Female Foundry Week 97: Taming the tide. Ahead. Behind. Dry powder stays dry. The last day of the Survey!
Welcome to The Week 97, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
This is the last Female Foundry newsletter this year. I am looking forward to the long Christmas break and I hope to see you in the first week of January!
In the news
UK-based Harriet, co-founded by Cecily Motley, raises a €1.4m Pre-Seed round led by Concept Ventures for its full-stack AI solution for HR; Madrid-based Gataca, co-founded by Irene Hernández, fetches a €1.3m Seed round led by Signature Ventures, for its decentralised identity solutions; Munich-based healthtech startup RYVER.AI, founded by Kathrin Khadra and Simona Santamaria, secures a €1.3m Pre-Seed round led by Nina Capital, for its medical AI imaging solution.
Munich-based Vanagon Ventures, co-founded by Susanne Fromm, has reached the first close of its first €30m fund. The firm plans to back B2B climate software solutions and has already made 10 investments.
Spotlight
Taming the tide.
The ‘groundbreaking’ AI Act, making the most substantial attempt to date to regulate AI, was announced this week. In a nutshell, the Act adopts a risk-based approach, requiring ‘high-risk AI systems’ to undergo a fundamental rights impact assessment and to operate transparently. That's just the beginning. Certain AI systems face a total ban, including biometric categorization based on sensitive characteristics and untargeted facial recognition scraping. Companies innovating in this area have just six months to comply. There is also a significant emphasis on making AI ‘unbiased’, a goal quoted as ‘impossible’ or ‘aspirational’. Again, AI classified as ‘high risk’ must be designed to manage biases and uphold fundamental rights.
Applicable to most companies leveraging AI, the Act requires also all providers to document their compliance efforts, including programming, training, and oversight methods, and mandates human oversight for all ‘high-risk’ systems.
As mentioned, the Act is the most progressive attempt to date in trying to tame the wave of innovation driven by AI, which very few people (Ray Kurzweil?) can truly comprehend. The Act will surely increase compliance costs - fines can be substantial, up to €35 million or 7% of global turnover, putting system and product redesigns and staff training on the agenda.
Driving innovation is a balancing act. Now, with pressure to comply in this new regulatory environment, should we be excited about the AI-underscored future? Meanwhile, Mistral AI, Europe’s AI pride, announced yesterday that it closed a new €400m financing round from Andreessen Horowitz, valuing it at over €2bn, just 11 months after its incorporation.
Fundraising
Ahead. Behind.
Yet another busy week. I am really looking forward to the Christmas break! On Tuesday, I was invited to a Christmas dinner by a friend of mine who runs a very successful angel syndicate in the UK. Among many enthralling conversations, there was one idea that stuck.
Are you ahead or are you behind? Nothing stands still in venture. Most likely, you are either trying to monetise on an opportunity that has been there for some time, before the fuel of enthusiasm and value creation runs out, or you are ahead, creating a market and an opportunity, relying on those early-adopters to close the adoption chasm and for you to take an early-mover advantage. Understanding where your company (currently) stands on the innovation adoption curve is crucial for you to know what sort of investors (mavericks or followers?) to approach, the team to attract and how to position your product. Are you ahead? Bolster your credibility (advisors, partners) and prove your value creation and therefore the market. Are you behind? You must be creative in proving your unique value proposition, business model, product growth map, the size of obtainable market share. VCs, in general like to invest right in the middle of the innovation adoption curve - in the sweet bandwidth, where risks can be hedged and there is still high velocity of growth. But nothing stands still! So, if you want to be smart, make sure that you keep an eye on where you are and bring yourself back to the imaginary middle.
Analysis
Dry powder stays dry.
Recently released data shows that In Q3 2023, the largest publicly listed alternative asset managers, such as Blackstone, KKR, The Carlyle Group, and Ares Management have put brakes on their investments, with private equity deployment dropping nearly 50% compared to Q2.
Out of the biggest firms, Apollo Global Management and TPG have been the only players that actually increased their investments compared to the previous year. Over the past 12 months deployment of asset management firms into PE has fallen by 32% compared to the previous year. The report points out that during this period, besides macroeconomic factors, there has been an increased discrepancy in asset valuation between buyers and sellers, complicating deal negotiations, and consequently, lowering the appetite for deal-making in the PE class.
Community
The last day of the Survey!
Yep, seven weeks have passed, and today is the last day of our State of Gender Diversity in European Venture 2023 report survey.
In January, we will host an exclusive Launch Event, inviting the twenty most frequent readers of the Female Foundry newsletter who have also answered the Survey.
If this sounds like you, please be on the look-out to the ‘By Invitation Only’ email in the coming 10 days.
Haven’t answered the Survey yet? We are closing the Survey at 10pm GMT today.
First Insights: The event with HSBC Innovation Banking next Tuesday.
If you are in London on Tuesday, register for Female Foundry x HSBC Innovation Banking in-person event and get the first glimpse of the data we have been discovering as part of the State of Gender Diversity in European Venture initiative we are leading, before the official report launch in January. We have the last 5 spots available.
Hiring
This week hiring:
GoHenry ➯ Finance Assistant | Kamma ➯ Senior Content Manager | Surfboard ➯ Software Engineer.
See more jobs on the Female Foundry Job Board.
Founder & Investor Meetups
Wednesday, December 13, Amsterdam ➯ ACE Incubation Program Pitch & Beers | Thursday, November 14, Paris ➯ Financement start-up : Quoi de neuf ? | Saturday, December 16, Amsterdam ➯ Founders Running Club.
The Google for Startups EU Accelerator: Women Founders program is now accepting applications! This 12-week equity-free accelerator program presents a unique opportunity for Seed to Series A startups in Europe and Israel. For more information, email here.
Enjoy the rest of your weekend and see you after Christmas.
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.