dutch Startup Conference 2023.
Enjoy your Sunday. See you next week!
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 other Female Foundry articles.