Words Henry Lane Fox
December 19th 2023 / 10 min read
2023 really showed both sides of the coin of the tech industry.
On the one hand, we saw the extraordinary blossoming of one technology. AI has been considered an emerging technology for some years now, a journey we started embarking on ourselves in 2016 with our AI sector. But in 2023, AI has really started to come to fruition. A series of breakthroughs and technological developments has seen a vast breadth of use cases, ranging from the gimmicky to the astonishing. AI and large language models (LLMs) have already proved that they are the catalyst for the next industrial revolution, and will no doubt radically transform the economy of the coming decade.
And yet, on the other hand, tech’s market slump has persisted. Fundraising has returned to pre-pandemic levels, struggling to come anywhere near the lofty heights of 2021 and H1 2022. Certain industries have been hit harder—web3, for instance, has experienced the end of its hype cycle in dramatic fashion.
In a venture market where capital is sparse and AI is quickly eating and transforming any number of industries—where does this leave founders? In truth, it’s harder than ever to gain a competitive edge.
The combination of these things has reaffirmed many of our long held beliefs. Specialisation, rather than generalisation, is required to support founders and to help them achieve outsized impact. This is true both in terms of vertical specialisation, in a year where we’ve sought to continue to build authority across fintech, climate, health, and deeptech; and in terms of operational support, as we’ve built an increasingly deepened and differentiated platform, helping founders find pathways to enterprise contracts, to navigate regulatory environments and gain access to the public sector, or through GTM expertise, for example. This is exemplified by Blue Action Accelerator, our new climate tech support programme, where on top of capital we provide unparalleled access to government partners and real world testing grounds to help climate founders prove their technology and scale it.
And amid all this, we’ve had our share of successes, both at Founders Factory HQ, in our growing number of distributed locations, and across our global portfolio. Here, I’m delighted to share an overview of 2023 at Founders Factory.
Invested in 43 new startups through our Accelerator programme—including 15 startups that were built in and spun out of our Venture Studio
Our all-time global fundraising total hit $900m — with notable fundraises from Shop Circle ($120m), Dronamics ($40m), and Scan.com ($12m)
2 new international locations—Italy and the Bahamas (home of Blue Action Accelerator)
2 new corporate partners, both based in Italy—Fastweb, the leading telecommunications provider, and Mediobanca, one of Italy’s largest and oldest investment banks
Our first 2 bootcamp programmes launched this year—Planet Positive Lab, backing science-backed climate founders from the University of Oxford, and Children’s Health Impact Accelerator, backing founders in paediatric innovation
Last year, I wrote that the golden age of venture was certainly over, and we were entering the Stone Age.
Across the board, fundraising in 2023 has suffered, even among a well-documented AI funding boom. Late stage funding has particularly suffered, at less than half of that from the same period in 2022, while seed and early stage investment has also seen steady decline.
In spite of this, we’ve seen proof that capital is still available for standout companies chasing giant opportunities. This includes those showing tremendous traction, such as Shop Circle (pictured above), who are quickly establishing themselves as the first operator of e-commerce software tools, raised an impressive $120m Series A, a strategic combination of equity and debt with funding from 645 Ventures, 3VC, NFX, and QED, among others.
Or indeed those demonstrating meaningful innovation, like Dronamics. The business marked one of the most important years in their journey, as they look to build the first fleet of ultra-efficient, long distance cargo drones. Just a month after a $40m pre-Series A, they pulled off their first successful test flight in May. They have already secured a commercial partnership in Greece as well as a UAE-based manufacturing deal to start producing up to 300 drones a year commencing in 2025.
Some fundraising highlights of which we are particularly proud include:
Iris AI (generative AI engine for scientific text understanding) raised $15m
Scan.com (booking infrastructure for diagnostic scans) raised $12m Series A
Matter (microplastic filtration technology) raised $10m Series A
Acre (blockchain-powered mortgage platform) raised $8m Seed
HotelRunner (hotel management software) raised $6.5m Series A
Tembo (family lending mortgage platform) raised £5m
Xapien (AI for due diligence) raised £4.5m seed extension
In pursuit of deeper specialisation, this year we’ve sought to segment our investments across four key sectors—fintech, climate, deeptech, and health. We believe specialisation is the path to offering differentiated support to founders, identifying the unique problems that founders face in each vertical and building a bespoke platform of support for each.
In doing this, we’ve not only redoubled our efforts in certain programmes, but also launched new vehicles that can help us address unique challenges in these sectors.
On the former, it’s worth reflecting on the success of one of our established hubs—Founders Factory Africa. This year, they announced $114m in funding from the Mastercard Foundation and Johnson & Johnson Ventures. This new funding will help them extend their reach across Africa, invest in new sectors, and offer additional non-dilutive funding to startups. We remain particularly proud of the growing FFA team, who are fast becoming one of the most important investors on the continent, particularly across fintech and health.
We saw renewed momentum behind a number of our funds. Creator Fund expanded the reach of its student investor model across seven EU countries, making it now the largest student-focused VC in the world. They’ve continued backing the best university-based startups across AI, life sciences, and deeptech, expanding their portfolio with 10 more investments—including Malt AI, a platform to allow enterprises to build task-specific and compute-efficient large language models, and Quantum Diamonds, a quantum sensing that uses synthetic diamonds to assess semiconductors during the manufacturing process.
Climate seed programme G-Force also announced the launch of Fund II, a new €20m fund to invest in 35 more startups—having already made their first investments in ESG360 (SaaS platform businesses enhance enterprise value by managing ESG) and Ki Hydrogen (converting waste into green hydrogen and green chemicals).
On the theme of expansion, we were excited to open two new locations for Founders Factory this year.
In early January, we opened our Founders Factory Italy office in Milan. We are now up and running with our first two corporate partners there: Fastweb, the Italian telecoms provider to invest in a number of sectors including energy, cybersecurity, IoT, healthtech, and more; and Mediobanca, one of Italy’s oldest and most prestigious investment banks, who will be our new fintech partner in the region.
We also launched Blue Action Accelerator, a seed stage investment platform funding and commercialising the most promising ocean & coastal resilience technologies and entrepreneurs, working alongside Bahamas-based Blue Action Lab. Central to this is addressing some of the key challenges founders in this sector face—for example, providing access to a network of local government and maritime actors to offer real world testing grounds to prove technologies at scale. We’ve already made our first 5 investments here—including Jeevan and ACUA Ocean.
We were also excited this year to test a new kind of support programme—shorter, intensive bootcamps to give differentiated support to more founders. We kicked these off in two of our verticals, climate and health. In climate, we ran Planet Positive Lab in partnership with the University of Oxford, supporting science-backed founders from the Oxford ecosystem. This programme addresses the key challenge many science-based university founders face—taking groundbreaking IP and building a route to commercialisation.
In the health sector, we launched the Children’s Health Impact Accelerator, funded by Innovate UK and bringing together a coalition of parties in the paediatric innovation space. This coalition of partners, including prominent children’s hospitals, not only helps our founders identify unique opportunities for innovation, but also gain a huge strategic advantage regarding implementing, monitoring, and scaling technologies.
2024 is already shaping up to be one of our most exciting years to date. As we continue to find new partners in our established sectors, across new geographies, we hope to continue our mission to power the best founders to go further faster.
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Learn more about our latest Blue Action Accelerator investment, and how they’re building dynamic technology to address the heat and aridity of the hottest deserts
Learn about the story behind TrustedHousesitters, the marketplace for pet owners and sitters, recently acquired at $100m valuation
Learn more about our latest Fastweb investment, and how they’re building an integrated solution against the most sophisticated classical and quantum level threats to data