Weekly VC Insights by Uniborn #13

Inside: European climate fintech is booming, as are AI startups, but there's still plenty of room for diversity and ESG growth
Barbara Krassner
🇬🇪 Uniborn Team
5 min read

Hey there, Uniborn is reconnecting! These past few days have been filled with extensive and multifaceted analysis. Let's dive into the key takeaways that European investors should thoroughly explore. Make sure to subscribe to not miss out. 

🔥 European soon-to-be-unicorns seem to fall into three categories: believers, non-believers, and don't-knowers

Sifted recently took the pulse of about 100 fast-growing SaaS startups across Europe and Israel to get the lowdown on their fundraising prospects. The results revealed some mixed feelings among the "soonicorn" leaders. About 30% are optimistic that fundraising will gain momentum this year, the other 39% are skeptical that the European fundraising landscape will improve in the second half of 2023, and 31% remain uncertain about what lies ahead.

Here is another trifecta: 36% said they intend to seek investors beyond Europe's borders to fuel their growth. Still, 47% of respondents believe in using European funds, especially for later-stage capital, and the remaining bunch is still on the fence.

At Uniborn, we would like to see more confidence in Europe's potential, as venture capital investment from the US and Asia into Europe has steadily declined over the past two years. In contrast, domestic funding has emerged as the frontrunner, capturing a whopping 64% of total funding so far this year, according to Dealroom.

Check the Sifted report for a deeper understanding.

🔥 There is a trend to improve ESG practices in Europe, but so far, there is a noticeable lag in social diversity, and more progress is needed on environmental issues

Above all, the mentioned Sifted report also looked at gender representation across senior leadership roles. According to the respondents, an average of 35% of these influential roles were held by women: this is a slight but encouraging increase from the previous year when startups in a similar ranking reported that only 29% of leading positions were taken by females.

Also, startup boards are confirmed to be a "boys' club" in a new report by ESG_VC and BVCA. Their findings reveal that a staggering 45% of European startups lack female representation on their boards, and some 15% have no women holding executive positions at all; these statistics are based on a comprehensive survey of 450 startups backed by renowned VC firms such as Lakestar, Molten Ventures, Beringea, Balderton, MMC Ventures, and Highland Europe.

Regarding environmental performance, the survey highlights notable progress made by startups. In 2022, 16% of early-stage companies started measuring their carbon footprint, up from 11% in 2021 — and an additional 2% of companies engaged in offsetting tools or initiatives. However, early-stage companies face challenges when it comes to achieving net-zero goals. Only 1 in 20 companies have a zero-carbon program, indicating a 2% decrease year-over-year (from 7% in 2021 to 5% in 2022).

Check the ESG_VC & BVCA research for a deeper understanding.

🔥 On the other hand, European climate fintech projects raised nearly $1 billion, outpacing all other regions of the world in 2022. By comparison, North American projects collected only $640 million

The findings come from the Swiss venture firm Tenity, which tracks over 600 startups worldwide.

Climate fintech startups play a crucial role in decarbonization efforts by improving ESG efficiency and simplifying everyday financial operations such as saving, spending, and investing. The range of carbon fintech products is broad: from carbon footprint reporting services to carbon risk data collection for insurers.

Europe is home to nearly 70% of all these startups, with the UK leading in funding and number of startups. Switzerland may take the crown for climate finance technology per capita, but Estonia consistently presents the highest number of climate fintech companies with at least one female co-founder.

Check the Tenity analysis for a deeper understanding.

🔥 Speaking of Estonia, it currently has more AI startups per capita than any other country

To put things into perspective, Estonia boasts 14 known AI startups per its million populace. In contrast, with 336 million citizens, the United States houses as many as 1,752 AI projects. Meaning the ratio per person in the United States is approximately two times lower compared to Estonia.

Given the emergence of several AI hubs in Europe, especially within prestigious universities, it is highly likely that we will soon witness further remarkable advancements in the Baltics.

Check the Data-driven VC article for a deeper understanding.

🔥 Lithuania is also a major contributor to the rapid development of the Baltics startup landscape, along with Estonia

Lithuania is the largest fintech hub in the EU, and its regulators and companies have just unveiled a fintech roadmap for 2023-2028. The country wants to increase the sector’s turnover by 30% annually.

So a whole campaign has been launched to attract talent and investment. For example, it was recently announced that 100 million euros would be invested in creating Europe's largest technology campus in the heart of the Lithuanian capital, Vilnius. The so-called Tech Zity will open next year and could become the Lithuanian Silicon Valley.

Check the Silicon Canals review for a deeper understanding.

And don’t miss our Baltic Angel Investors list.

Cover image: Unsplash

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