When I moved to Berlin in the middle of October, I was met with pretty much the same sarcastic reaction from everyone I talked to: Oh, you moved at the perfect time. It's true — the winter here is no joke. But something else I've noticed since I arrived: a big chunk of the city's tech scene opts not to stay in the German capital when things get icy.
But where are they going? Locals likely know what I'm about to say next: Cape Town. Why? My colleague Miriam Partington and I decided to find out...
Elsewhere, we find out when Europe's biggest VC backer, the EIF, thinks funding will pick up and we dig into a new angel syndicate aiming to fund founders from immigrant backgrounds.
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Inside the Berlin tech scene's annual pilgrimage to Cape Town
If you’re also spending this chilly winter in Berlin, you may have noticed something: the streets are quieter and the buzzy Mitte neighbourhood — which houses many of the city’s top VC shops — is much less crowded. Where is everyone?
A good chunk of them are in Cape Town. Ever since I moved to Berlin, I’ve been hearing about this trend of the city’s tech scene — VCs and founders flocking to sunny South Africa for the winter, partying on yachts and networking in coworking spaces. It’s sparked multiple Cape Town WhatsApp groups among the city’s tech cohort, survival guides and villa parties. So my colleague Miriam Partington and I decided to ask around: when did this start, and why is Berlin’s tech scene so attracted to the city?
“I think there is definitely this FOMO element — everyone is there. Like, all of your LinkedIn and Instagram,” Katia Yakovleva, an ex-Spotify employee- turned-founder who’s currently in Cape Town, tells me.
While some people come to party, others aim to take advantage of the contacts. “Everyone is going there — the majority of people on their own budget — for the value of this informal networking in your spare time,” says Yakovleva.
But it's not for everyone, and the sense of FOMO (fear of missing out) around the trend has drawn some criticism. Dig into the whole piece here — and if you’re a Berliner, tell me: Are you in Cape Town this year? If not, why are you sitting it out? Have you been in the past? What do you think about the trend and has it affected how you do business during the winter? My line is open.
🙌 The European Innovation Council plans to ramp up its startup investments in the first half of 2024, an EU official tells Sifted. Many of those deals will involve companies working on AI, quantum and semiconductors, they say. "The hype is AI."
👼 There’s a new angel network in Germany — dubbed the 2hearts Angels Collective — which aims to increase funding for founders with immigrant backgrounds.
It’s grown out of 2hearts, a community for culturally diverse tech entrepreneurs and its founding team includes Gülsah Wilke, the former COO of Ada Health, and Iskender Dirik, an entrepreneur and investor (both of whom are angel investors).
It’s now accepting pitch decks and sharing deal flow with a network of about 80 angel investors. Those angels could write cheques of €5k to €100k.
Wilke says she wants to “drive change in the European tech ecosystem” by “activating dormant capital and expertise” — helping angels who otherwise wouldn’t have the deal flow or know-how to invest.
The launch comes amid a rise in angel networks across Europe broadly; but also amid rising anti-immigration sentiments in Germany. It’s “now more important than ever to also be united, use the power of community… to showcase the successful power that lies with the people with migration backgrounds,” Wilke adds.
🤔 Founder, CEO and chair? Swedish fintech Juni has made the unusual decision to elect its CEO and founder as its new chair of the board after its previous chair Johan Bendz left earlier this week
"There is clear and broad external representation on our board. We regularly review the structure of our board and do not rule out that in the future we will have an external chairman," a Juni spokesperson told Swedish tech site Breakit. The fintech raised over $200m in equity and debt in 2022 and has investors such as Mubadala Capital, EQT Ventures, Cherry Ventures and Felix Capital.
💰 The biggest backer of European VCs, the EIF, expects funding will start flowing more freely by the latter part of the year. And if it doesn’t, Uli Grabenwarter, director of equity investment at the EIF, tells Sifted in an interview this week, VCs’ LPs won’t be happy.
“We have today probably more capital parked in the venture capital fund spectrum than ever before. And yet, the investment activity in 2023 has been very, very slow and actually remains relatively slow [now],” Grabenwarter says.
But VCs will need to get a wiggle on. “You can only sit on raised funds for so long because… you need to show investors that you actually have an investment activity going. And if you wait too long, you're going to run against the end of the investment period.”
Grabenwarter also shared his views on specialist vs generalist VCs, emerging fund managers, diversity quotas, space tech and AI. Read the full interview here.
🇦🇹 In case you missed it: Austria has introduced a new company form for startups. On January 1, Austria rolled out the so-called “Flexible Company” form (named FlexKap or FlexCo for short), in a bid to make early-stage startups more internationally competitive. Here are the key details:
The FlexCo is designed to make assigning employee shares easier. In addition to classic company shares, FlexCo has “enterprise value shares”. This means employees can participate in balance sheet profit or liquidation proceeds (including what shareholders earn upon an exit) without giving them voting rights. These shares cannot make up more than 25% of the share capital.
Like other company forms in Austria, founding a FlexCo requires a company to have a minimum of €10k in share capital, though half of that amount must be paid in cash.
Crucially, the employee shares are not taxed upon issue, but rather upon sale — for example, as part of an exit.
“The new FlexCo is certainly a huge milestone, as it's the first relevant measure to support the Austrian tech ecosystem from a legal and tax perspective and proves that things can actually change, even in conservative and reactionary countries like Austria,” says Lisa-Marie Fassl, cofounder of Vienna-based Female Founders. “However, the devil is in the detail: there are unfortunately certain restrictions connected to ESOP shares that are simply unnecessary; e.g. that only companies with max 100 employees are eligible for this measure. From a tax perspective, these employees still don't get the same treatment as other shareholders, which I simply don't understand,” she adds.
🤖 The AI boom was all the rage in 2023 — but other so-called “hard technologies” were a big hit with investors, according to a recent report by financial services firm Lazard.
Companies in AI, energy transition (asset-heavy), life sciences, quantum computing, robotics, semiconductors and space made up a bigger portion of overall European venture and growth funding in 2023, according to the report, which also cites PitchBook data.
Those companies made up 70% of overall deal value in the second half of 2023, per the report — up from 20% in 2021.
That may have been impacted by more activity in the hard tech space, as well as a decrease in interest in other areas like software and fintech, the report’s authors note — and they write that “competitive moats of disruptive technologies operating within large global market opportunities could be viewed more favourably in a period of higher interest rates”.
Lausanne, Switzerland-based Timeline, a developer of nutrition and skincare products to support healthy aging, raised $66m in Series D funding. BOLD, L'Oréal Groupe’s venture fund, led the round and was joined by Nestlé.
Stockholm-based TrusTrace, which helps fashion brands meet compliance and traceability requirements for their products, raised $24m in funding. Circularity Capital led the round and was joined by investors including Industrifonden and Fairpoint Capital.
Paris-based Kinvent, a developer of devices and sensors used in physiotherapy testing, raised €16m in funding. Eurazeo led the round and was joined by investors including Uni.Fund.
Paris-based Kiln, an enterprise-grade crypto-staking platform, raised $17m in funding. 1kx led the round and was joined by investors including IOSG, Crypto.com, Wintermute Ventures, KXVC and LBank.
London-based Recraft, a generative AI graphic design generator, raised $12m in Series A funding. Khosla Ventures and former GitHub CEO Nat Friedman led the round and were joined by investors including RTP Global, Abstract VC and Basis Set Ventures.
Vannes, France-based TEMO, which manufactures electric motors for boats, raised €6m in Series A funding. At One Ventures and Bpifrance led the round.
London-based OctaiPipe, an edge AI platform for data scientists and AI engineers working in critical infrastructure like energy and utilities, raised £3.1m in seed funding. SuperSeed led the round and was joined by investors including Forward Partners, D2 and Atlas Ventures.
Dublin-based Lative, which helps companies plan their sales operations and evaluate performance, raised $3m in seed funding. Elkstone Ventures led the round and was joined by investors including Enterprise Ireland, Handshake Ventures and WestWave Capital.
Limassol, Cyprus-based Obelisk Studio, a video game developer, raised $2m in funding from The Games Fund.
Newcastle, UK-based Circadacare, which integrates circadian light technology with a monitoring platform to assist those living independently at home with dementia, raised £1.3m in funding. Northstar Ventures led the round.