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Why VCs are rejecting startups
European VCs are making fewer investments, The Google translate of Germany worth $2 billion , and more...
SearchVentures
December 18, 2024
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European VCs are cutting back
After a record high number of venture capital deals in 2021, this year has seen a sharp decline as European startups struggle to secure funding.
Why has 2024 been a disaster for startups?
This Week’s Trends
European VCs making fewer investments
The German AI startup valued at $2 billion
$3.5M funding for new MRI tech and more
Read Time 4 minutes
The Startup Trend
European VC deals in decline
European venture capital deals have declined by nearly 10% in 2024, marking a continued challenge for startups looking for VC investments.
> This downturn is largely attributed to rising interest rates and economic uncertainties, leading investors to tighten their portfolios.
> While overall deal flow in Europe has declined, Germany is outperforming with a 35% increase, driven by strong investments in AI and climate tech.
💡 The contrasting success of hubs like Germany, highlights how thriving regions can create new startup opportunities while others risk falling behind.
"Europe has the talent and innovation, but navigating market fragmentation remains one of the biggest challenges for startups relying on VC funding."
Startup Feature
The Google translate of Germany valued at $2 billion
DeepL, a Germany-based AI translation startup, has secured $300 million in a Series C funding round in May 2024, increasing its valuation to $2 billion. Founded in 2017 by Jarek Kutylowski, DeepL has become a leader in AI-powered language translation, taking on industry giants like Google Translate.
Rewriting the Rules of Translation
“We’re here to eliminate language barriers. With AI, we can make communication seamless, natural, and accessible to everyone.”
DeepL's neural network delivers context-aware, natural-sounding translations across 31 languages, serving industries like publishing and legal services. Its secure document translation capabilities have made it a critical tool for globally operating businesses. Since its 2017 launch, DeepL has gone from only a handful of users at its start to now over 100,000 business clients, including Nikkei and Coursera, who rely on its precise multilingual solutions.
“DeepL is more than just a word translator. We’re making global collaboration secure by eliminating communication barriers”
DeepL has set itself apart from Google Translate by focusing on enterprise-grade security and precise, context-aware translations, making it the preferred choice for companies handling sensitive data with a need for accurate translations.
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Why Investors Are Betting on DeepL
Despite a downturn in European tech funding, DeepL secured $300 million from Index Ventures and other European VCs, reaching its status as a startup unicorn. This investment reflects confidence in its sustainable revenue streams and its positioning as a category leader in AI translation.
“It was clear that neural networks and AI were going to be the next big breakthrough in translation. It was time for an update.”
DeepL’s revenue model is a key driver of this confidence. DeepL generates steady growth through a freemium approach, offering a free service to millions of users while monetizing advanced features through paid business subscriptions. These premium plans have pushed projected revenues to $185.2 million for 2024, a sharp increase from $141.3 million in 2023.
What sets DeepL apart is its focus on enterprise-grade solutions, an approach that has allowed it to carve out a distinct niche in a market dominated by more generalist tools like Google Translate.
With its latest funding, DeepL is planning to expand into new markets, enhance its AI capabilities, and scale operations. This positions the startup to take advantage of a growing demand for translation as companies may no longer need to limit their operations and teams based on language barriers.
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Headline News
This Week In Startups ✍️
Founders
> BVNK, a UK based fintech startup, announced the successful closing of its $50 million Series B funding round.
> Corsmed, a Swedish MRI producing startup has secured $3.5 million in Seed funding, to manufacture innovative ways to reduce scan times.
> Zuri, Czech developer of hybrid Vertical Take-Off and Landing aircraft, has raised a further €3 million investment in its recently concluded pre-Series A funding round.
Investors & VCs
> Fly Ventures has closed its €80 million Fund III to support deep tech founders in Europe.
> Here is Sifted’s list of all the new first-time European VC funds of 2024 as of November 14.
> Startup associations call for the creation of a European Tibi to boost VC investments from pension funds and insurers.
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Cheers,
Odin Lund & Hari Mohandas
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