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European startups are suffering
Startup funding is down, why Lilium couldn't raise funding, and more...
SearchVentures
October 30, 2024
Startups are not receiving funding
Startup funding in Europe is set for another disappointing year, sitting at 9.7% below 2023 levels despite positive estimates at the start of the year.
What's causing this downturn?
This Week’s Trends
Disappointing VC funding in Europe
The billion dollar startup unable to raise funding
€120 million fund for VC orphans and more
Read Time 4 minutes
The Startup Trend
Disappointing 2024 figures
European VC funding is at €41 billion as of Q3 2024, setting up for another disappointing year despite positive estimates at the start of 2024.
> Startup funding across Europe is currently 9.7% below the same time last year, likely to end lower than the estimates.
> With an estimated 7,460 VC deals closed in the first three quarters of 2024, the annual deal count is projected to be 11.9% lower than last year’s total.
💡2024 Q3 funding hit a four-year low at €11.3 billion, marking a reversal from Q2, which saw an uptick from the previous quarter.
Startup Feature
The startup that burned $1 billion
Founded in 2015, Munich’s Lilium promised to transform urban travel with its all-electric, zero-emission air taxis. Backed by over $1 billion from major investors like Tencent & BlackRock the startup was valued at $3.3 billion. However, after burning through their funding they are now struggling to stay alive.
Convincing Investors and Raising Capital
Lilium’s founding team—Daniel Wiegand, Sebastian Born, Matthias Meiner, and Patrick Nathen—shared a vision of an efficient, quiet, and environmentally friendly air taxi that would offer an alternative to congested ground transport.
“From the start, it’s been our mission to create a high-speed transportation system that is affordable for everyone.”
Starting as an academic project at the Technical University of Munich, the team initially pitched investors on a vision based on a prototype demonstrating successful vertical take-off and flight capabilities.
By 2019, Lilium had raised over $340 million, bringing the development of the Lilium Jet closer to commercial viability.
Two years later in 2021, Lilium decided to go public via a SPAC merger, raising more capital and aiming for commercial operations by 2024. What had started as a university project was now valued at $3.3 billion and backed by some of the largest startup investors in Europe to turn their vision into reality.
“To bring our technology to market requires the kind of financial backing that matches the scale of our vision.”
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Why Lilium Faces Bankruptcy
Despite raising over a billion dollars, Lilium's development costs proved steep. The startup expanded rapidly, establishing a workforce of over 1,000 and building a specialized assembly line, battery production, and propulsion manufacturing to support their advanced design.
“Creating a new transportation mode means pushing both technical and regulatory boundaries, and that takes time and investment.”
In the first half of 2024 alone, Lilium burned through roughly €200 million. This high cash burn, combined with regulatory delays and the immense capital required to complete certification, put Lilium in a dangerous position.
“We have tried to secure more funding, but the market we are in now is very different to that of 2022. We need to find a way to avoid bankruptcy.”
As financial pressures have mounted, Lilium asked for a €100 million loan guarantee from the German government and was denied. With a lack of VC funding in Europe for ambitious ventures, and without enough capital to continue, Lilium has already filed insolvency, and is at high risk of bankruptcy.
Headline News
This Week In Startups ✍️
Founders
> Sana, an AI assistant startup, raises $55 million in a Series C round led by NEA, reaching a valuation of $500m.
> Omnea raises $20 million for AI-powered procurement and supplier risk management.
> OroraTech, a startup using thermal satellites and AI to predict and prevent wildfires, has raised a €25 million investment.
Investors & VCs
> Resurge Growth Partners is raising €120 million to help turn around startups whose growth has stagnated and are no longer attractive to VCs (VC orphans).
> Flywheel Capital, led by Ex-Crowdcube executives, have raised $10 million as they target a final close of their first fund of $25 million to target secondaries market.
> Newwave, a French VC firm, is being taken over by billionaire Xavier Niel’s holding company, NJJ Holding.
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Cheers,
Odin Lund & Hari Mohandas
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