Biweekly VC Insights by Uniborn #40

Inside: AI ratings, green-flagged founders, and Nordic rising stars
Barbara Krassner
🇬🇪 Uniborn Team
3 min read

Hello everyone! Ready for the latest scoop from the European venture scene? Subscribe now and dive in — unless you’re busy chatting with GPT-4o, OpenAI’s new sensation 😉

🔥 Speaking of GPT-4o and other hyped AI products, some investors are raising concerns about their unusually high valuations

In the first quarter of 2024, the average early-stage AI valuation exceeded $70 million, while late-stage ones hit around $100 million. This upward trend sharply contrasts with other verticals, where fixed and down rounds have reached a decade-high, comprising 27.4% of all deals, according to the report. Even fintech, traditionally a favorite of venture capitalists, has slipped to second place.

This is the worldwide median of early-stage pre-money valuations. (Image: Pitchbook)
This is the worldwide median of early-stage pre-money valuations. (Image: Pitchbook)

On the one hand, the AI hype has reduced competition in other categories, creating more attractive opportunities. On the other hand, many investors are now rushing into deals without thorough due diligence, flooding the market with money. We all know how the bubble plays out.

To learn more, read the Pitchbook review.

🔥 Ever wondered if a founder's quick response time hints at future success? Here’s your answer

In an email analysis of 1,500 startups from 2012 to 2020, Episode1's Adam Shuaib found a resounding YES! Founders who went on to secure Series A funding tended to respond to emails twice as fast as those who didn't.

How did he do the math?  Only startups with at least three email interactions were included to ensure response times were accurately measured. The litmus test was whether a startup went on to raise a Series A round, which about 10% of the companies in the dataset did.

As Andre Retterath, a partner at Earlybird Venture Capital, observed, "The findings suggest that responsiveness may be an overlooked indicator of a founder's commitment and efficiency, potentially influencing their venture's success in securing future investment. The assumption is that this behavior translates to quick turnaround times in customer and stakeholder interactions."

Even considering the founder's speedy response is crucial, we caution fellow investors against making it their top priority. (Image: Imgflip)
Even considering the founder's speedy response is crucial, we caution fellow investors against making it their top priority. (Image: Imgflip)

To learn more, read Adam Shuaib's post.

🔥 Geopolitical tensions drive more public funds into European venture capital

In 2023, despite a notable global decline in venture capital investment, Europe defied the odds by achieving its third-highest fundraising total ever. Private equity, growth, and venture capital investments soared to €100 billion, the fourth-highest year on record. However, it's worth noting that VCs raised the lowest amount of capital since 2018, according to analysts at Invest Europe.

Image: Invest Europe
Image: Invest Europe

Their latest report reveals intriguing figures, with a standout statistic: in 2023, government funding was the only source of European VC funding that saw a year-on-year increase. Notably, governments emerged as the largest investor (their share more than doubled versus the year before!).

Let's delve deeper into the figures:

  • Government agencies played a significant role, contributing 37% (€4.2 billion) of the total €11.2 billion raised by European VC funds with known LPs in 2023, marking a substantial increase from the previous year's 16% (€2.8 billion).
  • Following closely behind, private individuals and family offices maintained their position as significant contributors, accounting for roughly 19% (€2.1 billion) of classified funds — a figure consistent with the previous year.
  • However, corporate investors, ranking third in contribution, experienced a 16% decline compared to the previous year.

The growing role of the state in venture capital is driven by clear factors: in the midst of wars and conflicts, nations strive for technological sovereignty, while post-COVID uncertainties affect frequent investors. Will this trend continue for years to come? Only time will tell. But as private investors regain momentum, our bet is that the results in 2024 promise to be a different story.

To learn more, read the Invest Europe report.

🔥 After showcasing the top Spanish startups in our last digest, it's time to shift our gaze to the Nordics

In recent years, the Nordics have become a hotspot for impact-driven innovation, where large factories and small startups alike thrive. Despite the challenges, the region held its own in 2023; while its European counterparts — the UK, Germany, and France — saw declines of 30.8%, 35.5%, and 41.5%, respectively, the Nordics saw a 24.8% drop in funding.

Now, the region had a record for funding in Q1, securing an impressive €13.2 billion from 277 deals, as per Sifted data. Surely, the biggest slice of it (almost 80%) flowed to late-stage companies: the number of megarounds in Q1 surpassed the entirety of 2023 in just one quarter, with standout fundraisings from Swedish unicorns Northvolt (€5 billion) and H2 Green Steel (€4.75 billion) leading the way. 

Climate tech remains a top draw for investors, with 85 funding rounds, followed closely by B2B SaaS with 71 rounds and then healthtech with 41. Surprisingly, deeptech saw a lackluster performance, securing only 10 rounds.

So we hope this has piqued your interest enough to dive into the list of the 10 fastest-growing Nordic startup teams (by headcount) over the last 12 months, compiled by Sifted using data from Dealroom. The majority of them, as mentioned, are climate tech companies — with only two fintechs making the cut.

To learn more, read the Sifted ranking.

Cover image: Unsplash

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