Hello Sifted reader,

New year, new(ish) VC trend... generative AI is all the rage — and in this newsletter, we ask why it's so trendy, share the startups to watch and explain what exactly this ChatGPT malarkey really is.

We've also got 2023 predictions from our journalists, and a breakdown of the upcoming EU (and UK) regulations on tech that will affect startups.

Tuck in — and a happy new year.

🔮 What will 2023 bring for European tech? Will ChatGPT become more powerful than Musk? Will startups finally figure out the key to living forever? Will layoffs calm down — or ramp up?

Sifted's journalists take a glance into their crystal balls to predict the tech trends that could define the year ahead.

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🏡 Could this be a second Airbnb moment? Out of the economic crisis of 2008-09 emerged Airbnb and Slack — so, will the upcoming downturn produce similarly successful breakout stars, or will this new set of market conditions prove just too tough to tackle?

👩‍⚖️ The EU regulations coming up in 2023. Regulators usually have their eye on big tech companies — but startups are rarely unaffected by new laws. Our policy whizz Zosia Wanat rounds up the regulations likely to be released into the wild this year, on everything from managing social media algorithms to policing the use of facial recognition technology.

🌱 How to spend your seed funding. You've sweet-talked the right investors, strategised your way to a successful close and survived the stress of a seed round: what do you do with the money now? Knowing where to best spend that hard-earned cash can be difficult — so Sifted got some VCs and founders who've been through it all already to offer some sage advice.

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Digital fraud is rife — is your business safe?

As our lives become more and more digital, it’s hard to know how to stay protected while keeping costs low. What can we expect from the future of security and identification? In our January 18 Sifted Talks, experts from GoCardless, Kroo, Mettle and SEON get inside the the mindset of a fraud and discuss strategies for uncovering fraud patterns.

Join for free.

Navigating 2023 — how two unicorns are restructuring.

2022 was a change of fortune for many tech startups in Europe — many high-growth startups have had to scale back teams and targets. What have Europe’s founders learned about laying off staff the “right” way? At our upcoming virtual event, two unicorn founders will share how they’ve rescued their runway and dive into practical tips on how startups can navigate the next 12 months.

Join us for free on January 31.

💬 TL;DR: What you need to know about ChatGPT. The in-demand conversationalist of the moment, the AI chatbot gained a million users in just a week after launch. But how does it work, how smart really is it and — just in case we need to stage an intervention one day — where are its weaknesses?

👀 The creative AI startups VCs are watching. ChatGPT isn't the only thing to be keeping tabs on — VCs investing in the sector also reckon these 12 startups have a bright future ahead. They're working on combining deep learning with creativity, from getting AI to write a hit song to making audio editing as easy as changing a sentence in a Word doc.

🤖 What's behind the generative AI hype? Investors are raving about the startups emerging in this sector, doing everything from speeding up content creation to developing new drugs — but the tech behind it all has been around for years. So, what's new about generative AI — and are we all getting a little bit too excited?

🤲 What not to say to someone who has been laid off. 2022 saw a wave of tech companies announcing layoffs throughout the year — and there are likely to be more in 2023. If someone you know gets made redundant, how should you not react?

↘️ Lessons from raising in a downturn. Fundraising is hard enough in the boom times, let alone in the gloomier times. Cristina Vila, founder of Cledara, shares what she learned from a failed fundraising attempt — and how the company managed to fare better the second time around.

😇 How to work with angels. Angel investors can offer more value to startups than just capital — though, of course, the money is welcome too. Miruna-Ioana Girtu, partner at SyndicateRoom, offers her advice on how to make the most of this relationship and set the boundaries for a successful professional connection.

💻 Why does European deeptech lag behind? Europe hasn't quite managed to catch up with the US or China when it comes to building major deeptech startups — yet. As Zoe Reich and Amy Nommeots-Nomm of Octopus Ventures suggest, the problem could be that there's simply been no template for what a Series B+ success would look like — until now.

🔄 Why Europe needs to get more pivot-friendly. Why are VCs so unsupportive of pivots? Anh-Tho Chuong Degroote, CEO of Lago, argues in favour of a good old pivot — and sets out how her startup managed to change tack successfully.

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