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| The Daily Pitch |
| PE, VC and M&A |
| Your edge on global private capital markets |
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| Good morning. In today's Daily Pitch, we look at an AI bee taking on addiction, investor priorities on European cleantech and our venture firm rankings. |
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| Inside Sunflower's AI-fueled quest to become the Duolingo of sobriety |
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| (Chloe Ladwig/PitchBook News) |
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By Jacob Robbins, Technology Reporter
Founder Koby Conrad remembers the moment in 2024 when he had to sell everything to help one of his startup's first customers.
Patty—an alcoholic for more than 30 years and one of Sunflower's first 200 users—was relying on the company's AI sponsor to stay sober. Conrad packed his life into a backpack and moved to Buenos Aires, where "the cost of living was like nothing," in hopes he could keep the app's key feature online. (Patty's name has been changed to protect her privacy.)
Sunflower, a fast-growing addiction-recovery startup built around an AI-powered cartoon bee named Sam, is testing whether AI can meaningfully support people trying to get sober.
One year later, Sunflower has grown from 200 users to over 100,000 monthly active subscribers. The company has grown its annualised run rate from $0 to $1 million in just 10 months and Conrad said it recently raised over $6 million at a $60 million valuation from investors including Y Combinator and Flybridge.
Sunflower's AI sponsor provides support to help people stay sober, with additional tools that let users track their sobriety, connect with others and complete CBT-based reading assignments. Conrad, who is himself in recovery, says he initially doubted the concept but now sees it as "the greatest application of consumer AI."
Sunflower's potential market includes an estimated 464 million people globally struggling with alcohol and substance-abuse disorders. But the field is fraught. Virtual therapy startup Cerebral faced legal action over its drug-prescription practices and user-data handling. AI platforms, including OpenAI and Character.AI, have been named in lawsuits alleging their chatbots exacerbated mental-health crises.
That landscape is not lost on investors. Jesse Middleton, a GP at Flybridge who led the firm's investment, said few VCs understand the need for something like Sunflower.
"If you have not lived the [12] steps or lived the sobriety journey, it does not make sense," he said.
Middleton and Conrad are both in recovery and do not see Sam as a replacement for a human sponsor, but rather as an accessible entry point into a stigmatized market.
Sunflower's AI is built on Anthropic's Claude model and is fine-tuned with physician and psychiatrist oversight; chats are anonymized and continuously reviewed, according to Conrad. Still, he knows the risks remain significant.
"I know one day, I will be in court defending my choices." |
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| A message from KEY Investment Partners |
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| How fundamentals are shaping the future of cannabis investing |
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The U.S. cannabis industry is a study in contrasts. Mature Western markets have navigated a classic down-cycle marked by price compression, inventory imbalances, and uneven enforcement, while newer adult-use states continue to deliver strong first-year ramps and rising per-store productivity. This divergence has accelerated a necessary reset in operating models. The operators gaining share are tightening pricing, simplifying portfolios, and prioritizing cash conversion and return on invested capital over vanity growth metrics. Meanwhile, federal momentum is reshaping the broader THC landscape. The emerging hemp-derived THC ban removes a structurally advantaged competitor and signals that Washington is moving toward a unified, “one-plant” regulatory framework as rescheduling advances. KEY’s latest white paper highlights where fundamentals, governance, and disciplined capital allocation are creating real value across the next wave of cannabis investing.
Click to download today |
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• A wave of AI-centric browsers from companies like OpenAI and Perplexity is rewriting the internet economy. Find out more
• AI is at the forefront of medtech's next growth wave—from smart implants to surgical navigation systems. Read the report
• The PitchBook-NVCA Venture Monitor now includes league tables for the industry's most active investors. See the rankings |
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| Cleantech remains a European VC mainstay—but priorities are changing |
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By Leah Hodgson, Senior VC Reporter
Even as funding pulls back in cleantech investment, the sector remains the third most active in Europe for VC deal count this year as the focus shifts from EVs to infrastructure and energy security.
According to PitchBook data, €7.6 billion (about $8.8 billion) has been invested in the continent’s cleantech startups, putting it on track to fall more than 25% below last year’s annual figure. It has dropped to sixth place for verticals by VC deal value, but the vertical has remained steady in its position for deal count.
Deal count has, so far this year, reached 955, surpassing other verticals including fintech, healthtech and life sciences. |
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VC cleantech investment was hit hard by the 2022 downturn due to its nature, which tends to involve long development cycles, high capital requirements, and slower paths to commercialization compared to traditional VC sectors, such as software.
The collapse of Swedish battery maker Northvolt last year, along with political shifts toward defense and reduced government spending on clean energy projects, has reinforced investor caution and reduced support for startups.
Appetite for cleantech has, however, improved slightly; although funding levels remain below historical norms, Q3 experienced an uptick in both deal value and count compared to the previous quarter.
Cleantech investors have shifted their focus over the past few years. At the peak of cleantech investment, most capital went to batteries and EVs—this has since dropped off.
Investors are now prioritizing startups that aim to reduce energy bills, a growing need amid a cost-of-living crisis, such as energy subscription service providers Elvy Energy and Sunsave, which raised €154 million and €153 million, respectively, this year.
Nuclear fusion is also attracting more investment due to technological advances. Germany’s Proxima Fusion raised a €130 million Series A in June, while Munich-based peer Marvel Fusion secured a €113 million Series B in April.
Cleantech startups are also capitalizing on the surge in defense spending by focusing on energy security. Earlier this week, Estonia’s PowerUp raised a €10 million Series A to expand its hydrogen-powered electric generators for the defense sector. |
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Smart reads that caught our eye.
• Motorola stayed relevant not through pink flip phones but through public safety. The answer to how the brand managed to survive through the pressure of the iPhone lies in police officers, emergency responders and defense operations. [Bloomberg]
• People working at the Macy's Thanksgiving Day Parade deflated the massive balloons in just 15 minutes. How the behind-the-scenes magic makes the floats disappear. [The Wall Street Journal] |
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