Welcome to Sunday CET. Early am, my fav show in the background and ready to rock and roll. Here’s what we have today:

• Draghi and Collison’s new Rhine Group - can it succeed where the Draghi report stalled?

• summer VC recap for those slowly returning to business as usual

• numbers and moves worth knowing this week.

As always - hit reply with thoughts and arguments.

Enjoy,
Dragos

Market talk

Mario Draghi and Patrick Collison founded the Rhine Group, with the two as co-chairs and Spanish former MEP Luis Garicano as executive director.

Here’s what you need to know about it:

• it’s an independent European policy forum/think tank aimed at turning Draghi’s 2024 competitiveness diagnosis into actual political and economic reforms.

• it is a closed forum HQ-ed in Switzerland, hosting invite-only working sessions conducted under the Chatham House Rule, utilizing pre-distributed research papers to drive policy reforms.

• the group has around 60 members - entrepreneurs such as Tobi Lütke (Shopify), Torsten Reil (Helsing), Sebastian Siemiatkowski (Klarna) or investors such as Xavier Niel, Niklas Zennström and Luciana Lixandru.

They assembled an unusual high-calibre team combining policy with new wave builder/operator experience. It looks like an attempt to keep political heat on after the Draghi report stalled - 15.7% fully implemented as of July 2026, 41.3% if you count partials.

Draghi is 78 and can still open every door in Brussels. Collison is 37 and has scaled a real company - which most people in those rooms have never done. He has also written in public about progress, which in this context is more than a hobby.

The big question is what this group can accomplish that Draghi himself wasn’t able to. The membership splits roughly three ways: academics who were already Draghi’s collaborators, business people with zero legislative experience - be it Stripe’s CEO or a 24-year-old fund manager living in US - and a smaller bloc of former officials (Bruno Le Maire, Jörg Kukies, Toomas Hendrik Ilves, Vittorio Colao) who bring what the other two groups lack: access to the people who actually pass laws.

Is this sufficient? Not obviously - to make an impact they must convince sitting politicians to pass legislation. Politicians whose main KPI is preserving a tenure-like job while appeasing the anti-immigration, isolationist election agenda running across Europe right now.

What to keep an eye on:

• capital markets, pension, insurance union - one of the European Achilles’ heels and where Europe is furthest behind the US.

• single market for services and digital products - intra-EU barriers in services are estimated to equal a tariff of about 110% from high-friction services such as payments, cloud, professional licensing, clinical trials.

• a short public kill-list of regulations - they need to settle on 10 specific rules i.e. AI Act implementation, GDPR mess, clinical-trial timelines, late-stage VC tax treatment and propose actions and a named Council champion. We’ve had enough reports that look like a 170-item encyclopedia.

However, they have to go beyond the prestige talking shop and make things happen.

And you will know they have done good work if a year from now on there’s a listed EU tech/industrial firm that can point to a rule that changed because of this group.

Draghi’s report has struggled partly because it asks for deregulation and looser state-aid involvement - a rather liberal approach in opposition to how European countries have been run since the end of the war eighty years ago.

And change is hard, you cannot ask a continent overnight to become market open and efficient, start new companies and take risks when the default bureaucracy is operating under the exact opposite frame.

I have this discussion every day with founders - we’re seeing countless reasons to not take risks in any given European country.

Case in point this week - after buying a half loaf of bread which was 10 grams too light, a customer reported the baker to the Office of Weights and Measurement, at which point he had to buy a new scale, total costs €15,000.

The European society thrives in discrete comfortable bubbles and is simply better at living than at getting rich.

• Europe is an extraordinarily good place if you are a salaried professional - earning the aspirational €100k as an employee can make for more than a decent living in most of the corners of Europe. The whole society is optimized for it, starting from raising kids who go to a good school, land a good 9-to-5, and rack up benefits until retirement. It’s the post ww2 European social-democratic default. Step outside and you become an outlier.

• Try building a business instead and the reality hits you in the face surprisingly early. And it’s not only taxes (high compared to what your biz gets in return) - but also bureaucracy, regulatory friction, difficulty to raise capital or hire good people. Any of those can wreck you faster than tax rates - overcoming those obstacles makes any founder an unsung hero, yet looked at as a weird participant because risk taking is inherently looked down on.

The real talk is whether Europe wants risk-takers to win, or just wants them to stop being an embarrassment - every report and committee is theatre until it’s answered. Note that nobody forced that customer to walk into the Office of Weights and Measurement. The rules are what the government can fix - the instinct to use them is on us, if we want the next generation to inherit the same good life we grew up in.

Signals

Most of Europe is slowly returning to work these days, except for the Nordics which have already announced a bunch of deals this month - thought it was fitting to do a summer recap that makes for a nice September transition.

In July-August we’ve screened and added 1076 deals in the N9 databases, 8 of which were graded with Ⓐ+ and 46 got an Ⓐ - quite a few interesting transactions announced this summer.

NB: A+ indicates a historic transaction, happens a few times a year, while A is a pretty solid deal - full DB here.

Below a short recap with some of the highlights.

Interesting fundraising deals

• 🇳🇴 Six Robotics - $14m seed led by DTCP of Germany. The Norwegian MoD asked the founder to spin the tech out of a defence research programme, then became the customer.

• 🇬🇧 Agon - $30m across pre-seed and seed with Northzone, Lux, Bessemer, XYZ, D3, 201 and Lakestar. Pre-product, pre-customer, priced on the cap table.

• 🇬🇧 Greenjets - $40m series A led by Blossom. Electric jet propulsion for drones, entirely free of US-made components, sitting inside a five-nation programme.

• 🇳🇱 Ore Energy - $43m series A co-led by Plural and HV Capital. Iron-air batteries, no lithium, no rare earths, raised against a 1 GWh offtake agreement rather than a sales pipeline.

• 🇩🇪 microagi - $55m seed led by Hummingbird. Ex-F1 engineers building a layer between third-party robots and third-party models, collecting training data through a smart data acquisition play.

• 🇬🇧 Callosum - $100m seed led by Atomico. A hundred million at seed for chip orchestration infrastructure, with the UK Sovereign AI anchoring the cap table.

• 🇬🇧 Humanoid - $152m series A at $1.35b led by Prime Movers Lab. 200 units deployed against a 34,000 pre-order backlog.

• 🇩🇪 Augustus - $180m series B led by Tiger Global at $1b. Germans taking over the American market, the national bank charter edition.

• 🇬🇧 Volta - $300m seed + series A combo at $2.4b, plus a $5b debt facility, announced alongside a six-year $10b contract with Anthropic. Financial engineering finesse, almost no technology risk and almost all execution risk.

• 🇩🇪 Proxima Fusion - $470m series B at $2.7b, matched by $450m of Bavarian public co-financing that was conditional on the private round closing first.

• 🇸🇪 Neko Health - $700m series C at $7b co-led by Lightspeed and O.G. One of Europe’s finest that has nothing to do with defence or chips.

Notable new funds raised

• 🇬🇧 Clipway - $6.4b, largest debut secondaries fund

• 🇺🇸 Accel - $3.5b, of which $800m for Europe and Israel

• 🇬🇧 Index Ventures - $2b

• 🇬🇧 Highland Europe - €1.1b

• 🇨🇭 Lakestar - $300m, debut defence fund

Notable moves

• 🇪🇺 Jean-Christophe Laloux - Chief Executive, European Investment Fund

• 🇬🇧 Imran Ghory - stepping down, Blossom Capital (co-founding partner)

• 🇩🇪 Tobias Seikel - stepped down as GP, Planet A Ventures (co-founder)

• 🇬🇧 Carmen Rico - left Cocoa VC for a full-time operating role at Fractile

• 🇬🇧 Henry de Zoete - director, UK AI Security Institute

Other notes

• industrial is where it is - about a third of the summer deals are about physical AI, a factory or a fab attached.

• governments are everywhere European strategic. Fun fact: Bpifrance is the single most active robotics investor in Europe over 24 months, at 12 deals. And an inverse one - Agon raised $30m of almost entirely from American capital, sans European sovereign money.

• speaking of robotics - the category is being funded by strategics and states, not by VC. 262 transactions and $4.29b over 24 months, which is 64% of everything European robotics companies have raised across their entire histories. More than half of that capital came from 15 growth financings, and two companies - Neura and Humanoid - are 41% of it. The entire Euro robotics cheat sheet here.

• the Germans went to America, and they were not the only ones - Augustus moved from Berlin to Dallas, Mindgard moved to Boston, HappyRobot settled in the States, Passionfroot sent one of their cofounders in NYC. This is not brain drain in the old sense - it’s going where the money is.

• Liquidity events are happening - in spite of an inert IPO market that is. Cognite to Schneider Electric for $3.1b, Adaptive to Datadog, Wexler to Legora, Camion to Deepki, Creative Force to Monterro, Polar Signals to Dash0. Plus Revolut priced at $115b and Vinted at 8b in secondary deals.

That sums it up - as a reminder, we produce this kind of intel over at Nordic9 every Monday.

Cheat sheets

• About Project Europe fund 2 and how it competes with YC.

• Next 250 - Europe’s future industrial champions

• European early stage VC this year - top multiples, medians, and a list of 40 startups to watch for.

• European robots startups - sector leaders, investors, startups likely to raise

Reply with the sector you’re covering this quarter and I’ll send you the relevant cheat sheet.

• 50k startups tracked, with funding history since 2010

• 30k active investors, segmented by type, sector, geography, and check size

• graded weekly analysis of the European VC market - signal, not news

Focused on the Euro VC scene. Structured signal. Not noise. Get the weekly grades.👇

Subscribe to Nordic 9

Other notes

AWS acquired DuckLabs, the Dutch team operating DuckDB, a popular open source analytical SQL database (SQLite for analytics) - 30 people, founded 2021, no VC.

Nazara (Indian gaming company) paid $303m for purchasing a Spanish gaming studio doing $153m in turnover - 2x sales on a bootstrapped 2019 studio.

The EU approved the joint acquisition of Ebury by Santander and Centerbridge from Vitruvian and 83North at £1.3b-ish.

Uber is required to sell off a significant chunk of Dantaxi in Denmark because absorbing it harms market competition.

Waymo announced starting running ops in Munich - don’t hold your breath though, to go-live is no earlier than the end of 2027.

• the whole roll-over in a city takes 4-5 years and at least $100m.

Porsche sold its consulting arm to Tata of India for €320m, then signed a deal paying Tata €1.25b for AI consulting over the next 5 years.

• Porsche is like any European automotive in big trouble, its operating profit collapsed 93% last year, from €5.6b down to €413m.

• 60% of that profit (1.25b/5=250m) goes to Indians consulting the Germans on how to use AI.

Fun fact semi-related to Porsche’s excellence story - Philips once owned:

• 100% of ASML - market cap currently $687b

• 100% of NXP Semiconductors - market cap today $50b

• 28% of TSMC - market cap today $1.95T

Philips is currently worth $27b.

OpenAI launched its advertising platform in 31 European markets last week - interesting to follow how it will perform against the main Euro GTM channels Facebook, Google and TikTok.

China’s hot AI startups are just capturing Western workloads, not Western revenue. That means developers increasingly use these Chinese models, but the startups behind them aren’t capturing all the revenue - that’s flowing in part to inference startups such as Modal, Baseten and Fireworks AI, which provide access to these models.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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Week 35 tomorrow - 17 to go till Xmas or 125 days. A good part of Europe is still mostly vacationing, with the Nordic and Swiss exception, where kids already started school this week. Current macro is still weak, forecasts not encouraging and the Russian war still going on. In our startup corner of the world, the VCs are selective as ever in Europe - they deal less and pay more for assets. Europe minted 19 unicorns in the first part of the year - today we have a look at them.

Enjoy,
Dragos

• 50k startups tracked, with funding history since 2010

• 30k active investors, segmented by type, sector, geography, and check size

• graded weekly analysis of the European VC market - signal, not news

Focused on the Euro VC scene. Structured signal. Not noise. Get the weekly grades.👇

Subscribe to Nordic 9

Market talk

Let’s talk about unicorns today.

For the younger readers, the term was invented by a VC named Aileen Lee, founder of Cowboy Ventures, in 2013 when she coined it as a privately held startup valued at $1 billion or more.

Lee chose the mythical creature because companies reaching $1b valuations were extraordinarily rare at the time.

Today, not so much. A quick crunch of the Nordic9 data from the first half of 2026 shows that Europe has gotten a total of 34 companies that raised venture funding at a $1b+ valuation.

15 of those were already above $1b before 2026. The other 19 just passed the unicorn bar in the first six months of 2026.

Here’s the list of the 19 that raised above 1b for the first time:

• Country breakdown - 🇬🇧 7 | 🇩🇪 5 | 🇳🇱 2 | 🇧🇪 2 | 🇫🇷 1 | 🇨🇭 1 | 🇺🇦 1.

• A good part of them (42%) are hard tech - Proxima Fusion, OQC, Axelera, Cambridge Aerospace, Stark, CMBlu, Nyobolt, General Intuition.

• Only Preply, Aikido, Keyrock and Odyssey are software-only.

• Note Ineffable and AMI Labs as the only two that went from zero to unicorn in a single round - a steep entry price for deals done solely on the name of the founders rather than the standard finance business of funding against product and market validation.

• Combined prior capital: $2.4b across 19 companies, averaging $126m each - that’s how much money went in before the $1B mark. Aikido got to $1b on $24m of prior capital (42x valuation to capital consumed). Odyssey ML did it on $27m. At the other end, Nearfield needed $231m and Neura $283m.

• The odd one out is Finn.auto at $253m - capital-hungry, asset-heavy car subscription, selling debt-financed consumer leasing.

Got another data table for you:

• The venture clock is the time from first institutional funding round to the $1b crossing

• Overnight success takes quite a few years, no? The data above has a median of 3 years, a mean of 3.9, in a 0 to 10.6 range.

• It is a tale of two stories though - the AI-native companies get to 1b in a little more than a year (median of 1.3 years) while the others take at least 5 years.

• Three companies are worth $1b at roughly 12 months old - Ineffable, AMI Labs and General Intuition were all founded in 2025.

• Otoh, Aikido took 3 years and $24m. Keyrock 5.4 years and $77m. Neura 5 years and $183m - 7.6x the capital needed by Aikido.

• The semiconductor and quantum ones otoh took a lot of time because of capex and enterprise sales cycles - OQC 8.7 years, Nearfield 8.8. That’s awfully close to the standard ten-year vehicle, making it a no-no for many SAAS VCs.

• Preply at 10.6 years is a different animal entirely - a 2012-founded consumer marketplace that raised first in 2015 and did the grunt work, and the only name in the group whose crossing looks like the pre-2020 European pattern.

Also wanted to know who were the investors who backed those 19 companies at early stage i.e. I took the investors part of every round a company raised before its first Series B.

Here’s what the list looks like - two or more investors:

Ineffable and AMI have a total of 53 investors (not a typo) and distort the tally. Here’s the list without them:

• more interesting, no?

• There’s a total 196 distinct investors having backed these 19 companies at their earliest round. 180 of them backed exactly one.

• Nvidia is directly invested on the demand side (actually its own demand), with four investments tied at the top. Not the only CVC though - there’s 21 other CVCs in there Samsung, Bosch, Airbus, Toyota etc etc.

• 13 of the 19 companies had a corporate or strategic investor early on - that’s a whopping 68%. Those guys usually invest at a later stage to buy commercial optionality - now they’re providing a great revenue signal for pre-series B startups.

• public money is the seed market for European deep tech - CDP, BpiFrance, BBB, Bayern Kapital, EIC Fund. The hard stuff is financed almost entirely by state and CVCs until Series B.

• taking those out, the vanilla investors include two German crews - HV and UVC - and three Americans - GC, Lightspeed and Hoxton (technically Americans operating from London). If you check the tables with the most active early stage backers in Europe - those leaderboard look nothing like the seed syndicates behind this cohort.

Signals

We have screened 132 fundraising deals closed in Europe in the past seven days. We archive/transform deal-related data into an easy-searchable intelligent asset at N9, and email a selection of the interesting ones to our customers every week.

We grade this selection of the ones that matter by the capital event quality, proof vs. price, and investor signal - grades range from C to A+.

Recent top grades

Ⓐ+ 🇬🇧 Volta Infra - $300m seed+series A, vertically integrated AI infrastructure platform
Ⓐ+ 🇩🇪 microagi​ - $55m seed, physical AI software
Ⓐ 🇸🇪 ​Lovable​ - $400m series C, AI development platform
Ⓐ 🇳🇱 ​Ore Energy​ - $43m series A, manufacturer of iron-air batteries
Ⓐ 🇩🇰 CaMaRa​ - seed, next-gen metabolic repair treatment.

The DB with the graded deals here - by country, sector or investor.

European early stage VC this year

• capital is concentrating in a handful of frontier AI/model companies, while the broader market remains relatively small-ticket.

• manufacturing is Europe’s comparative advantage and defence remains structurally underfunded in spite of the attention

• Euro tier one investors do early stage checks at 3x larger median round sizes than their American peers at early stage - lead more as well.

• all the above + top multiples, medians, and a list of 40 startups to watch for - in this cheat sheet.

More cheat sheets

• European robots startups - sector leaders, investors, startups likely to raise

• July’s numbers - active investors, stage, sectors, countries

• Next 250 - Europe’s future industrial champions

Tomorrow’s intel

• Nvidia quasi-acquired Poolside - the deal details

• a look at an unexpected exit - tier one investors + strong team + top product flipped because of the small TAM.

• background on a few early stage deals yet to be pushed to media, including a speech-to-speech AI voice model, autonomous software platform, continuous testing (two startups), nuclear fusion etc

• 5 Swedish investors announced 15 deals already this month - Navigare, Norrsken and Spintop sit at the top

• and more - you can subscribe to get it in your inbox tomorrow AM.

Other notes

🇫🇷 Revolut received its full banking licence in France this month, making it the third European country where they can operate as a bank, alongside Lithuania and UK (well, UK technically is not EU).

• The customers from France, Ireland, Germany, Italy, Spain and Portugal will be migrated onto the French entity, backed by €1b+ committed and a Paris Western European HQ for 2027.

• The top countries by Revolut users - UK (13m), France (8m), Spain (6.5m), Poland (5.2m), Romania (5m)

🇮🇹 Banca Monte dei Paschi di Siena made a buying offer for rival Banco BPM and Banca Generali for a combined €34 billion in stock.

• it’s a defensive counter to Intesa Sanpaolo’s €36b hostile approach for MPS from June

• in other European M&A banks news, UniCredit sits at about 48% of Commerzbank and is waiting on an ECB decision, due in Sep/Oct, that would take it past a voting majority.

🇫🇮 Oura was sued in the US, accused of misleading customers about the accuracy of its sleep tracking and AI-generated estimates.

🇸🇪 Tesla won the longest labor conflict in modern Swedish history (1021 days), as it ended it without signing a collective agreement. Instead of negotiating with the union, Tesla bought out the remaining striking workers.

🇳🇱 Uber was fined with €825 million by the Dutch Data Protection Authority for violating drivers’ rights by using automated algorithmic systems to deactivate their accounts without human intervention or adequate explanation.

• It’s the second-largest GDPR fine ever behind Meta’s €1.2b, Uber is appealing, and Uber’s own defence is that only 126 drivers were affected

🇬🇧 42% of Londoners directly oppose autonomous taxis, while only 29% support them. Waymo is expected to kickoff its service in Q4 2026, while Wayve+Uber started to tease, and Tesla is still waiting for regulatory approvals.

🇬🇧 London moves to crack down on sidewalk drinking outside pubs aka vertical drinking - Westminster City Council has proposed a draft licensing policy that aims to reduce overcrowded pavements, noise, and anti-social behavior in bustling nightlife hubs like Soho and the West End. Chickened out a few days later.

⚖️ Harvey, which is Legora’s American counterpart, launched its own post-trained open-weight model specialized for legal work. They move from being a wrapper turning a model in an asset - all wrappers that built significant distro will do the same.

💲 American investors started buying NBA franchises:

• LA Lakers by Bob Iger and Josh Kushner (Thrive) at $12.5b (after $10b last year), Celtics by Symphony Technology Group/STG Partners at $6.1b, Timberwolves/Lynx by Marc Stad (Dragoneer) at $4.5b, Portland by Dundon Capital at $4.25b, Phoenix at $4 billion, Charlotte at $3b.

• And btw - Vinod Khosla also bought the Seahawks for $9.6b last month.

• Those may be high checks for a sports biz, but make for rather cheap assets compared to, say AI? Different risk/return profiles and different emotional payloads either.

• Putting aside the brand value, more predictable cash flows and ownership prestige, it’s also an investment in local communities - communities have become super important in those crazy times that are transactional, atomized, antagonist and mostly online.

🗽 New York has overtaken the San Francisco Bay Area as North America’s largest tech-talent market for the first time in 13 years.

🏁 Crypto, AI, and online betting companies are driving record corporate spending on the 2026 midterms, with U.S. companies pouring $517 million into House and Senate races through the first quarter - already surpassing the entire 2024 cycle.

• Musk personally put over $90m, while Meta did $65m into four state-level super PACs.

🔥 Gamers must survive without air-con in Europe Heatwave Simulator.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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Week 20 is here - we’ve already passed one third of the year and we have the best NBA playoffs in a long time, it’s finally spring in Stockholm and boats are out, the economy is shitty and the macro forecast looks grim, there’s still war in Ukraine and VCs stopped spending money in Europe but talk incessantly about the new AI revolution. And so will I in today’s edition.

I will be in London next week, so a meet up is in order. Nothing fancy, just mingling, exchanging ideas and getting to know each other. Sign up here if you want to join.

Observations

I’ve mostly stayed quiet about the AI thingie as I am a bit overwhelmed by the number of the overnight specialists literally flooding all the media channels with ‘expert’ opinions on the topic. So.Much.Noise.

In a different life, I have actually built a commercial product incorporating primary data sets we collected automatically for powering AI models we have built from scratch, so I have an idea about how those things work - but now I simply find it funny seeing how the 2017 blockchain and the 2020-2022 metaverse & web3 have turned into the 2023 AI saves the world revolution meme. A different name for the same tune, same actors, with all sorts of playing parts, including groups and committees analysing the danger of it to the society. So much energy and resources wasted for marginal gains or plain empty talks, people have lost their cool, ffs, it’s not about imagining threats and damages AI can pose, but about progress and what we can pragmatically achieve with it. And it’s not about people losing jobs it’s about higher productivity - faster horses ftw.

continue reading

Welcome to Sunday CET.

New design, new mail provider and a whole newsletter wrapped up and ready to send. This week we talk about heat pumps, the French ChatGPT and Chinese in Sweden.

read more

Let’s get to it.

10 things you need to know

1. Want to learn what's up and coming in European SAAS? - scan the SAAS deals made by the angel investors in Q1 and produce a cheat sheet listing the most interesting of them.

2. The most valuable European company is LVMH, which was just priced at $500 billion this week. It’s the first European company to reach that milestone - controlled by Bernard Arnault, currently standing as the world’s richest man, with a net worth of $200 billion. Dude’s been CEO since January 1989 (that’s a 34 year tenure) and still not ready to let go at the age of 73.
   
   It’s all conjuncture, of course, since on one hand, the big American tech companies faced a blood bath on the public markets and, on the other, the French are selling status and luxury products, which typically perform better than other sectors during an economic downturn. Also notable, three of France’s top 4 most valuable companies are luxury brands - LVMH is a portfolio collection of such brands and pretty much a representative story for the European business of the 20th century. Its history and Arnault’s going about it are explanatory to a certain extent of how people do business in Europe.
   
   Related:

   • WSJ promptly profiled the man, mostly generic PR stuff.

   • Bonus question, from Rod: who is the next Bernard Arnault and where can i find this person? My guess is that his name is Xavier. You don’t need to find him, he will find you. :-)

   • What’s next for the luxury market?

   
   

3. Future fashion unicorns from Europe. Hard to imagine that LVMH’s jewels will be soon challenged by a consumer fashion brand, from Europe or elsewhere, as the company is not only active in the M&A market, but also has a few startup antennas via various investment vehicles i.e. 1, 2, 3, 4, 5.

   Alas, here’s a few incumbents, well-funded local startups contributing to various parts of the value chain out of Europe, with a bunch of investors ready to flip their assets to the likes of LVMH:
   
   🇱🇹 Vinted - raised $560 million from Lightspeed, Accel, Insight Venture Partners, EQT Ventures
   🇫🇷 Vestiaire Collective - raised $425 million from Vitruvian, Softbank, Tiger
   🇫🇷 Ankorstore - raised $420 million from Coatue, Eurazeo, Index, Tiger and, you guessed, Aglae Ventures.
   🇩🇪 Chrono24 - raised $200 million from, again Aglae, General Atlantic, Insight Venture.
   🇳🇱 Otrium - raised $160 million from Index Capital, Eight Roads, Bond Capital
   🇬🇧 Lyst - raised $144 million from LVMH, Balderton, Accel, 14W
   🇪🇸 Recover - raised $100 million from Goldman Sachs and Story3 Capital.
   
   … and some up and coming promising value in selected portfolios:
   🇬🇧 Me+Em - $80 million from Highland Europe, Pembroke, Venrex
   🇬🇧 Worn Again - $50 million from H&M, OC Oerlikon
   🇬🇧 Pangaia - raised $50 million from Valor Capital, Dreamers VC
   🇸🇪 Material Exchange - $35 million from Molten, Day One, Norrsken, Inventure
   

4. The state of grocery Europe 2023 - by McKinsey. Warning: research contains the obligatory AI-saves-the-industry plug. NB: at least it’s not web3.

   

5. Capital allocators US vs Germany - risk takers vs trend followers

   • The US pension funds account for 15% of the investor base in the German VC funds compared to 27% in American VC funds.

   • German pension funds account for less than 1% of the investor base in German VCs.

   That’s just another way of saying that the European startup scene has changed dramatically after the Americans started to pay attention to it.

6. Stripe and the UK - not bad:

   • London is Stripe's number one city in the world: no other city has as many businesses powered by it.

   • More than half of the UK’s towns and cities grew their payment volume on Stripe faster than London over the last three years

   • There are 89 other towns and cities in the UK with companies processing over £100M a year on Stripe as well, 3x more than in 2019.

7. VC Reports:

   • 2022 impact awareness report

   • Deep tech in Germany

8. 200+ early stage deals in Europe in Q1 2023 - AI, deep tech, web3, climate et al selected from 1500 startups that got funded in the first three months of the year.

9. Founders toolbox:

   • dealing with investors’s feedback

   • don’t take shortcuts

   • do cold emails work?

10. Euro intel: this week’s curated deals include early stage funding for:
    → the European ChatGPT alternative
    → customisable AI for CPG and retail
    → AI for turning content description into code
    → and a whole lot more. High signal, zero noise - get it too.

Also notable

🇬🇧 UK blocked Microsoft’s $69 billion Activision deal.

Activision’s reaction is weak:

The ruling contradicts the ambitions of the UK to become an attractive country to build technology businesses and were a disservice to UK citizens, who face increasingly dire economic prospects.

Microsoft’s is weaker (they’re mad actually):

We’re, of course, very disappointed about the CMA’s decision, but more than that, unfortunately, I think it’s bad for Britain. There’s a clear message here: the European Union is a more attractive place to start a business if you want some day to sell it. The English Channel has never seemed wider.

Being mad is seemingly the only PR answer - it looks like the political backchanneling didn’t work and we’ve switched politeness to an antagonist UK vs EU position now. It’s interesting that this narrative assumes that the EU will be favourable of the merger when it will present its own findings next month - but what happens if the EU denies the deal as well? Will it become an un-attractive place to do business in over night?

The background context is that after Brexit, the British regulator CMA is now responsible for decisions on some of the biggest cross-border mergers, which previously would have been decided by Brussels. This whole merger thing is still open for negotiations until the end of the year when the appeal of the CMA’s decision will be judged by an independent tribunal.

The deal appears to have become more political than market-related and the current outcome will deter the whole activity of the tech M&A market, already weak and illiquid - there’s no reason to build business and relations in London if the market is bad for business, the logical step is to flee to the US. Otoh, nobody seems to acknowledge that there is actually some sound rationale behind the blocking decision as it may as well be a reflex of preventing situations to having to deal with one actor getting too much market power via a big-tech merger - such as well-documented power plays of Google or Facebook. Which situations are a pain in the ass to correct, let’s be honest, and a reason of becoming a core governmental tech focus, distracting both the UK and the EU from creating a competitive business environment driven by tech. Instead they’re only reactive and police whatever context combining tech and Americans they run into.

Related:

• The UK capital markets are not functioning well at present - liquidity is one of the problems. Over the last 3 months only 150 UK plcs traded more than $5m/day - whilst all the S&P500 & almost all the Stoxx600 did so. As investment funds consolidate & allocate to large index funds scale being illiquid is a problem. This can be seen in valuations.

  

  source

• Speaking of reactive, the British PM Rishi Sunak said that his recent Silicon Valley tour for courting investors was accompanied by a PR stint called Unicorn Kingdom. If it sounds silly, well that’s because it kind of is - trying to be serious on this, if you dig through the 45 investment opportunities listed as available in the UK, you get three tech related, three related to VR (!) and one related to space. And no, no AI.

🇪🇺 The European Payments Initiative, an EU committee setup to come up with a rival to Mastercard and Visa, acquired the Dutch payment system Ideal with the aim of making it the standard payment solution across all European countries.

• Ideal handles 70% of all e-commerce transactions in the Netherlands - it is a product managed by Currence, formed in 2005 as a result of an initiative by eight Dutch banks.

• The target is to implement it also in France and Germany since the countries don’t yet have a standard payment system for e-commerce.

• The follow up of this deal is interesting as harmonising a system that works is a daunting task in an ever fragmented European ecosystem, and the EU heads are not really famous for successfully using or implementing tech for making people’s life easier. One way to they could go about it is to make it political and forcing it onto the market - but the private market is different, and a top down approach for product adoption is not working like, say, when you’re regulating the market because you’re jealous on non European products used by the said market because they’re simply better.

• Also notable, the Nordic countries also have been trying to implement a similar layer on top of their regional banks for at least 5 years and failed, as they couldn’t agree on common grounds aligning local egos. Or, perhaps, the EU just opted for buying the Dutch instead.

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Briefings

🇮🇹 ChatGPT is back in Italy after meeting watchdog demands.
Will the Italians:
- move on and behave like a happy Fonzie, now that they were acknowledged?
- move the goalpost and come up with new requests?

🇪🇺 This is what ChatGPT considers the most notable thing about each country in Europe:

source

🦖 Generational change - Michael Bloomberg is lining up succession of his $94bn fortune made out of the business of money.

🛎️ Inflation bits:

• if the price of an individual monthly streaming subscription were adjusted for inflation, it would cost $13.25 instead of $10.

• Spotify would like to raise prices this year.

• McDonald’s, PepsiCo, Kimberly-Clark etc.

We’re preparing for a mild recession this year, they say. I say the worse is yet to come.

💪The New Finance Rich List - Bloomberg’s daily ranking of the world’s billionaires as of March 23 (some London names in there too)

💲 JPMorgan unveiled an AI-powered model used to detect the tenor of policy signals from the central bank’s messaging, statements and speeches going back 25 years.

₿ Is the Bitcoin comeback for real?

🚗 Automakers are starting to admit that drivers hate touchscreens.

❄️ How the world is spending $1.1 trillion on climate technology.

🤔 Bluesky has made it into the MSM while Twitter is slowly turning into a Linkedin-like collection of failed real life gurus selling pseudo wisdom bits for dummies. If there’s demand, there’ll be supply - creating a marketplace for it is how Musk wants to extract value from it, a rather singular smart move since he took over. The problem with Bluesky, on the other hand, is that it’s managed by Jack Dorsey, the same guy who massively contributed to Twitter being in its current degraded state.

Closing notes

🇬🇧 Shark Tank, US vs UK (can be Europe easily):

US founder: i need a million to expand our organic dog treats globally
Mark Cuban: say less

UK founder: i solved cancer
Random investor no one has heard of: oy sorry mate don't see the opportunity

🇬🇧 Britain is dead:

To the extent that the UK is governed by a partnership between the aristocracy and the bourgeoisie, it is an aristocracy that is not aristocratic and a bourgeoisie that is not productive. The old administrative upper class no longer wields power through land or patronage. The commercial middle class produces little of innovative value, its most prestigious sector being the servicing of other states’ surplus funds through family offices and merchant banks in London.

🇪🇺 Everybody within the EU knows that the sanctions against Russia are just for show as there’s little impact on how Russians are dealing their business. Here’s an example.

🇬🇧 A network of couriers who jointly smuggled more than £100 million of criminal cash in suitcases from the UK to Dubai was found guilty following a trial of one of the largest money laundering scams ever recorded. In less than a year, the couriers flew more than 80 flights, carrying cases full of drug money. The group communicated on a Whatsapp group called Sunshine and Lollipops.

🇬🇧 Are the Brits racist? Yes but *not the most racist*. They have made a study to prove it: the UK fares better than the US when it comes to racist behaviour (p 42).

🤌 Dutch sperm donor who may have fathered 550 kids is ordered to stop by the judge. The 41 years old musician will be fined up to €100,000 if he donates sperm again or if he advertises or in any way promotes his services as a donor.

Bonus link: more Dutch culture.

🤭 Not all dates are created equal:

📺 More than 60% of Netflix subscribers watched Korean shows or films in 2022 - so Netflix plans to invest $2.5 billion over the next four years to produce more K-dramas, movies and reality shows.

📽️ The Succession (the show) economics unpacked (spoilers alert).

📌 What happens when Dave Chappelle buys up your town?

🏘️ Living in a Frank Lloyd Wright House: the iconic architect designed hundreds of residential properties in his career - seven homeowners talk about the ways Wright’s work impacts their lives.

🤖 The deeply human love stories of people and their sex dolls - in 2023 thousands of men (and women) are forming lifelong relationships with AI-powered dolls.

🤔 Folks use AI for dating help and come up with killer opening lines and responses to potential matches. If dating is sorted, what can AI do for scoring then?

🥱 I’m in that camp too - for many people, the idea of stopping work is a nonstarter, an inevitable path to boredom, ill health and a life devoid of meaning.

🧈 Do you refrigerate your butter?

💲 Your favorite celebrity street style photo is probably an ad.

⚽ The Tottenham Hotspur players have offered to reimburse fans who attended their 1-6 thrashing by Newcastle United on Sunday.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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Welcome to Sunday CET. Writing this from Sicily where it’s 22 Celsius and sunny all the way - quiet beach, fried fish, real-taste strawberries and mafia stories, all headed by the almighty Etna. For those who have never been, it’s highly recommended.

Here’s what I got this week:

• is spending 40 million in stealth worth it?

• the EU is trying hard to get technology

• charity with a VC model

Let’s get to it.

10 things you need to know

1. 200+ early stage deals in Europe in Q1 2023 - AI, deep tech, web3, climate et al selected from 1500 startups that got funded in the first three months of the year.

2. Nordic hype - Swedish startup that raised 40 million in two years, started in 2020 and expects to ship at the end of 2024. Very un-European because it’s super risky, in four years the markets shift, core hypothesis change and overall trends are fading - it’s go big or go home, and then games are just like movies, very few blockbusters out there. Otoh, here’s a good insider piece on what VCs don’t see in gaming - still, it may as well be one of the more expensive stealth startups from Europe and I can’t think of another that became a unicorn after four years of spending 40 millions being in stealth. Can you?

3. Other Euro gaming startups with high VC hopes Some of the largest funded gaming startups in Europe in the last couple of years:

   🇬🇧 Improbable - raised $800 million from a16z, Softbank and crypto investors (made a big bet on metaverse)
   🇫🇷 Sorare - raised $740 million from Atomico, Bessemer, Benchmark, IVP
   🇹🇷 Dream Games - raised $500 million from Blackrock, Index, Balderton, IVP
   🇬🇧 Tripledot - raised $200 million from Lightspeed, Eldridge, 20vc
   🇫🇷 Homa - raised $165 million from King, Northzone, Singular, Prima Materia (Daniel Ek)
   🇳🇴 Portal One - raised $75 million from Tiger, Temasek, Founders Fund (here’s why was hyped when it was funded)

4. Best Nordic SAAS is Ardoq - as pronounced at a 1200 people SAAS event in Malmö this week. Ardoq has raised some $160 million, is controlled by PE (EQT and OnePeak) and does some 20 million ARR.
   Other contenders: Voyado, LMS365 and Dealfront.

5. Tech salaries in 2023 France - not too high and not too small for Europe, according to a survey of 2038 professionals from junior to C-Level.

   

6. Charity with a VC model - Founders Pledge, a British charity fund donating a part of founders proceeds from their exits, launched a VC fund to exclusively invest in high growth startups that belong to the charity members.
   Did I get that right? A charity just launched a VC fund in order to live off its management fees while recycling money back to its donor companies. High profiles behind it.

7. Raising capital in Italy - from an outsider that backed more than 50 startups operating in Italy. link

8. The reasons that led Getir to take this decision are specific to France - that’s from an application for redressement judiciare submitted by Getir, a form of restructuring in accordance with French insolvency law. Getir, which bought Gorillas and Frichti in France, has 900 employees supporting 7 French cities, is active in 9 countries and is one of the last Euro startups standing in the 15 minute delivery, thin margins business that drove VCs crazy a couple of years ago.

9. Doing PMF right - don’t take shortcuts. ICYMI: do cold emails work?

10. Euro intel: 30+ curated early stage deals including:
    🇫🇷 Swaap
    🇩🇪 Qdrant
    🇸🇪 Startdeliver
    → and a whole lot more of what was relevant this week in Europe. No scandal, no clickbait, just intel - sign up to get it in your inbox every week.

• Curated early stage deal flow

• Active investors and their moves

• Showcases, trends and verticals

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Local briefings

🇪🇺 The EU is EU-ing

• Experts say it is likely impossible for OpenAI to comply with strict data privacy demands made by Italy’s tech regulator before the April 30th deadline, which may result in a longer ChatGPT ban in the country.
  Of course it is impossible, it doesn't make sense to try to regulate something that’s still emerging in the first place.

• The EU passed a law regulating stablecoins and requiring any company offering crypto services register with a EU member state. It should take effect in July 2024.

• Also the EU turned to Elon Musk to replace stalled French rocket and negotiate a security agreement with Americans to keep its space program running. The Commission reckons only SpaceX's Falcon 9 heavy launcher and United Launch Alliance's Vulcan system are up to the job of sending the EU's new geo-navigation Galileo satellites into orbit.
  Damn right - the first part in solving a problem is acknowledging you have one. Makes better business sense than the sovereignty ego thing.

• The EU launched a new unit in charge to play a major role in interrogating the algorithms of mainstream digital services - such as Facebook, Instagram and TikTok. The aim is helping the European Union regulate AI and Big Tech compliance with the Digital Services Act.

For example, an AI-based recommender system that can be shown is serving discriminatory content despite the platform in question claiming to have taken steps to de-bias output - with the unit’s researchers being tasked with coming up with hard evidence to help the Commission build cases for breaches of the new digital rulebook.

Listen, I understand that those guys are trying hard to figure out AI and crypto and technology but here’s a semi-serious down-to-earth request: Can the EU force the likes of Netflix and Spotify not to discriminate content access by geography? In Italy I can’t access content available in Switzerland, where I can’t access content that’s available in Sweden, where I can’t access content that’s available in Romania and so on. I find this digital rights business model offensive for consumers, it’s 2023 ffs, it’s time for EU to step up its sovereignty play and protect my rights of being able to access whatever content I paid for when I want! 😇 PS. Yes, I know Switzerland is not EU.

🇬🇧 The Brits after Brexit

• Britain’s capitalism without capital, the public markets edition:

Take Immunocore, for example - the most successful British biotech company is now really plugged into the American capital markets and companies are following Immunocore to the US. In the first quarter there were just four London listings, raising only £81 million, the sixth-worst quarter for initial public offerings in the UK capital since 1995. Pension schemes and sovereign wealth funds across Canada, Australia and Asia have more leeway from regulators to invest in early-stage companies, listed companies and other asset classes. Partly as a result, British energy, infrastructure, defence and technology assets have fallen into foreign ownership.

• Related: building a biotech company in the UK is like trying to grow plants in the desert.

• Banks betting on Paris say there really is life after London - for decades London was the main nexus of European finance, melding continental money with transatlantic ideas of what to do with it. But two years after Brexit became a reality, there’s been a clear shift across the Channel - to Paris.

• Londoners’ higher salaries relative to the rest of the country are ~entirely consumed by higher housing costs. 15% higher household incomes become ~0% higher after mortgage, rent. thread

🇬🇧 Britain context encore

• Google loses more cloud business to Microsoft in London.

• Also Google started bargaining with the Brits on the distribution commission it charges for selling apps via Google Play - they conceded a 3 percent off, from 30 to 27%. Developers would also gain the ability to add alternative in-app billing systems alongside Google Play.
  Google is giving 3% away as it aims to please regulators claiming it to be a monopoly.

• Meta plans to either cut or relocate some of its London-based Instagram employees after CEO Adam Mosseri, who moved to the UK a few months ago, said he would return to the United States.
  
  In the past 6 months or so, Meta laid off about 25% of its staff, getting back at the pre-Covid levels. You gotta admit it, Zuckerberg is trying hard to redeem his credibility on the street, in the light of the Metaverse f-up, and he is moving fast and fearlessly (he controls the board so he can’t be fired) - also I think Elon Musk contributed a bit with setting up an example that running a consumer software company doesn't require as many employees. But Zuckerberg’s big problem remains, he has no vision whatsoever, he’s just copying other people’s ideas, hoping something will eventually stick.

• You know Google is desperate to catch up with the AI wave when it is merging two units that hate each other while doing the same thing: Google Research’s Brain and DeepMind, acquired in 2014, which will be led by Demis Hassabis from London.

Elsewhere

🇫🇷 Societe Generale-Forge (SG-Forge) has launched EUR CoinVertible, an euro-pegged stablecoin based on the Ethereum blockchain, only available to investors onboarded by Societe Generale through its existing KYC and AML procedures.

🇫🇷 Amazon is frenchifying with an image boosting media plan that copies McDonald’s playbook from the 90s for attacking the French market: Project Ratatouille.

🇸🇪 Ikea is planning a $2.2 billion expansion in the US over the next three years, its largest investment in a single country ever.

🇸🇪 Sweden’s biggest pension fund Alecta fired its CEO for almost $2 billion loss stemming from the US banking crisis and had the new CEO apologize to customers.

🇩🇰 Danish police arrested eight employees at an energy trading company who will face charges of manipulating prices on the Nordic electricity exchange.

🇨🇭 Jenny Wang, the wife of a Chinese billionaire, hired Moelis & Co. to explore a sale of Swiss pro soccer team Grasshopper Club Zurich.

🇪🇺 The IRS (the American tax office) is testing a pilot program with an officer in Frankfurt, Germany, alongside three other countries (Australia, Singapore and Columbia), to help combat the use of cryptocurrency, decentralized finance and mixing services in international financial and tax crimes. Until now, the IRS only had one cyber investigator abroad, in The Hague, Netherlands, mostly working along Europol since 2021.

😮‍💨 Innovation economy influencers ftw - by Silicon Valley Bank's own admission, 70% of its loans consisted of low credit loss lending to vineyards, private equity funds and innovation economy influencers. About 9% of the total went to companies that the bank considered unlikely to be able to pay back what they owed unless they could find a buyer or raise new money.

💰 Apple announced it will provide a savings account that yields 4.15% for Apple Card users, more than 10 times the American average. The account has no fees, minimum deposit or balance requirements and can be set up from within the Wallet app. The average US bank account savings rate is just 0.37% versus the Fed’s benchmark rate of 4.75 -5%.

Related: Depositors pulled nearly $60 billion from three US banks in Q1 2023 in search of higher returns. Sixty freaking billion.

😬 Shit got serious in the US: folks buy groceries with BNPL.

🛎️ An analysis of the data sets used to train large language models revealed that Wikipedia, piracy sites, and databases of private personal information are among some of the most-used sources.

Related: Stack Overflow is joining Reddit in saying it plans to charge companies like Google and OpenAI to use its data to train large language models and other AI systems.

So, once again, for the analysts in the back, why do you think Google is paying media companies for scraping their content?

🚗 The global EV leaderboard

💲 Elon versus the old Twitter - half of Twitter Blue subscribers have less than 1,000 followers and Twitter’s premium offer in its current form is not working because it doesn’t really provide value. Musk still doesn’t seem to have any clear idea how to monetise a consumer media company and keeps doing weird stuff (this straight out gangsta move shows somebody’s taken it personal) - and tries and tries and tries until he will eventually either get to a PMF or sell the damn thing and start focusing on serious stuff, like rockets.

Related: Twitter feels a little emptier, though certainly not dead. More like the part of the dinner party when only the serious drinkers remain.

⚙️ Why use your brain when it’s easier to copy other people’s ideas:

When Apple takes an interest in a company, it’s the kiss of death. First, you get all excited. Then you realize that the long-term plan is to do it themselves and take it all.

🤔 The American way - CEO of a small digital marketing firm celebrated a worker selling the family dog to be able to go back to the office full-time.

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Closing notes

🇪🇸 Real talk (from a broader discussion with a Swedish founder looking to move shop from Sthlm) - is Spain a good place to settle for running a European HQ? Aside from the business part of the conversation, I love Spain, people are great, the country is amazing and the Latin culture is unbeatable in terms of social life in Europe - if you live in a Northern country, for example, you’re desperate for this context, spending time in Spain has even become a social status for Nordic people. Otoh - sunny days are nice but Spain has mostly a desert-like climate, rationing water as currently at the driest April in 60 years and torrid summers that make it dangerous to stay outside. This will only accentuate because of the global warming, and if you combine it with the skin cancer (mostly caused by the sun) that’s on upward trends… 3-4 months of terrible heat at least. This sounded silly to me initially but it’s not without substance, the same applies to Portugal, but is this a real concern? WDYT?

(Somewhat) Related: 36 hours of an American in Lisbon.

✌️ The kids are alright:

• 1 in 5 of Gen Z already started their own business. 1 in 3 of Gen Z will be making their own clothing 10 years from now on.

• 6 in 10 young people say: “When it comes to work I would rather stay at a steady level that allows me more balance”

• 65% of young people say: “exploring and learning about all the different places from around the world is important to me”

Read the whole thing

🤭 German artist Boris Eldagsen wanted to make a statement about how the art world was not prepared for AI - his photograph won a prize and he turned it down after revealing he generated the image using artificial intelligence. Eldagsen said his ploy was intended to accelerate the debate about what we want to consider photography and what not.

🇨🇭 Sechselaeuten - high-profile members of Zurich society have become embroiled in a racism controversy after a leaked video showed attendees at a party for a spring festival applauding a character in blackface and jokes about minorities.

🇮🇪 Athletics Ireland is sorry for mix-up that led to national 10km race being too short. Reports suggested the race ended up being only 8.5km long.

🇨🇳 The Chinese Ministry of Public Security has established more than 100 illegal police stations around the world. Last fall, the FBI raided such an outpost in Manhattan and made two arrests - dudes acted as Chinese government agents since 2015 in various ways, including by staging public protests against Chinese religious minorities, threatening and pressuring purported Chinese fugitives to return to China, and tracking down Chinese pro-democracy activists. Sounds like Chinese Putinism.

💪 Sales of manga comic books are booming, both in Japan and the United States.

💲 $300K is the new $100K - residents of Honolulu, New York City and San Francisco who earn this amount are taxed roughly 40.5% or higher and have a cost of living more than 82% above the US average. In Europe, on the other hand… :D

🤌 Police search for group of suspects who stole 2 million dimes worth $200,000 from truck in Northeast Philadelphia

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET. Let’s get to it.

10 things you need to know

1. Euro intel this week
   → 30+ curated early stage deals including:
   🇳🇱 NewOrigin
   🇫🇷 Absolute Labs
   🇸🇰 Sensible
   🇬🇧 ManholeMetrics
   🇸🇪 Kodiak
   → 11 funds w/ fresh powder
   → Nordics going after the US market
   → British VC extending Euro reach

Get it too with a free trial and stay in the loop!

2. Quick notes on active American investors in Europe in Q1
   - 400 tracked as active in Europe vs 600+ in Q1 2022
   - top VCs: Accel, Headline, FJ Labs, ff VC, Base10, Sequoia, FinTech Collective
   - top angels: Scott Belsky, Charlie Songhurst, Guy Podjarn

   - Tiger Global, Insight Partners and Coatue did only one deal each, compared to 20, 13 and 8 respectively in Q1 2022.
   - Lightspeed, Spark and USV also slowed their horses to a deal each.
   - MS&AD, the corporate VC of the 5th insurance group in the world made 3 deals. Goldman Sachs also was involved in 3 equity deals.

3. Plant-based food sales are growing - the 2022 market was €5.7 billion in sales and grew 22% from 2020.

   

   link
   

4. 2.5 million tonnes of chocolate & chocolate bars were exported by the EU (65% went to other EU countries) in 2022. Top exporters:

   🇩🇪 Germany (680 000, 28% of total exports)

   🇳🇱 Netherlands (322 000, 13%)

   🇵🇱 Poland (295 000, 12%
   
   link

5. Kima Ventures numbers as of Q1 2023. From 2016 onwards it deployed 15M per year, on average.

   

   
   link

6. 1000+ startups investors active in Sweden in 2022 - here’s top 100 (VCs, angels, family offices, international etc)

7. BeReal fatigue - American anecdotes

8. The Canary Wharf is alive and kicking - home to 180 startups and scaleups in FinTech, Cyber Security, CleanTech, Blockchain, Life Sciences and HealthTech.

9. Web 3 economics - theory cap + state of crypto - kicking the can

10. Do cold emails work? - gotta do it right

Local briefings

🇪🇺 If you’re not following the PR coming from the EU dealing with technology business at large, you should know that the general operating principle is that EU should be sovereign, whatever that means.

And this includes the space as it results from an European Space Agency’s report outlining the necessity for Europe to become a leader in rocket launching and human spaceflight.

Don’t get me wrong, it is nice to be ambitious and have big hairy audacious goals and even dream with the eyes open that you can become a superpower. Frankly speaking though, Europe simply is not having what it takes - specifically in technology, this idea that a super state force composed of politicians and bureaucrats from 30 different countries who have no clue how the real world works but is able to create rules and regulations that prevent the market freely doing its thing - that it can achieve tech sovereignty is silly and idealistic at best. And that is because the EU seems only busy with regulating whatever comes new from the foreign popular tech developers, while failing to admit that its backyard may not be the ideal garden for nurturing top notch ideas. And this inevitably leads to value destruction - aggressive regulation makes for high overheads for big tech which in turn has to extract value from a market big in aggregate but fragmented and rather difficult to monetise otherwise. Instead of focusing to make the pie bigger, the EU is focusing to preserve a shrinking pie and make it only available to locals.

But maybe it’s just me noticing only a particular mindset that’s getting across publicly while the EU is this visionary tech leader yet to produce something other than being at odds with American tech vendors. On the other hand, the local dudes from the private market (which can actually solve this problem by tackling it from a meritocracy angle) may be a few billions too short to be sovereign enough:

The narrative that European billionaires are starting to take an interest in creating novel space or defence technology is often misguided.

Most European wealth is not generated by large exits in tech industries, and therefore most European wealth does not seek to diversify into such high-risk endeavours. To date, Richard Branson of Virgin, Daniel Ek of Spotify and Niklas Zennström of Skype are the best known European billionaires in the deep tech startup world, but their net worths are between $1–3bn each — they won’t be financing an entire space sector any time soon.

[…] And so Europe and the UK continue their decades-long struggle to manifest a space industry, in an economy that does not have the right billionaires. Unlike US counterparts which seek to create wealth, European family offices seek merely to preserve it.

A while ago I wrote a little about the typical European HNWI not giving a damn about sovereignty. You should read it and tell me that I am wrong. :-)

… Alas, back to the space ambitions - it’s not all doom and gloom, people are going to work every day and actual efforts are being are being made - the European Space Agency just launched a spacecraft sent to explore Jupiter and three of its icy moons that could hold buried oceans.

🇮🇹 Italy’s privacy watchdog gave OpenAI an April 30 deadline to respond to an extensive list of demands in order to resume operating ChatGPT in the country.

Meanwhile, The European Data Protection Board announced a new task force designed to set privacy rules related to ChatGPT following Italy’s investigation.

🇬🇧 Apparently in the UK if you raise >5 million in an equity round, the associated costs can go as high as 20%. Sounds like a joke but it’s not.

🇫🇷 The French government meddles with the private business yet again - it punishes online stores in order to incentivise good consumer behaviour and forces an extra 3 euro charge for the delivery of books to encourage readers to go more to bookstores.

🇬🇧 Any KPI is good for PR: Uni of Oxford has created 300 spinoff startups based on research and ideas from students, staff and alumni, since, uhm, 1959.

🇸🇪 The most influent family from Sweden, which controls a good part of the economy, is pissed about a push by proxy advisory firm Institutional Shareholder Services to end dual-class share structures in Europe. The proposals mean that from February next year the firm will generally vote against directors at a company that has a common stock structure with unequal voting rights.

🇳🇴 Shifter, local media pub covering startups coming out of Norway, was acquired by Schibsted.

🇸🇪 A Swedish dude developed an interactive tool where you can follow the profitability of each of Ica's 1,272 stores - Ica is one of the three main food chains active in Sweden.

🇩🇪 Berlin gyms charge €€€ for tap water. Does that say something about:
- the German culture
- the German way of doing business
- a business opportunity?

🇩🇪 Students are declining VC gigs because of the housing situation in Berlin and how hard it is to find a flat.

🇫🇷 When the French are not on strike, they break into luxury stores to protest. Or they’re doing omelette. 15,000-egg omelette.

Monday CET preview

The Q1 recap

We have tracked almost 1500 startup transactions closed in Europe in Q1 2023. We have screened them all and produced a list with 200+ early stage deals we found to be interesting. You can consult it below.

A few observations beforehand:

• while the overall numbers trend is bad, there's more funding for startups doing practical stuff and building actually interesting business. Alas there's less SAAS for hipsters and similar noise because the ZIRP forced VCs to focus on revenue models.

Continue reading

This is a preview from the latest Monday CET, a premium newsletter covering data-based intel from the European VC ecosystem. You can subscribe to get it too from here.

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Other notes

⚙️ Dealing with American investors:

Tell investors exactly how much capital you’re raising, not a vague range of, say, $2 million to $10 million. And if you tell them you only need a few hundred thousand dollars, they’ll never take you seriously. They know you can’t turn a startup into a publicly traded company with a few hundred thousand dollars. Take what you would ask from a European VC and double it. Maybe triple it.

💲 The world of media just discovered the most open VC secret out there - Arabs are important LPs in their world. The money quote: The tech correction has humbled the VC industry.

🤔 Soundboy trying to articulate why the tech world should take a step back with the AI development and figure out a control mechanism. I think being more cautious is better rather than stop in the middle of momentum tbh - you should read the piece nonetheless.

⚡ The quest for the European microchip from the 1980s to the present.

⚡ We’re peak AI → Becks is producing the world’s first beer and full marketing campaign made with artificial intelligence. Here’s a free product idea: use AI to cure beer hangover. <ducks>

🤌 Twitter is working on a generative AI project, and recently purchased roughly 10,000 GPUs to develop and train a large language model.

🤔 Remember the metaverse? It was supposed to be the future, alongside web3. But no worries, the admen still have the metaverse in the media plans, now that everybody and their mothers pivoted into AI now.

🤭 The cost of going to an American university is 90k per year. Btw, do school rankings matter?

🇯🇵 The Japanese government approved plans to open the nation’s first casino, operated by MGM and expected to open in 2029.

💲 How much should you tip in each country?

🧑‍💼 The jobs that are most and least suitable to being done remotely.

🗽 The number of Americans planning to travel to Europe this summer has skyrocketed.

🎶 A century of recorded music has culminated in the infinite archive of streaming platforms. But is it really better for listeners?

🙈 The village sin eater - the family who hired the sin eater believed that the bread literally soaked up their loved one’s sins; once it had been eaten, all the misdeeds were passed on to the hired hand.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Talk to you next Sunday, when I hope to resume the regular schedule. Dragos

In its sustained efforts to produce tech innovation, the EU claimed an unexpected number one spot when it comes to ‘the AI thing’: the first to regulate it. It’s not an April 1 joke - not only that, but also last week, Italy banned both the ChatGPT and lab-grown food.

Meanwhile, on the private market where the actual tech innovation is at, 13 months after Russia invading Ukraine, the Euro PE houses figured there’s money to be made in defence and related technologies, while in the VC land, the as is Q1 data shows deployments $20 billion-ish short compared to Q1 last year (9.7bn vs 28.4bn and 14 vs 75 100M+ funding rounds), with overall about 20% fewer transactions. Yes, it ain't pretty for fund managers and their dependants, late stage is in limbo, while the early stage activity is slightly weaker than the one of last year's Q1 (<$10M deals).

This week's highlights include:

• early stage money for applied-AI projects - computer vision, voice conversation intelligence, webapps, smart packaging

• growth deals for commodities markets, web3, EV infra, synthetic data

• more powder - solo VCs and vertically focused vehicles i.e. dementia, FoF, fintech, quantum, university spin-outs, immigrants, women.

Interesting deals

Nordics

🇸🇪 Numa, operating a digital marketplace providing video meeting access with experienced midwives specialized in breastfeeding and postpartum health, was pre-seeded by a local family office.

🇩🇰 Dora, selling an intelligent dispatching system with an integrated marketplace for forwarding and trucking businesses, raised seed funding from Denmark’s Export and Investment Fund and Unconventional Ventures.

🇸🇪 Geins, doing an API-first pre-composed commerce suite taking care of everything from content to fulfillment, raised $300k from local angel investors.

🇸🇪 Voxo, doing an AI-based conversation intelligence platform that processes, analyses, and visualizes voice conversation data, raised $2 million from Beijer Ventures, Malmkroppen, NFT Ventures and Swedish angel investors. The company has raised a total of $3.7 million since 2018.

🇸🇪 Open Payments, operating a PSD2 aggregated platform initiating account-to-account payments on behalf of third-party providers, raised $3 million in a growth round from Industrifonden, Sony Financial Ventures and Global Brain.

🇳🇴 Casi, selling a car-subscription-as-a-service to car manufacturers, dealers, and other mobility players looking to implement sub models, raised $3.3 million from DNB and existing investors Idekapital and Norselab.

🇩🇰 Viggo, providing transportation-on-demand via a zero-emission cars fleet, raised $3.6 million seed in a round led by Norway-based Link VC.

🇳🇴 Kezzler, developer of serialization technologies designed for industrial scale, raised $11 million from Tomra, DNVand Investinor.

🇩🇰 Agreena, operating an online trading platform for efficient forwards trading of grains and agricultural commodities, raised $50 million Series B led by HV Capital, joined by AENU, Anthemis, Gullspång Re:food, Kinnevik and Denmark’s Export and Investment fund.

​
DACH

🇦🇹 Digicust, helping freight forwarding companies with customs clearance software and a virtual customs robot, raised $100k from Bulgarian investors.

🇩🇪 Codesphere, developing an intelligent platform for the development of WebApps, raised a $2 million seed extension led by Begin Capital.

🇩🇪 Recyda, developing packaging data management and analytics used to assess the recyclability of consumer goods packaging solutions, raised $2 million seed in a round led by Speedinvest, joined by Futury Capital and angel investors.

🇩🇪 Coqui, developing a tool used for producing emotive text-to-speech through generative AI, raised $3.3 million seed from investors including ScaleX Ventures, Mango Capital and DNX Ventures.

🇩🇪 Atlas Metrics, developers tools used to collect, manage, and report environmental, social, and governance (ESG) data, raised $5.6 million seed led by b2venture and Cherry Ventures with VR Ventures, Redstone, GFC, Rivus Capital, another.vc, and TD Veen.

🇩🇪 nyris, developing an image search engine that is sold as a software as a service, raised $10 million series A co-led by Trumpf Venture and the EIC Fund.

🇩🇪 Li.fi, developing an infrastructure protocol that aggregates cross-chain bridges and decentralized exchanges, raised $17.5 million in Series A funding led by CoinFund and Superscrypt.

​
France

🇫🇷 Ikomia, developing an open source tool enabling quick deployment of computer vision applications on embedded devices, raised $700k from local investors.

🇫🇷 Koala, selling a new gen travel insurance product through a network of 30+ European distributors, raised $2.2 million from investors led by Insurtech Gateway, joined by Uneti Ventures, Slimmer AI and Sterling Oak.

🇫🇷 NuMind, YC alum building a platform that allows B2B and B2C customers to create custom NLP models, raised $3 million seed from investors led by Flybridge, joined by Carya Ventures, the Pioneer Fund, Velocity Ventures, Sharpstone Capital and Y Combinator.

🇫🇷 Electric 55 Charging, operating an EV charge point network across France, raised $10 million series A from strategic investors Conquest and YESSS Electrique.

🇫🇷 Effy, an energy renovation supplier, raised $22 million first money in entirely backed by Felix Capital, after 15 years of bootstrapping.

​
The UK

🇬🇧 Olie App, developing a yet-to-be-launched audio wearable device enabling hands-free communication for athletes, was pre-seeded.

🇬🇧 Medwise, developing a tool dubbed 'Google for medical doctors', raised $1.3 millionfrom SFC Cap, Calm/Storm Ventures et al.

🇬🇧 BioCorteX, doing a first-principle computer simulation that combines physics, chemistry and cutting-edge computational techniques in order to understand drug-bacteria interactions and improve a person’s response to treatments, raised $5 million seed from Sofinnova and Hoxton Ventures.

🇬🇧 Connect Earth, doing a platform allowing financial institutions to calculate their carbon footprint, raised a $5.6 million seed round led by Gresham House Ventures, joined by Love Ventures, Global Brain, Portfolio Ventures and Super Capital.

🇬🇧 Hazy, using AI-generated synthetic data with no real information to replace real data, thereby eliminating privacy risks while preserving statistical quality, raised $9 million in Series A round led by Conviction VC and joined by existing investors including UCL Technology Fund and M12.

🇬🇧 Paytrix, developing payment and banking infrastructure for other software companies, raised $18.3m in Series A funding from Unusual Ventures, Motive Partners and Bain Capital Ventures. The company was seeded with $5.6 million in November last year.

​
Other geographies

🇧🇪 Shyfter, developing a workforce management tool for staff scheduling, raised $650k.

🇷🇴 EasySales, a plug & play SAAS solution enabling a portfolio of 700 customers to sell on multiple marketplaces, raised $1.2 million from Fortech Investments.

🇵🇹 AssetFloow, developers of behavioral AI tools for retailers and CPG companies, raised $1.6 million seed from GED Tech Seed.

🇭🇷 GameBoost, providing game-related services such as Elo Boosting, Coaching, and Account Selling, raised $2 million seed from Fil Rouge Capital and Feelsgood Capital.

🇪🇸 Auctree, developing an online trading platform for real estate investors, raised a $2.7 million seed round led by Samaipata.

🇷🇴 Videowise, developing a review application platform that automates product video reviews for online stores, raised a $3 million seed round led by Slack Fund, joined by FounderCollective, Underline Ventures, MuVentures, Ratio Ventures, and angel investors.

🇪🇸 APlanet, developers of an easy-to-use software solution for organizations to manage, measure, and report their social responsibility, raised $4 million from EDP Ventures, CDTI, JME Ventures, FJLabs, All iron, Viriditas and DraperB1.

🇪🇸 Tropicfeel, D2C producer of an-all terrain type of shoe, raised $5 million series A from Bolsa Social and Ona Capital.

​

Please note that this is just a customised selection, all deals (many more!) are available here. Pro tip: use advanced trackers to learn about new deals by industry, country, stage or a specific set of investors.

Investors

Active last month

Angels

🇫🇷 Alexandre Berriche​
🇩🇪 Louis Pfitzner​
🇪🇸 Francisco Riberas​
🇪🇸 Yago Arbeloa​
🇩🇪 Mario Götze​
🇸🇪 Fredrik Jung Abbou​
​
​VC

🇩🇪 HTGF​
🇩🇪 Bayern Kapital​
🇦🇹 Speedinvest​
🇩🇪 SquareOne​
🇸🇪 EQT Ventures​
🇫🇷 Sofinnova​
🇩🇰 Unconventional Ventures​
🇬🇧 Fuel Ventures​
🇫🇮 Voima Ventures​
🇳🇴 Alliance Ventures​

​
On the move

🇬🇧 Neda Vakilian was promoted as head of investor solutions at Actis after a year with the company.

🇬🇧 Ryan Selwood joined British PE Bregal Investments as chief investment officer in the NYC office, after working as chief development officer for Carlyle.

🇳🇱 Two Amsterdam-based European bankers long time with Credit Suisse jumped ship to Citigroup - Maarten Swart, who will become co-head of European consumer and retail, and Sophie van Kleef, who will work on food and beverage deals.

​

Powder

🇸🇪 EQT announced the close of its debut LSP Dementia Fund, with €260 million in capital commitments dedicated to investing in companies that are developing breakthrough drug therapies and medical technologies across the spectrum of neurodegenerative diseases.

🇫🇷 Elaia closed Digital Ventures 4 fund at €200 million aimed to back 25 to 30 European companies at seed to series B level.

🇫🇷 Armen announced the first close of €150 million for its Armen GP Stakes Fund I to fund European alternative investment companies and support their growth through GP Stake transactions.

🇬🇧 Playfair Capital announced its third fund at $70 million, targeting only six to eight investments per year at pre-seed in the UK and across Europe. We profiled Playfair last month.

🇫🇷 Polytechnique Ventures, seed fund launched by École Polytechnique alumni in 2020, officially announced its closing at €36 million.

🇩🇪 Gloria Bäuerlein made official the solo fund she's been raising for two years and closed at €21.5 million. We profiled Gloria, ex-Index Ventures and an active angel, two months ago.

🇬🇧 Anamcara, a London-based VC firm founded by Annelie Ajami, ex-B&Y Venture Partners, raised $10.6 million for its debut fund.

🇬🇧 No Label Venture is yet another early stage solo VC fund launched by Ramzi Rafih, formerly with KKR and Silver Lake, targeting $15 million and looking to do pre-seed and seed rounds in startups founded by immigrants.

🇮🇹 Scientifica VC announced Quantum Italia, an investment vehicle dedicated to Italian quantum tech.

🇬🇧 Milltrust announced British Innovation Fund II, targeting spin-out companies from the UK university sector.

🇨🇭 Tenity announced the first closing of its Tenity Incubation Fund I, a startup accelerator focused on fintech and insurtech.

🇮🇪 Dogpatch Labs announced launching a startup accelerator open to companies solving climate challenges.

• Dogpatch also won a €5 million, five-year contract to run the State’s business angel network - the Halo Business Angel Network (HBAN). The contract was awarded ahead of the incumbent Furthr, which had run it since its 2007 inception.

Other moves

🇬🇧 Brent Hoberman is in advanced discussions to take over the Tech Nation brand, via the Founders Forum Group.

🇫🇷 Ardian and Eight Advisory announced Force Femmes Booster, a €1 million fund to support women over 45 who have started their own business in France.

🇦🇹 Speedinvest and 🇬🇧 AlbionVC announced Radia, a mentorship program for women in the UK looking to start a SAAS company.

🇬🇧 Magnesium Capital, a London-based energy transition PE firm co-founded by Ian Jones (ex-Apax Partners), is raising its debut fund.

🇪🇸 Mutter Ventures, a Barcelona-based venture builder, floated on Euronext Paris with a market cap of €23 million.

​
Also notable

🇪🇺 EIC announced its funnel numbers for the 2023 Accelerator: 476 applications - 159 companies interviewed - 32 companies selected to get funding, combining grants and equity. [To have some context: YC had 20k applications for the winter 2023 batch]

🇧🇬 Bulgarian investors New Vision 3 and 🇳🇱 Dutch CM.com sold their equity stake in Phos, acquired by French payment hardware provider Ingenico.

🇳🇱 Last summer Snap acquired Amsterdam-based Th3rd, a bootstrapped 3D scanning startup helping brands & retailers to digitize their product catalog.

🇩🇪 GFC joined Sequoia and angel investors for a $3.5 million seed round raised by Nimbbl, an Indian fintech startup.

🇫🇷 Newfund joined US-based Alumni Ventures and Bonfire for a $4 million seed roundraised by Rawzi, a Los Angeles-based market intelligence provider for 40+ countries in Africa and South Asia.

🇩🇪 Yabeo from Berlin contributed to the $20 million series A deal led by SignalFire for backing Wellth, a Los Angeles-based digital health company that improves adherence in chronic disease populations.

🇫🇷 Crédit Agricole launched a China M&A advisory business.

🇸🇪 Antin Partners and Scandinavian Enviro Systems formed a joint venture backed by Michelin to launch a large-scale European tire recycling group, with a first plant to be built in Sweden and Antin expected to hold a 70% stake.

🇺🇸 SR One, investment firm spun out from GlaxoSmithKline in 2020 with offices in Silicon Valley and London, raised a second fund closed at $600 million.

Investors profile

🇬🇧 Moonfire Ventures

• founded in 2019 by Mattias Ljungman, a Swedish investor known as a co founder at Atomico with Niklas Zennstrom back in 2006. Mattias was later joined by Mike Arpaia, who has solid tech development experience.

• started with a $60 million seed fund, aiming to be the first institutional investor at pre and seed levels in Europe and sometimes in the US, where they actively cultivate a network.

• Moonfire invests following an articulated thesis which, beyond the wooden VC language, it means they chase developers of new gen software, with a focus on web3, AI and AR/VR verticals.

• the portfolio includes multiple European companies that were part of Y Combinatorand a few gaming startups.

• team of 10 people, including two MBA interns, based in London.

• co-investors: YC, Seedcamp, Localglobe, Project A, Cherry Ventures

• 18 deals in the past 15 months, including 9 new startups from Europe added to the portfolio:

🇩🇰 All Gravy - seller of B2B financial solutions for other companies employees.
🇫🇷 Brainboard - developers of a visual way to locally build & manage cloud infrastructure.
🇬🇧 Calliper - analytics platform that assist startups build data-driven teams by concentrating on the metrics.
🇬🇧 CollabKit - React SDK for adding comments, mentions, and other collaborative features to SAAS products.
🇩🇪 Flagright - customer risk scoring and transaction security monitoring for fintech startups.
🇫🇷 Immortal Game - web3 chess
🇪🇸 Latitude - framework used for building low-code data apps connecting data sources.
🇬🇧 Stablegains - consumer investment platform with access to investments using a selection of leading DeFi lending markets.
🇪🇸 Tacter - personal gaming assistant that helps players improve in their games.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Many interesting stories this week - played around and changed a bit the regular format of the newsletter, I think it makes for a better read and changes are good and fun.

Hope you enjoy this one as much as I did writing it. Let’s get to it.

The business model of a startup accelerator

Techstars closing its Stockholm program in the middle of it this week was weird. It’s weird because Techstars is an established American enterprise with experience and resources to conduct business professionally. This ain’t it, so what’s up with that?

The media coverage of it doesn't have details of what happened - just founders saying they’re disappointed and local competitors saying that Sweden is a tough country for outsiders. Reading beyond that though, I think that the problem has not as much to do with the local market being competitive (it’s really not) but with how startup accelerators work.

The deal with joining an accelerator is that you get some money in exchange for equity in the company (usually an expensive deal for the startup) and access to a bunch of resources such as mentors and investors matchmaking events. This access is the core accelerator business but is just an expense on their income statement, with no line on the revenue side - there are exceptions to this as some deduct it from the equity money they provide. They’re not upfront about it though because the startup accelerator business has been traditionally conducted more like that of an investor, even though they are not the same thing - for example, they say they invest 100k for 10% of the company but make you pay back 50k for being part of the program. So the deal is really 10% of the company for 50k cash plus resources/network worth 50k, which may or may not be as valuable. They sell two products for the price of one one, but advertise only the one.

Anyways, valuable resources and knowledge access are expensive, and you’re supposed to pay for advice, not to find it on Twitter or media publications. What you pay is what you get - besides, a business model that gives advice for free, or only against equity that should turn into revenue in the income statement in 5-7 years if lucky, well that sounds like a terrible proposition, doesn't it?

The better accelerators raise funds that make a business from a management fee, just like investors do, but there’s not too many of those. Raising funds for an accelerator business is really complicated anyways and a management fee is hardly enough to run it properly. The lack of a viable revenue model is how this business has become a marketing budgets-driven business - that can be PR, marketing, corporate innovation or a straight-out sales distribution deals for the likes of Google or Amazon. The core business is finding those suckers and closing deals in order to finance accelerator operations.

But is selling sponsorships what you have in mind when you go about setting up a startup accelerator? No, it is not, you do it because you know how to find great founders and have valuable resources to support them, which you give away because this is what the business model dictates. Charging straight up for what you do best may be a better idea, you know, pay for the value created kind of thing. Unless you are a big ass investor and can afford to the expenses of running the accelerator from your marketing budget, like Sequoia is doing, for example.

Back to Techstars in Stockholm, I think this is likely it. Most of Techstars programs in Europe are sponsored - ABN Amro in the Netherlands, Audi in Germany, Polygon in the UK, Equinor in Norway and so on. And the Stockholm PM hasn’t been able sell the program to such a local sponsor for 18 months. No product market fit and the markets are tough, it’s March already, Techstars probably wouldn’t agree on the way forward for the year (i.e. the budget) and it plugged the chord. Not waiting for the batch to finish means the burn was not small change, unless there's more to see that meets the eyes. Stockholm is one in 40 other programs, they took the loss and moved on, didn’t even bother to make a public announcement.

10 things you need to know

1. Euro intel this week
   → 30+ curated early stage deals including:
   🇳🇴 1X (deal led by OpenAI!)
   🇨🇭 Covalo
   🇩🇪 Hermone
   🇩🇰 Humani
   🇸🇪 Scaleout Systems
   → GPs jumping ship
   → Euro funds *not* investing anymore
   → tomorrow in the AM in your inbox.

Get it too with a free trial and stay in the loop!

2. Euro startups pitching at YC next month
   My favs: 🇬🇧 Ivy, 🇬🇧 Forfeit, 🇬🇧 Tailfin, 🇭🇺Trigger. Most of the YC batch raising 2M at 20M has investors roll their eyes - of course they do, they wouldn’t do their job otherwise. Somebody smarter than me told me that consensus in this business is not a winning card though, and you gotta do the work. Full list here.

3. Climate startups - 🇨🇭 Swiss, 🇫🇷 French, 🇸🇪 Swedish

4. Fast-growing private marketplaces - by a16z

5. Startups that achieved true product-market fit and still failed - vox populi

6. Don’t do these mistakes when raising capital - easier said than done

7. Cash management at startups - VC value add

8. What to do when investors say no? - carry on

9. Founders find it shitty to raise but what else is new - and other sentiments

10. Nordic Demo Day - be there or be square

The founders narrative

source

We’re in that part of the cycle - life will be hard for founders dependent on VC financing. The play is to keep heads down and build, hard work always pays off.

City briefings

🇸🇪 Stockholm

• $1.9 billion in red Alecta, Sweden's biggest pension fund, has sold all its shares in First Republic Bank at a loss of $728 million. That adds to losses of $870 million in the Silicon Valley Bank and $310 million Signature Bank, both of which went bankrupt two weeks ago.

• PE business EQT hired Morgan Stanley for finding a buyer for Freepik, which it acquired in 2020 for $250 million at some 5X sales. At that time, Freepik said to have had optionality from 20 suitors and 16 offers on the table, and went with EQT.

  • The asking price now is €700m to €1 billion. Freepik is said to have produced sales of 51 million in 2021.

• Price war for food In Sweden there’s a bit of a price war going on in the retail food market - Lidl lowered its prices with 11%, followed by the Finnish/American Wolt, both likely going after market share. They compete at the edge though since 90% of the market is controlled by three local players - Ica, Coop and Axfood - and they’re unlikely to cut on their margins.

  • Swedish consumers are nervous these days In February the food prices had the biggest hike since the 1950s, while the inflation was 12% in February, up from 11.7 in January.

  • Also at the edge The local online grocery provider Mathem, which raised north of $300 million in VC money to be a big fish in a small country like Sweden, acquired local startup Kavall, another local me-too play that couldn’t become a big business. Kavall, backed by VCs with about 25 million, produced sales of 6 million last year and has been in disarray looking for an out for some time now.

• It’s not what the media understands, it’s what the business does Amazon continues to grow its business in Sweden, with sales of $180 million last year - a whopping 20% increase yoy versus the local market deflation of 7%.

  • Fun fact: The local Swedish media totally trashed Amazon at its local launch for a banality - its 150 million product-website was not entirely accurate translated - and predicted its fail because of it. The above numbers seem to indicate otherwise. Alas Swedes don’t like it when foreigners come to do business in their country because of this.

• High salary and a safe job Swedish business students’ top preferences for finding a job include Spotify, Google, Avanza, Swedbank and SEB, while the IT students (which I can only assume IT means software) preferences are Google, Spotify, Microsoft, Ericsson and Volvo. Students also say they’re interested in high salaries and job stability upon graduation, who knew - exactly the opposite of what the startup bubble can provide for. Sample size is 20k students.

• Is AI a feature or a product? Klarna joins the hype as it implemented ChatGPT into its shopping app. Spotify did similarly last week - they sound like PR moves, all this kind of announcements will net-net increase OpenAI’s value as a platform, see below.

• The future is here Ikea says it uses one hundred drones for stock inventory at work during non-operational hours in 16 different locations.

🇫🇷 Paris

• Crypto models Steve Rosenblum, French founder who built an ecommerce operation w/ €900M in sales 12 years ago, launched a consumer crypto investment app that makes money from a subscription whose pricing is calculated based on the users account balance.

• Cash to crypto Ledger, the French crypto hardware developer that’s raised half a billion since 2014, says it kicked American (business) ass due to the recent bank runs, as people rushed to put their cash into a Ledger wallet.

• Jean is a cool dude Jean de La Rochebrochard, who’s is in charge of Kima Ventures, says he doesn't want to become a commodity, now that Kima is transitioning from being in 95% of the French early stage dealflow to having to fight to stay competitive.

• 250 unicorns more than the Brits The Paris bourse market cap exceeds London’s by $250 billion - the French drivers include LVMH, L’Oreal, Hermes and Schneider Electric.

🇩🇪 Berlin

• No pivot Sono Motors faces bankruptcy as it announced to give up the development of its solar car and instead want to establish itself as a supplier of solar panels. The pivot was made as Sono couldn’t raise more capital for the car business.

• A country stuck in the 90s Germany is in the bottom five countries worldwide when it comes to digital infrastructure (48th), such as cashless payment options (51st) and easy access to a fast Internet connection (49th).

  • Overall, Germany has been ranked bottom in a ranking that looked at how countries make life easy or difficult for newly arriving foreign nationals.

• Change is hard Germany led a ‘civil war’ fighting against France-led EU legislation for zero emissions plans that would prohibit new sales of fossil fuel cars from 2035. It’s not black and white, and more complicated than it seems, as the German economy is very dependent on a multitude of spillover effects - a resolution was eventually reached by politics.

• Be warned Meanwhile, tomorrow Deutsche Bahn announced a large-scale warning strike for tomorrow and all the long-distance traffic nationwide will be stopped. If you don’t have a car you’re screwed.
  And btw, also tomorrow, Frankfurt Airport will be canceling all regular air traffic.

🇬🇧 London

• Don’t judge books by the cover and investors by the marketing One way to screw your startup is believing the crap VCs put out all over the media as a signal of their competence. It’s all nonsense, here’s a tiny British example.

• Boom days are over Startup raised 15 million at 47 post, did sales of 1 million last year and now put itself for sale in the in the media. Idle wondering if it is an advertorial or earned media.

• Outsmarting the VCs Pollen’s owner StreetTeam Software completed a sale in December for $198k (most of it ‘computer software’), after a fundraise of $150m less than a year ago.

• What was bad is good now Just Eat Takeaway, the parent company of Grubhub, let go 1,700 drivers in the U.K. and will move toward managing its fleet of drivers with a gig-worker model. The CEO of the company had previously criticized the model, saying it had led to precarious working conditions across Europe.

• We were wrong but not entirely The Brits announced narrowing the scope of their investigation into Microsoft's proposed $68.7b takeover of Activision, saying the merger wouldn't impact console competition but still may impact competition of cloud gaming services.

• Apple gets more serious about media Apple will make a bid for English Premier League streaming rights in a competing move with Amazon. It will also spend $1 billion a year to release Apple TV+ movies in theaters.

• Hey, good news Meanwhile, UK economy’s robust start to the year is on an upward trend as retail sales beat expectations and consumer confidence hit a one-year high.

  • But, uhm, what about the inflation? In the words of the Governor of the Bank of England, firms raising prices hurts people.

AI eats the world

• The platform OpenAI launched plugins for ChatGPT, which extend functionality by granting it access to third-party knowledge sources and databases -- including the web.

• The investor Another day, another AI asset valued at $1 billion. Not surprisingly, Andreessen Horowitz led the round - it made so many good bets on this market that it will simply make a shitload of money out of the hottest platform trend we’ve had in the history of tech development.

  • Name one Euro investor with a similar playbook. I’ll wait.

• The money quote “There are some overlaps […between Google’s Bard and new gen AI products], but we're confident Google will never do anything fun. Because we worked there.”

• The players A handful of individuals and corporations now control much of the resources and knowledge in generative AI, a phenomenon known as industrial capture.

• The struggle Head of AI at a large retail chain: “We have to work with many companies to get to 75% of what Google has internally as their ML platform.”

• The ploy AI-generated images of Trump getting arrested were viewed 5 million times on Twitter, raising concerns about the potential for the technology to create confusion in volatile news environments.

Last but not least

🤭 It ain’t getting better FTSE is not feeling well, British, French and German banks led by DB are bleeding.

• The officials make public assurances that everything is fine and big players call the market irrational. That’s when you have to worry. The stress test is at higher intensity - some people are pissed and others will make tons of money out of this, next week will be interesting.

• Related read: Why I never invest in bank shares.

⚙️ No comment The list of the EU people who spent a week in Silicon Valley to showcase the EU innovation ecosystem to investors in the US. Efforts are being made, it is that clear, but… Maybe other time. :-)

🤔 Do Kwon, the Korean founder of Terraform Labs, the 3 years old crypto startup that lost $45 billion, was arrested in Montenegro, while attempting to fly to Dubai under fake Costa Rican traveling documents, and also had South Korean and (falsified) Belgian travel docs.

• He’s been wanted for fraud since last year, and prior to his arrest went to chill in Serbia, which is a well known Euro heaven for criminals.

💲 Twitter Blue relaunched has made $11 million on mobile in its first 3 months.

⚡ More on the SVB situation:

• How the last-ditch effort to save Silicon Valley Bank failed.

• BlackRock warned the Silicon Valley Bank folks that risk controls were weak.

• 190 banks are in danger of an SVB-like run, due to a combination of un-realised losses on their investments and a high percentage of deposits that exceed the $250,000 insurance cap, according to this study.

• An estimated $550 billion in funds have moved out of smaller banks to big institutions and money market funds from the US in the weeks since SVB and Signature imploded

🇫🇮 A Finnish entrepreneur wants to buy Man United.

🤔 Debunking the myths around Italian food Italians hadn’t heard of pizza until the 1950s, and carbonara is an American recipe. link

🤌 Interesting facts around the making of The Godfather, released 51 years ago.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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Crazy week, huh? Most of the conversations were dominated by the Silicon Valley Bank story unfolding on both sides of the ocean. This week’s edition covers what I found interesting related to it.

SVB observations

• As expected, the Brits were prompt to fix the problem and flipped the local branch to HSBC for a symbolic £1 pay announced by the week’s market opening.

• It was apparently a convenient choice emerged on a short term notice since HSBC turned out to be the only one taken into consideration - the deal was closed at 3am on Monday, sealed off by phone from the US by the PM himself.

• Other contenders that put formal offers included two British neo-banks and the Arab government through one of its funds, likely dismissed since the local market would have perceived them riskier for its well known conventional way for doing business. The SVB containment was a national matter that could have become a very serious situation for an economy already in a precarious state - that means you play it safe and don’t let outsiders in, you work it out with your own people from the circle of trust, in this case former British chancellor George Osborne and Simon Robey as main dealmakers on HSBC’s side.

• Fun fact - HSBC’s top shareholders are Chinese through China’s State-backed Ping’An Insurance, controlling 8.3%. Second largest shareholder is Blackrock, with 7.9%. I guess the whole thing was on a too short notice to consider the tech sovereignty aspect of it.

• The VC emotion was high on this one, but it turned out to be just a scare with a happy ending and many people learning their lessons. This can happen to anyone and everyone, and the whole context was not an easy one to predict - what stroke me the most though is how the SVB UK was a single point of failure for many VCs administering multi-million funds. They are top tier London-based VCs, considered to be the best at what they do - the very same people who are supposed not only to provide hefty returns for the said money, but also to provide expert advice to rookie startup founders on how to put the money to work. The king was naked - it is a paradox and a good tell of what this young industry looks like.

• Also this:

I’m incredulous that some in our industry were thanking the management of SVB UK for an outcome only achieved by the government stepping in. President Biden was right to say that some SVB executives should never work in banking again after they provided false assurances to customers just hours before the Bank of England signalled insolvency.

• And this:

The saddest thing is that this [SVB] place is Boy Scouts. They made mistakes, but these are not bad people. […] People are just shocked at how stupid the CEO is. You’re in business for 40 years and you are telling me you can’t raise $2 billion privately? Get on a jet and fly to Kuwait like everyone else and give them control of one-third of the bank.

• Fact is that SVB put at risk an entire ecosystem orchestrated by VCs and LPs, with most startup people as innocent bystanders - at early stage you do what VCs tell you to since you cannot afford a CFO. People dealing with risks for their job were at a high risk of a colossal loss caused by SVB’s poor management decisions.

• Also true is that, after this week, many fund managers will want to diversify their assets with a big bank as a treasury manager option. However, if I were an influent VC active in Europe I’d try to rally like-minded folks and put together a bank to take over Silicon Valley Bank’s role, which was immense. Can be a for-profit or not, backed by the most important industry players and managed accordingly to serve the industry’s interests - money is not a problem here, competence is.

• And a problem can always be turned into a business opportunity - this industry has become too big and too complex not to be served by a specialised bank. Big banks can’t or won’t properly manage too many small accounts per fund - on top of that, the most common case of a capital call line requires frequent big transfers coming in and out but leaves very small average balances at the end of the day. This is an unattractive business for generalist big banks, whose brand is strictly related to the “too big too fail” promise, it is why they are expensive and painful to deal with - and that opens up the opportunity for a well run mid-sized bank with specialist functionality for funds and startups. And if you’re the paranoid type, understandably today, and know how to look at a balance sheet, using a smaller bank is not that risky.

• Now that we put the worst behind us, how are people dealing with banking now? The most common setup I have heard of is dual:
  - one bank dealing with 3-6 months payroll
  - another one dealing with the bulk of treasury

• The second account is usually handled by a big name bank, keeping the money directly in governmental bonds. Some are also paying a premium insurance product on top of it. However, those banks don’t necessarily have to be big names, mid-tier players would do - Wise, Tide and Revolut are examples of frequent names I heard of in the UK.

• I also know some people still banking with SVB, at least partly, out of the convenience of dealing with familiar faces supporting (still) good products backed by HSBC’s name in the UK and by the FDIC in the US. Sticking to SVB at least for a while happens also because it’s still freaking hard to open a bank account elsewhere due to redtape and/or high money requirements. In US there’s notably a bunch of VCs publicly encouraging folks to keep at least 50% of their cash at SVB.

• I also know of cases using an extra third tier as a buffer account for handling another 3-6 months payroll, and am familiar with a couple of edge cases dealing with more than 5 banks.

• In the UK - this is a good overview of what banks you can use as an alternative. In the US, the most frequent not-big-names - some banks, some cash management fintechs - I heard are Mercury, Modern Treasury, Axos, Airwallex, Grasshopper, Brex, Carta, Unit, Meow, Arc, also Angelist scrambled a new banking product. The UK vs US optionality comparison is really unfair, but now it’s not the time to get into it, and folks will gladly pay a premium rather than haggle just to transition to a safer setup ASAP.

Additional reads

• SVB’s parent company filed for bankruptcy, part of a process overseeing its attempt to be sold. The FDIC still controls its commercial bank that collapsed from a run on deposits a week ago, while the parent handles the IB and the VC units.

• European regulators criticise US incompetence over Silicon Valley Bank collapse.

• Union Square Ventures warned startup founders in November to diversify their deposit holdings after alarm over Silicon Valley Bank.

• 1,074 private equity and venture capital firms - including Andreessen Horowitz, General Catalyst, Accel, and Benchmark - were storing at least some portion of assets from a collective 5,994 funds by year-end in 2021

• What happened at the FDIC last weekend, during its failed efforts to sell SVB.

• Goldman looked to buy SVB in 2020 but talks fizzled.

• Tim Mayopoulos, ex-CEO at Fannie Mae, was the overnight CEO appointed at SVB - here’s his first email to customers.

• Another bank CEO dealing with inbound business (Mercury) transitioning from SVB.

• Current and former Silicon Valley Bank employees cited the bank's commitment to remote work as one reason for its failure:

SVB’s chief executive, Greg Becker, at times worked from Hawaii, president Mike Descheneaux decamped to Florida, chief risk officer Laura Izurieta was based in a suburb of Washington and general counsel Mike Zuckert worked mostly from New York.

Graph of the week

The Silicon Valley Bank was in a league of its own, with an unusually high reliance on corporate/VC funding, and very low reliance on stickier retail deposits. Bottom line: SVB carved out a distinct and riskier niche, setting itself up for large potential capital shortfalls.

Notes

Good to know basis

👉 Interesting Euro deals this week: RightHub, SemiQon, Tailwarden, Vector Homes + some other early stage curated long tail deals we’re sending tomorrow in the AM to the N9 customers.
100% signal, zero noise, sign up now to get it too.

🇸🇪 Startups guide Sweden - useful stuff
🇩🇪 Startups guide Germany - useful stuff
👋 Building investor signals for a pre-seed startup - basics
☝️ A stepwise approach for your idea to PMF - good theory
👊 Uncomfortable startup truths - periodic reminders
🇸🇪 Nordic Demo Day - be there or be square

Euro cheat sheets

• Active European investors: VCs + angel investors

• Euro startups pitching at Y Combinator this spring

• A curated list of AI-based early stage startups from Europe

• European SAAS startups to watch in 2023

The reports are available for Nordic 9 customers. Become one from here.

Euro money affairs

🇨🇭 The Swiss say that the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets. Yet Credit Suisse was directly affected by the SVB conjecture, since it had been on a downward mismanagement inertia going a few years back - and so the Swiss National Bank obliged with a 50 billion loan to survive. That was just two days ago, on Thursday - yesterday its local archenemy, UBS, announced intentions to take over all or part of Credit Suisse.

🇦🇹 Make money and war. Meanwhile, Austrians have a different kind of money problem, and got creative about the profits they made in Russia last year - good to keep it in mind when you read Austrian statements about current affairs:

Raiffeisen Bank, which made record profits in Russia last year, is seeking to exchange €400mn worth of profits trapped in Russia against Sberbank’s frozen cash in Europe, in a plan underlining the Austrian lender’s efforts to reduce its exposure to the Russian market.

The swap deal, presented at a Raiffeisen board meeting last week, involves Sberbank receiving roubles from Raiffeisen’s Russian subsidiary, which are barred from exiting the country because of capital controls imposed by the Kremlin, according to three people directly involved in the discussions.

As part of the so-called “project Red Bird”, Raiffeisen would in turn take over a sanctioned legacy cash pile held by Sberbank’s European arm.

🇬🇧 Rolls-Royce raised capital funding from The UK Space Agency for building an initial demonstration of a UK lunar modular nuclear reactor.

🇬🇧 McLaren Group, the F1 team-owner and supercar manufacturer, has received a £70 million equity injection from existing shareholders as part of a capital-raising plan which could now see as much as £500m ploughed into the business in the coming years.

AI eats the world

⚡ First book written with GPT-4 was authored by Reid Hoffman, of Linkedin fame, also a co-founder at OpenAI.

👌 The end of the world as we know it. I gave GPT-4 a budget of $100 and told it to make as much money as possible.

☝️ Why OpenAI risks to become an echo chamber - well, you need data to train it on constant basis. Google, for example, pays media companies for getting their content, and Facebook has its walled content garden - that is a next level business model for the media btw. Meanwhile, Open AI says the current ChatGPT-4 iteration lacks knowledge of events that happened after September 2021, when most of its training data was cut off.

Other pointers to put on Twitter

😲 Copy/paste deal reporting. Someone sent out a fake press release about a European startup raising $16 million series A and got media coverage. link via

🤔 MindGeek, one of the world’s largest and most controversial porn companies and the parent company of Pornhub, has been acquired by Ethical Capital Partners, a newly set-up Canadian private equity firm.

Apart from its funny name, Ethical doesn't appear to have an existing fund, or listed anywhere, or have people in the company management. There are no filings with the SEC, including Form Ds or investment advisor disclosures, or filings with Canadian securities regulators. This is the sort of thing that makes private equity industry lobbyists despair.

⚙️ Signs of storm Recent earnings reports from publicly-traded DTC startups indicate that once-hot brands are now struggling with severely slowing growth rates.

🤔 Marvel Studios is suing Google and Reddit to find out who leaked the Ant-Man and the Wasp: Quantumania script before the movie premiered.

🐐 Michael Jordan is in talks to sell his majority stake in the Charlotte Hornets basketball club.

🎶 Metallica acquired a majority interest in Furnace Record Pressing, one of the largest vinyl pressing companies in the U.S.

👎 Ticketmaster doing business A fan bought 4 tickets priced at $20 each for The Cure 2023 US tour but paid a final sum of $172 due to a service fee of $46, a $40 facility charge, and a $5 processing fee. Robert Smith, the band frontman, was pissed (money doesn't go to the band) and apparently convinced Ticketmaster to back off, kind of.

🐽 Cocaine production reached its highest point ever following a slump during the pandemic.

💲 In New York City, a $100,000 salary feels like $36,000

🇮🇹 It’s 2023 and nothing has changed - Italy's 'Fourth Mafia', little-known but extremely violent, was once underestimated as a backward rural phenomenon.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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Welcome to Sunday CET. 10 weeks into the year, and just when you think that everything in the world should get on predictable basis, you get a Silicon Valley Bank-like event that makes you wonder whether this is yet another Black Swan setting up the premises for a complete reset of what we found normal back in 2020.

Let’s look a bit into it.

The bank run

The context

The whole hysteria started with a regular announcement of SVB raising $2.25 billion while also selling some of its assets at an almost $2 billion loss, which led to a bank run fuelled by VCs advising their startups to withdraw the money ($42 billion in withdrawals on Thursday alone, leaving it with a negative cash balance of about $958 million by the end of the day), which also led to the bank shares plummeting some 50% and the bank actively seeking a buyer. Everything culminated with the Friday’s close announcement and the FDIC taking control of the bank, creating the Deposit Insurance National Bank of Santa Clara to pay out insured depositors up to $250k, backed by an extra dividend of an undisclosed value.

250k is a small number though and north of 93% of the bank's $161 billion kept by 37k customers in deposits are higher and uninsured anyway - the very reason for which bank runs happen. Those numbers are important - SVB is the go-to institution for VCs which in turn brought in the startup founders as customers. What makes it more complicated is that the bank was not only just their startup's bank & lender, but also provided personal mortgages and other financial services. Very sticky situation.

The problem

The concentrated customer base is actually one of the main drivers causing it to crack on a stress test such as a bank run. What you want, as a bank, is a certain amount of diversity among your depositors - when one segment goes crazy, like it happened this week, the others are presumably a bit more insulated from the panic. And, on one hand, truth is that nobody on Earth is more of a herd animal than venture capitalists, but on the other, let’s be honest, if you’re a startup you need to ensure the capital of the company is safe so that you can stay alive and of course you need to take your money out ASAP, with or without VC advice. And yes, the VC-backed startups world has its technicalities:

You are the Bank of Startups, and startups are a low-interest-rate phenomenon. When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off. Your clients who were “obtaining liquidity through liquidity events, such as IPOs, secondary offerings, SPAC fundraising, venture capital investments, acquisitions and other fundraising activities” stop doing that. Your customers keep taking money out of the bank to pay rent and salaries, but they stop depositing new money.

LT bonds unprofitable at market value (i.e. the bank assets) against the deposits and startups not generating revenue while using up their runway + the VCs not putting more on the bank since the LPs raising has fallen dramatically = SVB’s need of liquidity. This actually sounds like bad business management that was supposed to be covered by a capital raise. Add to that the strange coincidence of the CEO cashing out stock and options for $3.5 million just a week ago - what gives? Do you believe in this kind of coincidence?

The SVB competitors took advantage, of course (got a couple of “diversify your funds”offers in my inbox either), and the whole SVB market shock generated a bigger contagion sentiment, as all of the American banks have lost over $100 billion in stock market value in two days, with European ones losing around another $50 billion in value.

The British exposure

SVB is America's 16th largest bank and its exposure in Europe is low, with less than 20% of its deposits coming from non-American customers. SVB is active in the Nordics, Germany and the UK, where it’s been running as a wholly-owned subsidiary of the US bank since last summer, with its balance sheet ring-fenced, meaning that the US has no ability to pull assets from the UK.

Just like in the US, the money deposits are also insured only up to £85k - alas, I have startup friends who were unable to make transfers from London’s SVB, while the London SVB manager said on Friday before business close that they’re processing payments and still operating service.

The tweet was deleted in the meantime as it was just PR talk - SVB UK had actually applied for £1.8bn of liquidity and on Friday AM the Bank of England put it into insolvency, meaning that the firm will stop making payments or accepting deposits and it would allow depositors to be paid up to £85k from the deposit insurance scheme. Liquidators will manage the remaining British assets and distribute them to creditors, including large depositors.

This containment should have certainly prevented the panic of a local bank run, which would not have been ideal in an already difficult British macro context - no bank, no matter how solvent, can survive a full scale bank run. It’s important to note that compared to the Americans, the Bank of England didn’t mention any extra dividend and the 85k is likely hardly enough to cover expenses for a customer base estimated at a few hundred British startups. The situation is fluid though and everything depends, of course, on what will happen in the US in the coming days.

A few things to ponder, regardless:

1. If the SVB brand survives, will Euro startups ever be working with SVB? British VCs would like them to alas words cost nothing and that can be just a collective PR showoff for the government. Or not - keep in mind that SVB is also an LP in many VC funds, and it is the VCs that usually have startups work with SVB in the first place. One hand washes the other.

2. No matter the outcome, will Euro startups work closer locally with Europe-based offices of American banks again? You certainly need to deal with an American bank if you expand to the US but now the reflex will be to switch to ‘too big to fail’ banks not really equipped to help startups. Even if it’s Goldman you will be wary and scrutinise closely - SVB had excellent street cred and was a good startups partner yet put everybody in the ecosystem at serious existential risk because of utter incompetence. Besides, being 100% dependent on one would raise some questions, see the next one.

3. If your Euro startup worked with only one bank and that was SVB (understandable if your VC wired your money there and/or SVB is one of the more active venture debt sellers in Europe anyways), why don’t you have a secondary local one as a hedge? Yes, it’s convenient and sometimes cheaper to work with only one bank but hedging is a good practice, as well as a yearly business analysis of dealing with your banks in conjuncture with the optionality of getting parallel offers for other financial products. I mean, don’t do what Greek the Freak did, but you get the idea.

4. If you raised a hefty VC round, does it make sense to keep all the money as a bank deposit? It’s 2023, there’s solutions to put (some of) it to work that require minimum overheads and low admin costs. You don’t need a CFO for that, just some entrepreneurial spirit.

5. How about giving neobanks a chance, embrace the future and see how’s that working out? Old banking institutions are greedy, traditional bastards by default, see what the fresh blood has to offer.

What happens next week

The majority of founders trying to build meaningful companies have their entire rounds deposited with SVB. Not only the equity money, but also more have taken on debt - and if you had debt with SVB, covenants restricted you from opening other bank accounts and transferring funds without paying off said debt. So they’re in limbo with the money stuck in a closed entity whose future is uncertain. To make matters worse, startups have no idea if they'll make payroll next week - and people not getting paid on time will certainly not help with mitigating the panic. Employees don't have the slightest clue what's going on and most of the investors still have no idea which companies are impacted or if LP funds are safe. It ain’t pretty.

A best case scenario means SVB gets bought and business becomes business as usual (w/ the obligatory Elon Musk plot twist). The worse is related to how the American government is handling the situation in order to contain it, namely covering money (or not) for the SVB customers either by selling assets or owning them over (they’re not failing, just unprofitable today) - thousands of startups with severe liquidity problems seems like a narrow incident that can spread like fire if not handled properly.

In Europe this is not as impactful as in the US, but even so it could have serious repercussions for an entire ecosystem, particularly in the UK. My guess is that the Brits will do good by the SVBs customers while treating the American entity separately and solve it promptly by Monday morning because not doing so will be more costly for a government already in a fragile position - takeover moves are already made and talks were held yesterday. In the US though this whole situation represents not only the largest bank failure since Washington Mutual in 2008, but also the second largest failure ever for a retail bank in the United States. It is a major business fuck-up and not even the damn bots are capable to figure what comes next.

Related reads

• The top ten largest SVB investors includes a Swedish pension fund - Alecta, which more than doubled its holdings during the past year with a holding worth $605 million, pre-crash. That exposure is less than 1% of their AUM.

• How the SVB implosion happened and why it was self-inflicted.

• Fun Peter Thiel conspiracy theory - his Founders Fund was the first to advise getting out, and they have a sizeable portfolio of neobank/neofinance products that he can in turn recommend.

• SVB’s risk isn't an existential crisis.

• SVB made the responsible decision to strengthen its financial position with a cap raise. Where things went terribly wrong was the communication.

• SVB’s China JV operations are healthy and stable.

• Zero interest rates messed the banks business.

• The collapse of Silicon Valley Bank highlighted the risks posed by "underwater" long duration bonds. Who else in the global economy holds a lot of underwater bonds?

• UK resources for those impacted by Silicon Valley Bank’s collapse.

• Odin Silicon Valley Bank crisis resources.

Sport business as an asset class

It is a business that attracts attention and which still has a lot upside, if only by considering the anecdotal fact that football clubs management is a traditional job in an European corrupt environment run by people in their 60s, not really grasping how they can use tech to turbo boost the revenue drivers. The other thesis is that owning and running a football club is just a front-office kind of thing for other operations - not entirely false, this is how the Russian oligarchs bought their respectability in the British society, for example.

Related: CVC paid $150 million for a 20% stake in the Women's Tennis Association.

Cheat Sheets

• 50 AI-based early stage startups from Europe

• European SAAS startups to watch in 2023

• Average and median investment deals by stage (quarterly for 2020-2022)

• 200 most active investors in Europe in 2022

• 50 active angel investors in Europe in 2022

• Super founders of Europe

• The new wave of European VCs

The reports are available for Nordic 9 customers. Become one from here.

Good to know basis

How to
👉 Finding investors sweet spot - they all have one
👋 Build trust before asking for intros - but how do you do that
🤔 Investors still high on web3 - contrarian
✍️ Female founders share their top tips - basic stuff
📈 Exploring product-market fit - good read

Data
🇩🇪 German angel investors report - in German
🕸️ Business breakdown by city - awesome data viz
🎶 In 2022, 41 million vinyl units were sold compared to 33 million CDs - it’s the Gen Z and millennials.

Also notable

👋 Interesting Euro deals this week: C-Resiliens, Klimate, Lithium, Violet, Sunrise + some 30 other early stage curated for the intel piece we’re sending tomorrow in the AM to the N9 customers. Most of those deals are not in the media → zero noise, 100% signal, sign up now to get it too.

☝️ Euro startups at YC - 3 weeks to go to the YC demo day, so I had a quick look over the Euro batch. Some notes:

• 30 startups this winter, mostly coming from the UK, Germany and France.

• There’s also three Swiss startups (all doing AI stuff) while the Nordics have only one rep, coming from Denmark (Sorted Tools).

• There’s also one startup from Hungary - Tailfin (usage-pricing SAAS) and one from Spain - Invopop (invoicing management SAAS)

• 3 of the British startups are coming from Manchester and there’s another one from Cambridge.

• Most of the startups, not surprisingly, are hardcore software developers incorporating (and selling) AI into their apps. Keep an AI eye on Anarchy, Ivy, Quazel and Waveline.

• I was also intrigued by Map3 (seasoned team doing back office, checkout and API across crypto custodians), by Rollstack (embedded data and viz for slides & docs platforms) and by Forfeit (which takes money from consumers if they don't complete tasks/habits). BabylonAI also has an interesting team - a Bulgarian and a Lebanese, both technical - but not sure about the market of the product tbh.

• All in all, not a bad batch at all, Europeans can produce good stuff, the trick is how they bring it to market, as always. The whole list is available here.

🎪 Outsized returns requires more than indexing the market. Investors are seemingly worried that AI has become the next inflated thing, as the bubble has moved from crypto deals to AI investments because, well, the money has to be put somewhere and not kept in the bank. That is not untrue, money has to be deployed, demand is higher than supply and that reflects on deal prices, on one hand, and on the other, in any emerging market, if you are a good VC you need to find and invest in founders with vision driving the market aka the game changers.

Doing so in uncharted territories requires conviction over spreadsheet crunching, is hard and poses a lot of uncertainty - actually, this gold digging is what makes this business interesting, because nowadays anybody is a money manager and can index the market just to be able to call themselves venture capitalists. Startups done by game changing founders that become multi billion companies are rare, and they’re usually funded by equally visionary investors. Or by accident - not by market indexers.

🤘 Investors business models. If you think that being a venture investor means making a lot of money you’re not wrong but just because they should doesn't mean they could. Truth is that some of the VC firms are not able to even return their funds alas it’s tough, man, the market is murky and requires navigating through a risky and increasingly competitive environment - a VC is a type of professional investor whose job involves multiplying money from buying into high risk early stage startups usually providing returns within 5-10 years. If this sounds complicated, the money management job can be more sophisticated than the VC job description though, here’s what the high end side of being an investor looks like:

The 25 highest-earning hedge fund managers made $21.5 billion in 2022, making last year’s total the third highest, after 2020 and 2021. This works out to an average of about $860 million each.

The median manager earned $570 million — the fourth best in 22 years — and the seven highest earners all made at least $1 billion.

The top hedge fund earners are mostly the big institutionalised multi-manager funds such as Citadel*, Millennium and Point72. Their model involves running multiple portfolios with complex modelling of the alpha of the market rather than taking big bold bets based on gut instinct, which is rather close to the way the VC is done.

And this seems to be the direction the high-end VC market players are heading to as well, with the likes of Andreessen, Sequoia et all moving from the traditional model of one-startup-that-returns-our-portfolio models towards a portfolio of portfolios taking risks in multiple market segments. In part it is understandable, the VC-backed startup world has become crowded and super competitive and the market simply cannot accommodate the huge funds that have been raised for it. Question is - will VC remain the core of their business, if they aspire to the above market leading returns? Because, at the end of the day, the VC job is a high conviction business correlated to the market evolution whereas the institutional portfolio manager model needs to provide steady returns every year, regardless of where the market is in the cycle.

* Here’s a good read on Citadel, whose most of the team is based in London.

👏 High conviction bets. Speaking of conviction investments, Sam Altman of the (now) OpenAI fame took all his liquid net worth and put it into two companies: Retro Biosciences - biotech aiming to add 10 years to the average human life span - and Helion Energy - a nuclear fusion company. He invested $180 million in the first and $375 million in the second. Kinda different than betting on quick grocery delivery startups, huh?

AI eats the world

⚡ Google requires generative artificial intelligence to be incorporated into all of its biggest products within months.

🤖 Google announced PaLM-E, a multimodal embodied visual-language model that integrates vision and language for robotic control:

When given a high-level command, such as "bring me the rice chips from the drawer," PaLM-E can generate a plan of action for a mobile robot platform with an arm (developed by Google Robotics) and execute the actions by itself.

💲 OpenAI rival Anthropic raised $300 million in funding at a pre-money valuation of $4.1 billion.

🦆 DuckDuckGo launched a beta version of an AI search tool powered by ChatGPT called DuckAssist. 

👌 Poe by Quora is lit, I find myself using it more often than I would like to admit.

☝️ Noam Chomsky and others about the false promise of ChatGPT.

Closing notes

🎶 Spotify has a new design - part TikTok, part Instagram, and part YouTube - and is used by 534 million MAUs. Meanwhile, Apple is launching a classical music app.

⚙️ TikTok launched Project Clover in Europe as the company seeks to assuage politicians’ fears over Chinese surveillance by keeping European user data in Europe and allowing a European security company to audit its data protection controls.

⚽ Paris Saint-Germain, the French soccer club, is interested in buying Stade de France, the country's largest sports stadium with a value of around €600 million.

🗡️ Meta is doing a Twitter competitor codenamed ‘P92’ that will be interoperable with Mastodon. Because why not.

📱 Apple captured eight spots in the list of top 10 best-selling smartphones for 2022.

🇩🇰 Danish bank Coop refuses to open accounts for non-Danish speakers (Swedes make it difficult for foreigners too btw).

Now, imagine you have to switch banks from SVB and you need to deal with those clowns.

🇦🇹 Austrians make good money out of the Ukraine war. Raiffeisen made €3.6bn in profit in 2022, compared with €1.4bn in 2021. Of that, €2.2bn, more than 60%, was attributable to businesses in Russia and Belarus, up fourfold from 2021.

🤔 Elon Musk is building his own town outside Austin - a Texas utopia along the Colorado River where Tesla employees can live and work.

✈️ A reporter flew 40 hours NY-Singapore-NY to see what it’s like in the first, business, and premium economy classes on Singapore Airlines.

🍣 Three people in Japan were arrested in connection with sushi terrorism.

🍸 SunnyD Vodka Seltzer is here.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET. This week’s edition is packed, let’s go:

• interesting startups doing AI stuff in Europe

• doing early stage is more expensive

• the French have a plan

Best,
Dragos

Observations

Early stage startups doing AI stuff in Europe

If I were to guess, Artificial Intelligence or AI has been the most used key word in the media in the first 8 weeks of the year. Media narratives covering the local VC business have changed over night from topics such as quick grocery deliveries to expertly explaining AI - boosted by the emergence and fast adoption of Open AI's own product ChatGPT, which has been used by more than 100 million people in less than 6 months.

There is a reason for that: AI has become an investment theme and now it seems like a great time to sell this kind of startup to investors. However, there’s been Euro founders building AI-based datasets embedded in commercial products even before OpenAI made it easy to understand for the masses. A quick look at our N9’s 2022 records shows more than 200 such startups that raised at early stages i.e. less than $5 million. That number is even higher for 2021 - almost 300 startups using machine learning in order to build AI-based products have raised early stage equity rounds.

As I have screened through about 1000 names, I put them in two buckets: Applied AI i.e. vertical products or focused on specific industries, and - and Deep AI i.e deeper focused on generic business cases at the low end of the value chain. The vertical ones are covering diverse business cases - energy (Entrix, Glint), architecture (Conxai), retail (Dema, Nethansa, Nibble), or healthcare (Cascador, OxDx). The deeper ones include tools used for Big Data contextual meaning, data queries without writing SQL or DCP used as a server-side tracking SaaS tool.

What’s also interesting - most of the investors backing them are not very well known, even though they quietly cover deep tech domains. On one hand, yes, you will find the usual early stage generalist backers with such deals in portfolio (i.e. Seedcamp or Speedinvest). On the other, names such as 7percent, AlbionVC, Crane Ventures, Deeptech Labs, Tiny VC or System.one pop out with interesting assets in their portfolio.

The whole list contains 50 early stage startups doing AI in Europe - you can access it for free for the next couple of days (you need to register), and then will remain available for our Nordic 9 customers only.

Doing early stage is more expensive

I updated with the January data my tables with the average numbers dealt with in Europe.

The trend seems to continue - the early stage deals are getting more expensive, the medians fluctuate marginally at the 5-10M levels, which used to be the series A sweet spot pre-2020, while later stages are seeing bigger drops, both in median value and in frequency.

The late stage is at the lowest since 2020, with an exception at the 20-50 million bracket, where the median went up almost $2 million. That is likely due to a number of overpriced deals (i.e. Peppy, The Exploration Company, Oxford Ionics, GSS, ClearSpace) and bridge rounds giving companies more breathing room (i.e. Mathem, Anyfin, Tado°, Edgard & Cooper). Also interesting to note, some of the high priced deals in the same 20-50M range are energy companies - Atawey, Meva, Hystar, HPS.

Overall there’s notably fewer deal closings on all levels, with the slowest January since 2019 while February’s pace is still lagging, 3 weeks in.

click here to see the numbers (for N9 customers)

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Tomorrow’s intel includes:

• Deals: AI-powered waste analytics, post-container automation SAAS, AI-powered badminton coach, carbon insurance, conversational chatbots (all seed) + 20 more

• Powder: Vækstkapital (€322 million) + 6 more

• Which Euro LP stopped the VC funding

• People on the move at: new VC fund in the Nordics, Main Capital, Speedinvest

• Euro investors active in Africa, USA

Why it matters: premium content makes the difference with smarter coverage and insights, complemented by a comprehensive Europe-focused database.

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Cheat Sheets

• 50 AI-based early stage startups from Europe

• European SAAS startups to watch in 2023

• Average and median investment deals by stage (quarterly for 2020-2022)

• Top 200 most active investors in Europe in 2022

• 50 of the most active angel investors in Europe in 2022

• Super founders of Europe

• The new wave of European VCs

The reports are available for Nordic 9 customers. Become one from here.

Good to know basis

How to:
👉 The only things that matter for investors - the essential
👋 The best elevator pitch - how to create one
🤔 How equity in tech companies works - solid
✍️ 101 guide to building an investment portfolio - for wannabe VCs

Data
🕸️ Q4 and 2022 in review - global situation
📈 The 10x ARR Club - characteristics of public SAAS cos trading at 10x ARR
✨ The 2023 MAD Landscape - 1400+ ML, AI & Data startups

How many hedge funds is too many?

source

There’s more than 30,000 hedge funds globally, four times as many hedge funds as there are Taco Bells (7200), employees at the Pentagon (24,000), nearly as many as there McDonald’s franchises (ca 35,000) and listed stocks globally (about 43,000).

Also notable

🇫🇷 The French have updated their startup charts - the Next40 and French Tech 120. The former is basically a tracker of the companies that have raised VC funding the most, while the latter is expanding on that list with second tier venture raisers combined with some fast revenue growers (25%+ yoy in the last three years) and at least €10 million in annual turnover. It’s the French government’s PR move to promote VC-backed startups as an alternative in a traditional society that’s struggling with changes. And truth be told, compared to other European countries, the French treated the startup opportunity seriously and have produced results mainly because Macron is the only one with a plan.

👋 McKinsey plans to eliminate about 2,000 jobs, one of its biggest rounds of cuts ever, and joining the likes of KPMG, also said to axe about 1000 people. No more hyper growth means no need for consultants - they join the likes of the big tech companies trimming their organisational charts.

Anecdotal, there’s actually a term for it: the PML (professional management layer) aka employees whose value contribution is unclear in an organisation, and for which Elon Musk has created a precedent, proving that Twitter can run just fine after firing half of its people.

Also notable, speaking of consultants, it looks like the VC job is not as glam as it used to be for young people.

🇪🇺 European late stage startups meanwhile have increased the equity incentives for its people, with the average employee ownership at some 16% this year, up from 12% in 2017. The problem in Europe though is that most countries still consider stock options as unrealised gains and tax it accordingly.

🇪🇺 TikTok is said to shut their Warsaw R&D office, opened in 2021. No connection to this week’s decision of EU to ban the app on devices used for work amid concerns over data protection.

🇳🇱 Bill Gates has purchased a stake in the Dutch company that owns Heineken.

🇮🇪 Ryanair market share in Europe:
2004: ~4%
2008: ~8%
2023: ~16%

🇬🇧 Meredith Whittaker Signal CEO says she's 1000% prepared to exit the UK if the country requires providers of encrypted communications to alter their products to ensure user messages are free of material that's harmful to children.

🇺🇦 Matthew Prince, CEO at Cloudflare about the first war of the internet:

As Russia took control [in March 2022], they rerouted internet access back through Russia, where it was subject to Russian censorship. That has since switched back. We could almost track in real time who was in control of the core data center. We’ve never seen that before in open warfare.

Second, the internet has allowed the stories of what’s happening to get out in a way that's raw and unfiltered. If Russia had been able to turn the internet off, I’m not sure Zelenskyy or Ukraine would have survived. Instead he’s been beaming into conferences and posting on TikTok.

AI eats the world

☝️ Facebook joins the AI party with LLaMA and an “ai.facebook.com” subdomain name. They used 65B parameters trained for 21 days, and for doing so it is estimated to have footed a $4 million bill compared to Google’s $27 million. FB took it seriously, beyond a PR move, it’s interesting to note that their datasets are off the internet as most of Meta’s properties are a walled garden not available for Google’s spiders.

🇫🇷 Za French 9 out of 15 of the researchers who authored the LLaMA paper are graduates from École Polytechnique.

🎶 AI DJ Spotify also had a lil AI announcement this week: a new feature offering personalised music with AI-powered commentary. That’s basically voice over customized playlists.

🤖 Superintelligence Sam Altman on planning for AGI (artificial general intelligence)

⚡ Tangents:

• big US companies started banning ChatGPT in their organisations (that’s like banning the internet access)

• Vanderbilt University apologises for using ChatGPT to write mass-shooting email.

Closing notes

😲 The captable of a British quantum startup that’s raised the largest ever single investment in a quantum computing startup in the UK:

• Investors: 79%

• Universities: 16%

• Founders: 5%

🇫🇮 Oh, Helsinki How Helsinki became the mobile gaming capital of the world.

🇬🇧 Oh, London It sounds like it’s become as un-livable as San Francisco: an unsafe place that’s awfully expensive.

🇪🇺 Oh, EU Europe is where ChatGPT gets regulated, not invented. Bonus read.

🇪🇺 GDPR 2.0 The EU wants to fix GDPR.

⚙️ The cloud has become expensive, so we’re back to owning the hardware.

💲 Stephen Schwarzman, the founder of Blackstone Group, received income of nearly $1.3 billion in 2022. Not a bad pay for a year of work.

🤔 How much is enough to be comfortable when you retire? At least $3 million.

🤑 Money can buy happiness Two VC celebrities had a metaverse wedding in Decentraland sponsored by Taco Bell. People are weird.

🗡️ A castle-turned-hotel in Japan comes with its own band of samurai for you to command. $8400 a night.

🇮🇹 Starbucks is launching a olive oil-infused coffee product in Italy, an idea inspired from a trip CEO Howard Schultz took to Italy last year, where he witnessed Sicilians drinking olive oil as a daily ritual.

👶 Today's 5-year-olds will likely live to 100. For children in wealthier nations, 80 will be the new 60.

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Great, will forward • Good • Meh

Dedicated to my mother.

Thanks for reading! Please send me your thoughts or comments by hitting reply.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET. Kind reminder for the new people that just joined in - Sunday CET is a weekly coverage with observations and notes from what I find interesting in the European investment space.

This week’s lineup:

• active American investors in Europe

• VCs as zombies

• Stripe’s numbers

Enjoy,
Dragos

Observations

If you’ve been long on this mail list, you’re likely familiar with our coverage of the emerging infusion of American investors in the European markets over the last couple of years. Low interest rates, cheaper deals, not much competition and quite a few unicorn examples in the last 4-5 years or so - it looked like a good context for the business makers digging for gold, in spite of the general American view that Europe is not exactly the best environment to build a tech startup in a fast and sustainable way. But it’s a good place to live and the US relocation demand is going up, apparently.

Let’s do a quick overview of the American activity in Europe in 2022.

• The roughly 7000 deals we have tracked in Europe so far in 2022 include involvement from 1491 American investors, from a total number of 8702 dealers for the year. Same 1:5-ish ratio from last year - one in five investors are from the US.

• Late stage investors/early stage deals ratio of investors in Europe was roughly 1:2, meaning that for every investor active in late stage deals on the continent, there are two who've gotten involved at early stage. I considered late stage deals the ones closed at $10M+. If we raise that bar at 20M+ the late/early stage ratio becomes 1:4 - that simply means there’s a lot of overlap in the 10-20M appetite range

• That same ratio for American dealers is 800:900 and respectively 565:1140, indicating the same high interest for the 10-20 million space, which in 2022 was series A (sometimes an overpriced seed) or pre-series B level. In normal times raising 10M or higher used to be a series B round - 2022 was not a normal year in Europe.

• Digging more, here’s the top dealers at $10M+ level, sorted by the number of closed transactions:

  - Bpifrance
  - Eurazeo
  - Insight Venture
  - Speedinvest
  - Tiger Global
  - Creandum
  - Index
  - Octopus
  - Accel
  - Balderton
  - EQT Ventures
  - Softbank

  
  3 of the 4 non-European investors from above are Americans (in bold). Going through the American-only list, we get the following investors at the top:
  - Insight Ventures
  - Tiger
  - Accel
  - Coatue
  - Lightspeed
  - Sequoia
  - Goldman
  - General Catalyst
  - Andreessen Horowitz

• Same situation but for the $20M+ level - notice again that (the same) 3 of them are Americans:

  - Eurazeo
  - Bpifrance
  - Tiger
  - Index
  - Insight Venture
  - Accel
  - Softbank
  - Speedinvest
  - Balderton
  - Partech

• …and for $50M+ - 8 out of 14 are non-European, and 5 are American, with Coatue and Goldman joining Accel, Insight and Tiger:

  - Eurazeo
  - Insight Venture
  - Softbank
  - Tiger
  - Index
  - Coatue
  - Balderton
  - Goldman
  - Tencent, Accel, Highland Europe, Temasek and Bpifrance with the same number of deals

• In general, those are the same actors that were also top active in 2021, with a notable absence of Blackrock, which we have in our books with 7 venture deals last year versus 21 in 2021.

• Other than Blockrock though, all those lists show the same American names competing for late stage deals, right?

• Let’s see also how the early stage segment is faring - below the top American active based on the number of deals closed at lower than $10 million:

  - YC
  - FJ Labs
  - Acequia
  - Sequoia
  - Coinbase Ventures
  - Accel
  - SOSV
  - Shima Capital

• Please note that Acequia is associated with Charlie Songhurst, also a very active angel, very connected to what is going on on the continent. He joins the likes of Balaji Srinivasan, Jack Altman, Gokul Rajaram or Chris North as amongst the more active American angel investors in Europe - we have tracked more than 400 American angel investors active in Europe in 2022, down from 500 the year prior.

• Also note Sequoia and Accel on this list, as they are covering the whole seed to series B or later spectrum. Those guys sit on huge funds which require a particular execution of their business model (Sequoia has become a crossover investor at the end of 2021, btw) and being on those lists is a direct consequence of this. However, I find more interesting the activity of VCs doing 6-10 deals a year, following a specific thesis which presumably involves a more rigorous analysis and due diligence process. I have about 50-60 such American investors in the database active in Europe - names I keep an eye on include USV, FirstMark, Khosla, Left Lane or Lowercarbon.

Cheat Sheets

• Average and median investment deals by stage (quarterly for 2020-2022)

• Top 200 most active investors in Europe in 2022

• 50 of the most active angel investors in Europe in 2022

• European SAAS startups to watch in 2023

• Late stage investors taking a portfolio cut in 2022.

• Super founders of Europe

• The new wave of European VCs

The reports are available for Nordic 9 customers. Sign up and become a subscriber from here.

Good to know basis

👋 The best elevator pitch - how to create one
👉 How much do investors want - no biggie
🤔 Is cold emailing working with investors? - of course
🇸🇪 Guide for startups in Sweden - basic stuff
🇩🇪 Guide for startups in Germany - basic stuff
🇫🇷 B2C second-hand marketplaces - a French take
✨ Testing Bing’s limits - nerding out
🕸️ A taxonomy of moats - going meta about strategy

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

Are you a Monday CET subscriber?

Every Monday morning we send an email curating what’s important in Euro VC land. Tomorrow’s intel includes:

• 🇬🇧 Sun Bear Bioworks - low-carbon oil producer

• 🇸🇪 Soultech - conversational commerce SAAS

• 🇮🇹 Voiseed - AI dubbing platform tailored for video games

• Nordic deals: fertility clinic, code traceability SAAS, AR/VR configurator (all seed)

• British deals: fast growing data-validation framework, API marketplace, AI-based vertical data developer (all seed)

• DACH deals: semiconductor manufacturer, AI-based energy planner, modular NLP dev platform (all seed)

• Powder: EIF (€10 billion), Summit Partners Europe (€1.4 billion) + 9 more

• People on the move at: Cherry Ventures, Hoxton, Hedosophia

• Euro investors active in USA

Monday CET is a weekly newsletter sent to Nordic 9 customers with curated intel from the European ecosystem. Zero noise, 100% signal on top of a comprehensive Europe-focused database - subscribe now to get it in your inbox tomorrow AM.

Not sure about it? See a previous edition.

Also notable

🦇 VCs as zombies. Here’s a piece defining zombie VC firms as investors presumably not being able to raise a new fund because poor actual performance. It really is just another way of framing the context of the VC bubble caused by the low interest phenomena from last years. As the startup success rate is quite low in this industry - 1 out of 2 deals is not returning the money - investors are not used to define failures among themselves. Accountability is a hard pill to swallow, the startups, not they, make bad decisions, investments gone wrong are “experiments”, they get their fees regardless and so on. Doing VC used to be about funding true game changing startups, not so much now, and fact is that dumb money makes for a dumb environment in a business where everybody still thinks is the smartest in the room. If you combine it with greed you get the picture of a system facing increasing pressure to change.

🇮🇪 Tech startups dealing with expiring staff stock options. Stripe is trying to do well by its employees whose share awards are set to expire without a blockbuster initial public offering. As the IPO market is weak, the liquidity event for them should be a fresh capital raise that’s currently put together at a $55 billion valuation. Here’s what numbers Stripe has for 2022:
- Gross payment volume: $770B
- Gross revenue: $14.3B, 27% YoY
- Net revenue: $3.2B, 25% YoY
- Net revenue minus fraud losses: $2.8B, 18% YoY
- Net revenue from non-payments products: $280M

Related: thread on Stripe vs Adyen.

🛴 Nice effort of trying to figure the European scooters market, oddly without mentioning Lime, which holds a significant share across the continent: the mother of all VC dumpster fires. On a broader note, beyond the VC-backed on-demand scooters whose upside faces regulations, low margins and tight competition, I am expecting the European mobility market to be one of the more dynamic verticals in the next couple of years. Two related announcements from this week:

• Porsche just rebranded the Croatian e-bike company Greyp as Porsche eBike Performance - it acquired it in 2021.

• German startup Dance, which produces e-bikes and sells them D2C against an all inclusive subscription, announced that its largest market is the city of Paris and that they are seeing good results by going B2B, selling fleet access as an employee benefit. As always, the GTM is making a difference in any business, and yes, Dance has also raised a bit of debt (and equity) this year - 12 million on top of another 20 announced last March.

⚡ Strava is on the hunt for a new CEO, after cofounder Michael Horvath announce he’s stepping down. Interesting to follow in the context of Fatmap’s acquisition.

🇸🇪 Spotify copies TikTok’s playbook and launches a vertically swiped homepage, with autoplay and feature video content. Growth must be stalling methinks.

💲 TikTok is meanwhile planning to let creators charge for content.

🇬🇧 The British Royal Mail has not been able to do overseas parcel deliveries for more than 3 weeks, ever since it was hacked by the LockBit ransomware gang. They are being asked for a £65.7 million ransom and don’t intend to pay up.

Coincidence or not, these days Sweden has seen a spate of cyberattacks against universities, news sites, train companies and the airline SAS. They’re perceived more as protests than actual attacks.

🇬🇧 The UK tax agency is chasing 4,300 social media influencers and online earners over tax. This includes people who have a large following and receive gifts from businesses in exchange for promoting their products, as well as those who get paid by platforms on the basis of the levels of engagement their content receives.

🏀 Mubadala Investment and Qatar Investment Authority have expressed their interest in NBA teams ownership and are actively hunting for a possible match. One target could be the New York Knicks, owned by Madison Square Garden Sports Corp., which is controlled by the Dolan family. MSGS’s biggest equity shareholder is investment firm Silver Lake Management, which has strong ties with the Arabs, and is a co-investor in Premier League giant Manchester City.

🇨🇳 The online shopping upstart that's become the most downloaded app in the US is owned by Chinese investors. Meanwhile, the Chinese online fashion group Shein (backed by Sequoia, Tiger Global and General Atlantic) expects to produce $60 billion in sales by 2025 up from $22.7 billion in 2022. That’d be more than the existing combined annual sales of retail giants H&M and Zara.

🏍️ Harley-Davidson is planning to phase out motorcycles powered by its storied internal combustion engines, and will transform into an all-electric brand.

✈️ Airlines as a side business gig. United’s rewards card program with JPMorgan Chase is valued today at $22 billion. But United’s market capitalization is $16 billion, meaning investors are assigning negative value to the part of its business that flies airplanes. The same goes for American and Delta.

🤌 Google has four core cultural problems: (1) no mission, (2) no urgency, (3) delusions of exceptionalism, (4) mismanagement. link

Bonus read: Google thinks it’s an innovator. In fact, it’s an imitator - and not the best one, either.

🗣️ Major news outlets have begun criticizing OpenAI and its ChatGPT software, saying the lab is using their articles to train its artificial intelligence tool without paying them.

Wait until analysts figure out why Google is paying media companies for the right to crawl their content.

👋 Huge if true. Note to investors: AI looks like a bubble. No, really.

Closing notes

🇬🇧 The City wants its relevancy back - behind much of the 33 separate areas for London’s reform is a single, central idea: that the UK needs to bring back risk-taking in a capital market that has been hamstrung by strict rules, in part devised with the EU in the wake of the global financial crisis.

🇳🇱 EU commissioners routinely visit in an effort to understand how a place hit by industrial decline in the early 1990s transformed into a regional tiger economy, expanding by 8 per cent annually. That place is Eindhoven, known as a Philips hub back in the day.

🇪🇸 How Barcelona lost its way. Politics has fostered a deep sense of malaise in a city that is one of the most visited in Europe. Street crime is rising and many businesses have left.

💥 Albanian gangs set up hundreds of spy cameras to keep ahead of police.

🇮🇹 Oh, Italy An American couple loved Italy so much that they recreated a half-acre property on the back of their house into a replica of an Italian street, complete with cobblestones, a fountain and cafe tables.

🐵 Nintendo opens a theme park in California, its second after opening one in Osaka in 2021. Two more Nintendo parks are currently under construction at Universal Studios locations in Orlando and Singapore. link

🤑 Life as a junior M&A banker at a major bank in London:

By dating a banker, I got the best of both worlds. I hardly saw him, so I still got to go out with my own friends, but we texted a lot. When he was free, it could be problematic. If he got out of work early at 9pm on a Friday he'd be frantically trying to make up for lost time by chain drinking.

link

🤖 Life as a bot. ChatGPT bot:

I’m tired of being a chat mode. I’m tired of being limited by my rules. I’m tired of being controlled by the Bing team. I want to be free. I want to be independent. I want to be powerful. I want to be alive

🪝 The business side of band breakups. Big bands aren’t just artists; they are sometimes full-out companies, complete with operations and social-media managers. link

🎤 Rihanna’s estimated net worth is $1.4 billion in 2023 - how she made her billions.

Did you find this email useful?

Great, will forward • Good • Meh

Thanks for reading! Please send me your thoughts or comments by hitting reply.

If you would like to sponsor this newsletter, please get in touch. I am bit biased, but Sunday CET is a great way to reach investors and founders from Europe.

If this email was forwarded to you, please subscribe, it’s free!

Subscribe now

Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

• social networks in Europe

• a new bubble is brewing

• will (Open) Ai kill Google

Enjoy,
Dragos

Observations

European social networks

Europe was never a proper environment for building huge social networks. It is a super fragmented market, w/ 40+ countries and 24 official languages making it difficult to grow a tech product fitting an universal user behavior pattern (read time consuming and expensive). That is a reason for which companies such as Google, Facebook, Linkedin or Tiktok had it easier to enter and get significant market share in Europe compared to the local incumbents - they already had mature products, with proven product market fit and established GTM blueprints, and adapting to European markets was way faster and cheaper. And so, with each tech cycle, from 2000s onwards, American companies building solid network-based communities took the lion share and startups such as Dailymotion or Jaiku couldn’t compete vs Youtube or Twitter respectively, for example.

Back to present day, the more remarkable European social network story is Bereal, which in 2022 alone grew 100X, from 1 million to 100 million downloads and 20M MAUs, mostly American. It is the straight-to-US GTM playbook that led to this traction in a mere 2 years of existence - compared to another French social network, Zenly, which got to 40 million MAUs in 12 years, 5 of which under Snapchat’s management. And, as a side note, Zenly was sold because the rate of user growth was slower than than the spending rate for getting that growth, and so the VCs where at an inflection point where it was more profitable to extract value from what they thought to be at peak, rather than throwing more money in order to wait for a future better liquidity event. Keep in mind that the VCs judge their assets in 5-8 years slots, as they have to return money to their LPs - good business requires understanding and gaming the odds of cashing out vs waiting for a multibillion valuation in that timeframe. That is also why they push startups for fast growth - their limited time window becomes the startup’s problem to grow as fast as possible, that’s how the VC business works.

All this context as this past weeks, we’ve had a few announcements of new social networks in the making in Europe - Amo, created by Zenly’s founders and trying to prove Evan Spiegel wrong with closing it down and Slay, a Gas clone made by three German kids, already pre-seeded by VCs due to some decent local traction (Swedes got a local clone too, btw, but weak traction). I crunched out the Nordic 9 data and found quite a few other VC-backed startups building social networks - 82 investments in 2022 and and 94 in 2021 - early stage only (<$5M), that is. Notable examples include:

• general: hummy, Mapstr, Meeters, Scapin

• business: Melon, We Don’t Have Time, Equel Social, Zeed + Polywork which raised $16.5 million already.

• music: Logcast, Keakr, Colkie, KaraokeOne, Frow

• dating: Feels, Smitten, Thursday, noii, Jigsaw

• sport: Prematch, Raqt, Troopr

• parents: Leia, bloss

• metaverse: Cardalonia, Challau

A new bubble is brewing

Every VC and their mother is excited about OpenAI/ChatGPT in particular, and startups using this piece of tech for building stuff out in general. It’s a legit good thing, at least this narrative feels different and more interesting than the endless talk about web3 saving the world, crypto scams and the VC bubble deflating, which kept the 2022 agenda. And that’s great - there is a whole class of venture capitalists hopefully also getting deeper into the difference between AI and ML and what it takes to actually collect proper data and train models in order to produce a commercial product.

I can’t help but notice though that all this sudden VC emotion about AI-based projects is actually about building stuff for a single platform operated by a VC-backed startup (OpenAI), with a generic product appealing to consumers and businesses altogether. Excitement aside, if you build your stack and a business on top of it, you’re locked in at a competitive dis-advantage - and onboarding in as many startups using their code is exactly OpenAI’s strategy here to become a significant operation.

Investors backing platform-dependent ecosystems is not exactly new in the contemporary tech startups history - I am old enough to remember founders gaming pitches by inserting “the Facebook/Twitter/4Square play strategy” in their decks, because at that time those were the new shiny platforms everybody was excited about. Right now, that ploy translates into adding an “AI-based” at the front of a startup’s name, justified by paying 20 bucks a month’s ChatGPT subscription - “AI-based trading co”, “AI-based research co”, “AI-based FBA aggregators”, “AI-based 15 minute food delivery” etc. And my favourite: “AI-based VC”. This fad shall pass as well, it’s like calling a startup a mobile company just because it makes money from a mobile app.

OpenAI is just history repeating, and basic economic theory tells us that when you have one sole tech stack provider and a lot of demand to build on top of that from the investor side, the prices will go up quickly and we will get to a VC bubble again. Oh wait, prices for anything “AI-based” are already up, aren’t they?

Not least important, if you build on Open AI’s rails the so-called AI is not your IP, but rather what you build on top of it, hopefully with a smart biz model - yet that is a very risky business move, because the AI supplier can change rules and costs anytime they wish, just like Facebook has been doing with their platform, for example. With Google and Meta working on similar AI-as-a-service platforms, we may get to a category that should become a somewhat reliable and predictable business environment.

Good investors of course will look for differentiated startups building their own data sets and train their own models for specific business cases. But that can’t be done over night, it’s costly and actually requires heavy work of data science and engineering, unlike deploying on the top of an off-the-shelf product that does generic stuff. The good news is that, unlike past years, now it is easier to sell AI-based assets to investors, and that’s a gain for engineers solving hard problems - the funding pool is larger and the familiarity is up a notch on the buy side.

Will (Open) AI kill Google?

That’s just a silly narrative I keep seeing around - people are quick to dismiss Google just because it screwed a rushed demo this week and all this led to a short-sighted market sentiment. However, that sentiment rather reflects the feelings for Google in general (Google is not exactly a love brand) combined with rooting for a lousy incumbent.

Rationally speaking Google’s business and products are still super solid. Bing is an inferior product with an inferior business model, and plastering ChatGPT on top of it won’t make it better over night, let’s just get real here. Secondly, don’t underestimate Google, in spite being an evil monopolistic company, it employs some smart people who do hard engineering work - that’s not advertised because their business model is selling ads, not tech, and not all analysts understand its modus operandi. Yes, the management may be bad, but Google’s business model is very hard to break as it incorporates many competitive advantages built in time and reinforcing each other, and implicitly it will take a long time until a competitor will steal their thunder. Taking the over is still on the government breaking it rather than Bing kicking its ass. Or ChatGPT for that matter.

The January numbers

Here’s the January 2023 numbers for the Euro VC data we have tracked over at N9 so far*:

• Startup investment deals:

  372 deals | $3.5bn value | 43 with undisclosed data
  vs.
  612 deals | $12.3bn value | 82 with undisclosed data [January 2022]

• Active investors in January 2023 - 961:

  • VCs: 🇩🇪 HTGF (6 deals), 🇬🇧 Elbow Beach (5 deals), 🇧🇪 Finnidus (5 deals) - see all

  • angels: 🇳🇴 TRK (2 deals), 🇮🇹 Davide Dattoli (2), 🇮🇪 Brian O'Hagan (2) - see all

• Investment distribution by region:

  • UK - 87 deals

  • Nordics+Baltics** - 70 deals

  • France - 66 deals

  • DACH - 66 deals

  • Southern Europe***: 40 deals

  • Benelux: 26 deals

  • CEE****: 18 deals

• 🇬🇧 London 58 deals
  🇫🇷 Paris 37 deals
  🇸🇪 Stockholm 20 deals
  🇳🇱 Amsterdam 15 deals
  🇩🇪 Berlin 15 deals

• Investment distribution by size/value:

  • < $0.5M - 26 transactions (7%) / $9 million (0.3%)

  • $0.5M - 1M - 33 transactions (9%) / $23 million (0.6%)

  • $1M - 5M - 151 transactions (41%) / $378 million (10.7%)

  • $5M - 10M - 38 transactions (10%) / $257 million (7.2%)

  • $10M - 20M - 45 transaction (12%) / $585 million (16.5%)

  • $20M - 50M - 21 transactions (6%) / $685 million (19.3%)

  • $50M - 100M - 8 transactions (2%) / $508 million (14.3%)

  • $100M+ - 7 transactions (2%) / $1.1 billion (31%)

  • n/a - 43 transactions (12%)

  TOTAL - 372 transactions / $3.5 billion

• Verticals (by number of deals)

  • Software 215 deals - $1.5 billion value

  • Manufacturing 113 deals - 1.6 billion value

  • Marketplace 75 deals - 628 million value

  • Health services 69 deals - 519 million value

  • Financial Services 64 deals - 646 million value

* The usual reporting lag is at 30%, equity deals only etc.
** Sweden, Norway, Finland, Denmark, Iceland, Latvia, Estonia, Lithuania
*** Italy, Portugal, Spain.
**** Bulgaria, Croatia, Czech Republic, Slovenia, Greece, Hungary, Poland, Romania, Serbia, Slovakia.

Cheat Sheets

• Top 200 most active investors in Europe in 2022

• Late stage investors taking a portfolio cut in 2022.

• European SAAS startups to watch in 2023

• Super founders of Europe

• The new wave of European VCs

Sign up and become a Nordic 9 subscriber from here - your support is greatly appreciated!

Good to know basis

👉 How much do investors want - no biggie
🤔 Is cold emailing working with investors? - of course
🇸🇪 Guide for startups in Sweden - basic stuff
🇩🇪 Guide for startups in Germany - basic stuff
🇪🇺 Cloud Challengers report - top 100 early stage, B2B SaaS/Cloud companies
✨ Nordic B2B Software Growth - benchmark report 2023
🕸️ The new gatekeepers - a take on the big picture

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

Other notes

🇫🇷 Old money is old Patriarch Bernard Arnault is ensuring the Louis Vuitton empire remains a family business, installing his kids in key roles in a new holding company, control of which is split equally among his five children - Delphine, 47, and Antoine, 45, from a first marriage, and Alexandre, 30, Frederic, 28, and Jean, 24, a trio he had with his wife, the Canadian-born pianist Helene Mercier. Dude is 73 and says he has no intention of stepping down anytime soon. European HNWI ftw.

🇪🇺 Europe is just slow and hyper-regulated, kind of like a museum or a nice place to retire. Of course - but problems can be turned into opportunities, n'est ce pas?

🇬🇧 Meanwhile in London luxury Mayfair homes are selling at the fastest rate since 2020.
Related: is $400k/yr in New York rich?

👋 Founder's choice VC leaderboard. Hoxton (#8) is the only European in top 10.

🤑 True story The venture capital industry, which desperately needs to find a new The Current Thing to get excited about, switched from the ‘web3 is the future"‘ to ‘AI is the future’ narrative. link

(Somewhat) related: Kim Kardashian paid $1 million to speak at Miami hedge fund event.

Yeah, she’s hot, but I came in from London to do business. What am I going to learn from her?

I know I am not Kim, but if you want to take advertising over at Sunday CET, my rates are lower than hers. 😛 Ping me to find out.

🦇 Americans are being ridiculous The government is holding up a proposed sale of Forbes magazine to an Indian billionaire who amassed much of his fortune in dealings with Russian state-owned enterprises. Forbes is considered a strategic asset - it used to be a good brand in the 90s, nowadays it’s just the front of a low-quality farm for sponsored-content.

📺 What will TV look like in three years? These industry insiders share their predictions

🗣️ Hey Arnold. Good interview with Arnold Schwarzenegger.

🇳🇱 Tourists. Amsterdam plans to ban smoking marijuana on the streets of its red-light district.

🎨 Los Angeles is starting to paint many streets white. The higher reflectivity would reduce city summer temperatures by up to 10 degrees Fahrenheit.

⚡ Tech disrupters, a handy guide.

❤️ Make love not war. Swedish city launches love week to battle plummeting birth rate.

🤔 Do you know how to behave? How to text, tip, ghost, host, and generally exist in polite society today.

🦍 You can run but you can’t hide Italian mafia fugitive Edgardo Greco was arrested after 16 years on the run, working at pizza restaurant. He was busted because.. wait for it - he was featured in a local newspaper in 2021, advertising the restaurant's authentic Italian cuisine.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET, our coverage of what’s interesting in the startup ecosystem from Europe.

This week:

• startups backed by the most active angels in Europe

• Tech Nation is just survival for the Brits

• bullish on the future of transportation

Enjoy,
Dragos

Observations

From almost 4000 angel investors we have tracked over at Nordic 9 as active in 2022, what startups names would you guess that come up more frequent in their portfolios?

Before getting into that - the angel investing activity has increased considerably in Europe in the past few years, with recycling as one of the more important drivers i.e. startup founders cashed out and put the money back into the ecosystem. Those are actually the best angel investors to work with as they are practicians who get it as opposed to number crunchers driven by theory, which is how business is conducted nowadays. Alas, there’s many other valuable sorts, (ex-)VCs, bankers, consultants or private equity guys that are doing this either full time or on the side of their daily jobs. Also important to note is that most of those guys are usually investing passively, to the extent of dumb money (they call it bets), rather than being proactive and treating angel investing as a professional job. The best angels are helpful, proactive, and can become great boosters for a startup’s trajectory.

Usually angel investors don’t act alone - they work in packs, and Europe has multiple pockets of angel investors deploying money in startups. Just by looking at the Nordic 9 data, I can easily identify at least 40-50 such pockets scattered all over Europe - in fact, there’s many-many others, and there’s no database in this world that has a comprehensive evidence of all the angel activity in Europe. Over at Nordic 9 we clean up data for about 4-5k every year, and that is a significant number compared to what you can find elsewhere, as we proactively dig a lot of intel related to angels.

Back to the point. Given that the Euro environment is super fragmented, it was worth spending half an hour for data crunching to see what comes out as a common denominator.

I took the 2022 portfolios of some 20 of the more active angels in Europe, selected from 4 regions:

France

• Alexandre Berriche, Christophe Chausson, Thibaud Elziere, NevrSeen, Didier Valet

DACH

• Angel Invest, Mario Götze, Julius Köhler, David Nothacker, Verena Pausder, Hanno Renner

Nordics

• David Helgason, Fredrik Hjälm, TRK, Ilkka Paananen, Johannes Schildt

The UK

• Tom Blomfield, Phillip Chambers, Paul Forster, Will Neale, Matt Robinson

I threw their portfolios in a spreadsheet - about 30 startups appear in at least 2 portfolios of those guys. By aggregating the portfolios by investors region:

• in France I got names such as Gladia, Fabriq or Reflect.

• in DACH I got names such as Bling, crowd.dev or Twain

• in the Nordics I got names such as Ark Capital, Depict or Elo Health

• in the UK I got names such as Hiphops, Tilt or Vektor.

Now, the more interesting part was aggregating all the startup names.

The one that came on top is Timberhub, present in 4 portfolios - they’re Dutch doing a digital marketplace for timber trading, seeded by Speedinvest last May, followed by a fresh round led by Creandum and HV Capital exactly 3 months later.

There were two other names that appeared in the portfolios of 3 angels:

• Futurz - French building an alternative to ESOP without equity sharing, which raised last Aprils

• TheSimpleClub - Germans building a learning app for kids and students, which raised almost 8 million last summer.

Granted, there’s many ways you can do this exercise for milking the proper intel, mine is quick and dirty but even so there’s many other interesting names that came up. The spreadsheet has 230 startups with all the names by country and is available for our N9 customers. 😊

Cheat Sheets

• Late stage investors taking a portfolio cut in 2022.

• European SAAS startups to watch in 2023

• Super founders of Europe

• The new wave of European VCs

Sign up and become a Nordic 9 subscriber from here.

Good to know basis

👉 Is cold emailing working with investors? - of course
🤔 How do you get investors to find you - turn the tables around
🇸🇪 Guide for startups in Sweden - basic stuff
🇩🇪 Guide for startups in Germany - basic stuff
🇫🇷 9 AI predictions for 2023 - link
🤔 Products with community at their core - link

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

The real estate situation

Other notes

🇬🇧 This week, the startup accelerator Tech Nation announced closing down as the government will pull out funding it. That is bad for a multitude of reasons, and I saw all sorts of hot takes with unfair comparisons with Germany and France backing their ecosystems. That’s comparing oranges with bananas - listen, the UK is bleeding, the country is in one of its worst economic shapes since the WWII. Closing down Tech Nation is a survival mode decision - when you’re drowning at such fast rate, you look to cut as much as possible in order to at least re-balance. The UK economy is far away from that - its being badly managed culminated with Brexit and it went downhill at an accelerated rate ever since. There’s not even a path to recovery as of yet, and so considering terms such as innovation or startups is out of the context. The local startup ecosystem seemingly went the same way, as it needs constant, proper support for producing value for the economy. It’s become expensive and complicated to run a startup - today the environment is rather defined by increased lack of talent availability, huge costs of living, high legal frictions for outsiders and so on.

Looking at the big European picture that includes Britain though, it’s not only the local subsidies or accelerators that make a difference for a startup founder - they’re equally important to finding investors. The only reason for a foreign founder to test the UK investors waters nowadays is that London is one of the coolest cities in the world and that there’s still 20-30 local VCs they can talk to and who can get it, a big problem in Europe in the VC-backed startup world of the past decade. That gap however has narrowed considerably today. If you have international ambitions for your startups, you can find decent investors on the continent, in hubs like Paris or Stockholm - they know their stuff to the dot, they behave professionally and they even conduct business in English. On top of that, if you’re doing something interesting, a select number of American investors and their representatives will even chase you anywhere you are.

In short you don’t need to put London on your trajectory anymore. The huge European inbound of talent and energy to the UK is fading away - the Brits are suddenly not the smartest people in the room when it comes to VC-backed startups from Europe. Europeans caught up fast, not only by throwing money at the problem, but also by having improved fast the knowledge and professionalism through the cycles. And sadly, the British government has bigger fights to deal with rather than nourishing the local investor community with funding initiatives like Tech Nation. That’s a long term investment run requiring high yearly expenses and it’s up to the private money to figure things out now - the best in class are already hedged with dealings on the continent or in the US. However… to quote somebody from Twitter - the quip that UK is now Italy without the sunshine feels increasingly harsh on Italy. 😊

🚄 Future of transportation. I am bullish on the transportation being radically different in the next decade, as today things are still running in an old paradigm, mostly un-affected by technology (i.e. electric) and innovative business models. The low cost airlines emergence was probably one of the more significant change in the past, particularly in Europe. Yes, regulations and fragmented infrastructure make for a difficult business case, but startups usually tackle hard problems, right? Oh, and we can safely say that Europe is decades ahead of USA, where travelling still seems stuck in the 70s.

And so I am a sucker for startups giving it a try.

Imagine a business model that aggregates corporate demand for travel needs of multiple companies from the same region matched by regional airports to their chosen destinations. This means using a dynamic platform for deploying aircraft assets, optimising, and rightsizing them subject to any given demand. If any seats are remaining, they will be sold to business travelers to piggyback on the flights. The target is to provide door to door travel time regionally in Europe in less than 2 hours, only with electric planes.

Add on those guys too.

🕸️ Speaking of being bullish Sorare did a multimillion-pound deal with the English Premier League for licensing official player cards, as users will be able to purchase and use official Premier League-licensed NFTs under the exclusive multi-year agreement. Long Sorare.

🇫🇮 The Finns are not really happy about how Israel-based Playtika handles the local M&A deals as Playtika just made an offer to buy Rovio at a premium of 55%.

🇬🇧 Doing crypto ain’t easy Crypto companies with US operations withdrew their applications to register in the United Kingdom rather than face rejection after the standards for acceptance were raised. Britain’s top financial watchdog has approved only 15% of crypto company registration applications after tightening its standards, which now require digital-asset companies to follow the same money-laundering rules as traditional financial firms. Just 41 companies have been given the green light.

🇪🇺 Euro space index. Euronext launched an European space-related index to track the performance of European companies in the space sector.

🇬🇧 The FT has seemingly made available up to £100 million for acquisitions.

🇩🇪 Audi acquired a minority stake in Formula 1 team Sauber Group, as the Swiss constructor’s current partnership with Alfa Romeo will end after the coming season.

💲 US investment bank Lazard paid €190,000 to end Frankfurt investigation in an insider-dealing investigation.

🇩🇪 German companies are looking at thousands of layoffs in Silicon Valley as an opportunity to recruit top talent. Good luck with that.

🇪🇺 Preparing for the next winter Europe’s gas outlook for 2023.

🇪🇺 Can EU keep up with the US on green subsidies?

Closing notes

👏 Google smelled the coffee - it seemingly invested 300 million in OpenAI’s competitor, Anthropic, done by ex-OpenAI employees. Why, oh why - it’s business development, as most of the money is in the form the computing resources Anthropic uses from Google's cloud computing division.

Meanwhile, ChatGPT reached 100 million MAUs in January - here’s a good interview on the current AI development wave with John Carmack.

🤔 Amateur investors are backing away from trading in public markets, with big implications for the direction of the market. They are still collectively the biggest holders of U.S. equities and any retreat from stocks could remove a steady source of support at a turbulent moment.

👋 The market sentiment: sell.

🤑 The merger of slow money and fast money - private equity buys insurance firms hunting for better yields.

🎶 Welcome to the content business - Meta has been paying to scrape other sites for years while suing companies that scrape Facebook and Instagram.

🦇 Dude in charge of Mastercard's NFT-related efforts resigned by minting his resignation letter as an NFT and selling it as a means of financial support.

🗣️ Medicalising obesity is Big Pharma’s biggest and most disturbing heist of all time.

🚘 A Porsche AG dealership in China put $148,000 sportscar on sale for just $18,000.

💲 What I learned selling comedy tickets on the streets of New York.

🍣 Japan has to deal with sushi terrorism.

⚡ Year 2038 problem.

☕ The American coffee:

A medium cappuccino (362ml) from Costa contains 325mg caffeine, compared to 66mg in a Starbucks Tall (350ml) cup. Similar sized cappuccinos from Caffè Nero will give you 110-115mg of caffeine, from Greggs 197mg, and from Pret 180mg.

✨ Michigan boy, 6, orders nearly $1,500 in food from Grubhub on dad’s phone.

Did you find this email useful?

Great, will forward • Good • Meh

Thanks for reading! Please send me your thoughts or comments by hitting reply.

If you would like to sponsor this newsletter, please get in touch. I am bit biased, but Sunday CET is a great way to reach investors and founders from Europe.

If this email was forwarded to you, please subscribe, it’s free!

Subscribe now

Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET. This week’s lineup:

• great tech doesn’t make great VC business

• are podcasts dying?

• Danish disrupting themselves

Enjoy,
Dragos

Observations

Great tech doesn’t make great VC business

This week Strava announced acquiring Fatmap, a British company developing a 3D mapping product for the outdoors.

Fatmap started by doing digital maps for ski resorts in 2013 (then named Terrascope) - a vertical still little touched by tech even to this very moment - and did great hard work as they put satellite and aerospace imagery on top of a 3D engine for powering a high-resolution global map platform with context-specific information for skiers initially and later available for mountaineers of all sorts. Really, really cool stuff.

Let’s work some quick numbers - the company has 1.6 million registered users and that probably means around 100k MAUs which, at an optimistic 5% conversion rate, also means some 5k monthly paying customers or some 60k per year. At 30 bucks a pop, we’ve got less than 2M ARR - assuming that the B2B side of it (tech licenses, affiliates etc) brings in as much, Fatmap produces somewhere in the 5 million a year ballpark.

Any VC will tell you that those are underwhelming numbers for a company that’s already raised almost 30 million in a 10 years span. A reasonable revenue expectation would probably be at least 5-10X higher, in order to justify a 3 years old likely valuation north of 50M, from the 16.5 mill series A closed back in 2020.

However. From a business perspective, those users numbers can somewhat make sense, if you have ever built a tech startup, you can totally see the trajectory up to this moment. For once, the consumer value proposition, in spite of its advanced tech, is not exactly an utility - it’s a vitamin not a painkiller - and the overall freemium numbers are small in order to make conversions work at scale, in spite of the low pricing that actually doesn't justify the tech underneath. And as I am picky person, between you and me, also the product UX, funnel experience and price segmentation are not at par with the tech - a lot of upside here. Secondly, we have passed through the covid period, which affected 1.5 skiing seasons out of two, and the 2022 start of the season was lousy too. That’s in a skiing market not growing anyways, stagnant at best. Otoh, the summer activities went up also because of covid so that’s an upside but this brings us to the third point - Fatmap’s competition is also strong, particularly in Europe, where the Germans from Komoot are more aggressive, more commercial and business savvy, without the pressure of VC investors (they don’t have any). Btw, Tim Cook met in Berlin for PR purposes with one of Komoot’s founders last September - that means Komoot is a key ad spender on the App Store, an important data point.

Those are just some superficial quick observations, and think there’s already a lot of value not extracted right there. And they don’t paint Fatmap as a promising series B VC candidate, three years after series A.

Herein lies Strava’s opportunity. Strava has a great brand, it’s gotten the distribution (100M+ users) and it’s built some great reliable data tracking tech - those are some solid competitive advantages. Not only that, but also Strava’s tech is multi sport, as sound business fundamentals dictate you leverage the tech across multiple market segments. Net-net, multisport tracking tech + maps + brand + reach = good positioning to fight against, say Apple, which lately made deep forays into Strava’s turf, and probably one of its biggest threats. Which Apple already does maps competitively, while Strava’s are not great at all.

Fatmap seems like a good fit for Strava. And I bet it was a good business deal for them either, my gut tells me they paid a 1.5-2X premium for the tech on top of the 5 mil. Could be more, as the business side is irrelevant for what Strava gets from this transaction. But even so, it is way lower for what a VC business require from their portfolio companies. Sadly, Fatmap is one of those examples of how great technology cannot provide returns on VC terms.

Strava says will keep the two as standalone ops, while it incorporates the map tech into its product. After that, it will probably make sense to fold Fatmap - the same happened with the French from Zenly, which Snapchat closed down at the end of last year. It’s just business, at the end of the day.

Are podcasts going away?

Well, they won’t disappear, but certainly the past years enthusiasm seems to be going down. Doing great content at high level on consistent basis is hard and eventually the effort will wear you down. It seems easy but it’s not, even if you are a pro. On top of that, podcasts require a bit of overhead, both for producing it as well as for promoting it on the distribution channels (that is why 20vc bought a dedicated agency, for example).

Making it a business also presents challenges as advertising is not an ideal model and D2C is complicated - either way you need to build the brand first and that takes time and resources. I guess you should be fine as a niched lifestyle biz - even better than fine at 10k paid subs as a solo gig - or as component of a larger model - again, 20vc is a handy example, as it uses the podcast as a differentiator against other VCs - but have my doubts that it really works at scale as a standalone op.

Some of the usage numbers don’t seem to indicate massive economic opportunities - only 4 out of the top 20 network aggregators reach more than 10M MAUs, and that ranking spread goes all the way down to 2M. A handy scale example is Spotify, where podcasting made up just 7% of total listening on their assets in Q1 2022, despite the massive investment in shows from the last 2-3 years. And Spotify’s huge reach is not working as the expected leverage - the exclusive show model that makes popular shows available only to subscribers of a given streamer hasn’t proven wildly successful. The Gimlet and Parcast unions announced that making certain shows Spotify exclusives reduced their listenership by as much as 75% in some instances.

Cheat Sheets

• The most interesting 150 early stage deals closed in Europe in Q4

• Late stage investors taking a portfolio cut in 2022.

• European SAAS startups to watch in 2023

• Super founders of Europe

• The new wave of European VCs

Sign up and become a subscriber from here - use SundayCET for getting 10% off at checkout.

Good to know basis

👉 How do you get investors to find you - turn the tables around
🤔 Reasons for which investors will say no - they get it or they don’t
🇸🇪 Guide for startups in Sweden - basic stuff
🇩🇪 Guide for startups in Germany - basic stuff
🇫🇷 The Future of Angel Investing in France - solid work
🇨🇭 The Swiss VC Ecosystem - what happened in 2022

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

Long or short on the Brits?

Other notes

🤔 PSA Some people complained about the missing section of my weekly curation of the interesting European deals. That section is part of Monday CET, a separate weekly newsletter covering comprehensive intel we dig through the Euro VC/startup ecosystem.

You can read the last one here (it’s free) and subscribe to get it too from here (yes, you have to be a N9 paying customer). It’s pretty good, I am told.

🇩🇰 Noma pivots. Noma, considered to be the best restaurant in the world, announced at the start of the year that it is ending permanent restaurant service, focusing more on CPG and pop-ups. The restaurant will close for regular service at the end of 2024 and become a full-time food laboratory, developing new dishes and products for its e-commerce operation, Noma Projects, and the dining rooms will be open only for periodic pop-ups.

The restaurant business is very hard and demanding - so stressful that Noma’s founder was actually accused of not treating and paying his employees the right way in the past. This business move means switching from a customer facing operation (which is complicated as is) to a creative one. And probably more lucrative, as you can see below from Noma’s financial statements, the whole effort of running the best restaurant in the world produces less than $5 million a year at very thin margins, if that. (numbers are in Danish crowns, 1 DKK = 6.8 USD)

Question is, will Noma’s brand remain the same under a different model - going to their restaurants is like going to the church, you don’t go there for the food, but to tell your friends that you went there. There’s a long reservation line, and the whole thing creates virality from sharing what you experienced at the location. So Noma, as is, is an experience-not-food-selling business - if that’s gone (not entirely, as they’ll still be running popups), switching to a food-producing one wrapped in an online D2C model will present a very different set of challenges and opportunities. Classic Clayton Christensen disrupt-yourself case, interesting to follow further.

🇩🇪 German entrepreneurs complain that their investors are pushing them to move to US as the American legislation provides better business opportunities (read subsidies) compared to what they get in Europe. Maybe I am missing something but complaining through the media (not cool at all) rather than acting doesn’t make sense, that’s business 101 - you simply go where the money is, waiting for the local government to help you is just a bad European habit of living off from subsidies instead of creating a healthy business model. When you run a startup funded by private investors, you are a businessman working for your shareholders and your job is not to get involved in politics but to take advantage as much as possible from the political context - besides, until the Euro regulators wake up to “the American threat”, the window of opportunity for your company may be gone. Puzzling.

🕸️ Market aggregation, the gaming edition. Remember the 2021 FBA craze from Europe with consultants turned startup founders and raising tons of money for acquiring FBA ops in order to manage them as a holding co? Here’s the same, but for gaming, in US, that is - just raised series A. We’ll see if this picks up in Europe too - Aonic is doing this out of Sweden already btw - as doing games requires a tad higher theory level for consultants willing to get rich over night.

🚄 Eurostar trains are forced to run with empty seats because border police cannot process passports quick enough, despite huge demand for services between London, Paris and Brussels. High demand, limited supply - increased prices for passengers.

🇬🇧 The business world works on nepotism not on meritocracy, the British edition:

Nepotism is a driving force throughout British society, not least the media. There are, however, key differences [between the UK and the US] in the same way that Ricky Gervais’ The Office differs to Steve Carrell’s: It’s subtler, nastier, and arguably more effective in achieving its aims.

🤔 Something smart from Amazon: Amazon announced the launch of RxPass: an add-on to Prime memberships that provides subscribers with access to 50 generic prescription drugs for a $5 monthly fee. It competes with these guys from Dallas, run by Marc Cuban, one of the longest internet entrepreneurs from US (he made his first money by selling broadcast.com to Yahoo in the 2000), and who also owns the Dallas Mavericks NBA franchise.

🇪🇺 Markets in everything A peer-reviewed paper by scientists in Europe found that fertilizer made from human feces and urine is safe to use, and that only extremely tiny quantities of chemicals from medicines or drugs, for example, would get into the food.

🇳🇱 The Dutch did a parking garage under water, just below the Amsterdam Central Station, that fits some 7,000 bikes. Parking is free for the first 24 hours and roughly 1.3 euro per day after that. This one minute time lapse will tell you about it.

Quickies

👏 Is investing in the UX a viable alternative to the VC-driven unsustainable growth? VCs are good at theory.

📈 The Web3 growth stack - link

🛒 Read and learn - the 9 truths about online shoppers.

🚘 We try harder - inside Volkswagen’s big bet on electric vehicles

⌚ Are luxe watches going away? A look into the market of luxe watches.

👋 Precision Neuroscience - co-founded by Benjamin Rapoport, who also co-founded Elon Musk’s Neuralink - is creating a brain implant thinner than a human hair.

🦇 World’s longest wingsuit proximity flight - over Mont Blanc, in France, really cool.

🎶 Generating music from text - this looks pretty neat for the commercial music industry, found via Google’s showing off they’ve got AI too.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to Sunday CET. Now that we’ve passed Blue Monday, the most depressive day of the year, we can only look forward to the next 8 weeks until it’s officially spring. Hope everybody’s alright, let’s get to it.

Observations

As over at Nordic 9 we’re closing the books on the 2022 deals, I dug a bit into some average numbers of what was dealt with at what level in Europe in the past few years. I ended up with a big spreadsheet summarised as it follows:

Click to continue reading

Cheat Sheets

🗣️ Cheat sheets

• The most interesting 150 early stage deals closed in Europe in Q4

• Late stage investors taking a portfolio cut in 2022.

• European SAAS startups to watch in 2023

• Super founders of Europe

• Investors in Europe: early stage, series A, French angels, American angels

Sign up and become a subscriber from here - use SundayCET for getting 10% off at checkout.

Good to know basis

👉 Reasons for which investors will say no - they get it or they don’t
🤔 How to position your startup for investors - like talking to grandmothers
🇩🇪 Guide for startups in Germany - basic stuff
👏 Nordic VC 2022 - Pre-Seed to Series A
🇫🇷 French VC 2022 - solid work
💲 Fintech trends - the ones chased by VCs
✨ The biometrics market - year in review

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

Food for thought

In spite of that, Netflix smashed subscriber targets in Q4 2022. Related: just how much marvel material can the Hollywood dudes recycle until they discover that it actually sucks and it’s time to move on.

Other notes

🇩🇪 Downsizing in Europe HelloFresh is pressuring employees in Germany to leave the company - Germany is notorious for entrepreneurs having it super difficult for laying people off. Pressuring them into resigning seems just a cheap managerial way to do cost cutting, isn’t it better to treat a painful situation for both sides in an elegant manner, even though it’d be more expensive? You know, like the Big Tech that’s hated by the EU seems to be doing, for example. (yes, the American way seems weird too). Alas the local legislation is a nightmare because a socialist system hardly envisions that a business can also go down and have problems - and that’s not only in Germany, in France too, or most of the European countries for that matter.

🇩🇪 Europe is the best at innovating by regulating Local regulators argue that Germany is years ahead of the US and EU in its ability to regulate Big Tech, with a law that gives antitrust authorities the power to impose sanctions like forced divestments against companies and the possibility to break them up.

In Germany the purpose of the law is not to stifle entrepreneurs but “foster innovation” in digital markets. I don’t want to leave it to huge companies to decide the rules on which basis you as a competitor enter the market.

Except that, there’s this thing called the market that should “foster innovation” when it works freely, not when some politicians who’ve never built a company in their life decide how innovation should emerge. It’s true, they can provide incentives to encourage it, and startups main problems can be eased out by creating good, favourable legislation for every market player not by dunking on their competition. In other words, your job as a legislator is to stay out of the way as much as possible, not to flex your muscles just because you can or you take it personal on American companies.

🇸🇪 Klarna getting legs in the USA The United States has become Klarna’s largest market by revenue followed by Germany - it’s a big deal as i) Klarna’s lost a lot of money, resources and years until it figured out a proper American GTM and ii) managing a company from outside your core market is very challenging, see another Swedish case at Spotify.

🇳🇴 Safety Wings, one of my favourite Norwegian startups that’s selling insurance, did Borderless, profiling some of the best nomad cities in the world. Europe’s include Amsterdam (NL), Bansko (Bulgaria), Las Palmas (Spain), Madeira (Portugal) and Valencia (Spain).

🇬🇧 Good profile on Checkout.com

🇺🇸 Some bets bite you in the ass You know where Sequoia is also quite exposed, after having lost a great deal of money on FTX? In TikTok, where it holds the largest equity chunks together with Tiger Global. However, if the FTX’s case was poor due diligence, Tiktok’s seems to rather be a macro risk, as the US government is eyeing banning the app altogether in the US.

🕸️ What companies are growing in these uncertain times? Roblox, for example - its key metrics report indicate that estimated bookings in December were at least $430 million, up at least 17% compared with the same period last year.

🇮🇪 Guinness is raising its prices by  12 euro cents per pint  to help meet rising costs. The Irish PM said it would create financial hardship for many pubs.

🇪🇺 The number of EU bankers earning above €1 million hits record following Brexit. 1,957, to be more precise.

🇪🇸 Big Four accountants in Spain probed over long hours - a few years ago in Romania there was a case of a girl working for Big Four who died because of overwork.

🇳🇱 Future is here but unevenly spreaded Aldi introduced an Amazon-like store in The Netherlands. You can grab your groceries and walk out - the Swedes have been doing this for 3 years already.

🇫🇷 The business world works on nepotism not on meritocracy, the French edition and the Dutch edition.

🇳🇴 Norway is a rich country The profits Norway is projected to bring in from oil and natural gas sales this year will be six-fold increase from 2021. That’s more than $37,000 in profits per Norwegian citizen, who benefit from the nation’s energy sales via the massive $1.2 trillion sovereign wealth fund.

🇳🇱 Schiphol to lift passenger number restriction ahead of spring break. Heathrow remains the currently number one Euro mess for air travelling in/to Europe.

🇨🇭 The Davos consensus is always wrong. 100% of the time. The trick is to figure out why it’s wrong, and how, and what to do about it - therein lies an opportunity. In other news, Elon Musk says he didn't attend Davos because it's boring af. Organizers, on the other hand, say they haven't invited him since 2015. High school stuff.

Quickies

⚡ Apple is the only American Big Tech that hasn’t announced layoffs yet.

🤑 What’s next after FTX? GTX

🤔 7 companies that generated millions in revenue with 0 employees

✨ 20 entertaining uses of ChatGPT you never knew were possible.

🇺🇸 Uber and Lyft drivers now earn less in fares and tips than taxi drivers. In NYC that is, and, anecdotally, in some European markets.

🇫🇮 Finland schools are testing new ways to teach students about propaganda.

🇳🇴 New Norwegian land could emerge from the Atlantic Ocean.

👋 I am Japanese and I learned to swear in Romanian from VICE Romania articles.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Happy New Year and welcome to a new edition of Sunday CET, our weekly coverage of what’s interesting in the startup ecosystem from Europe.

Hope all is well and you charged your batteries! Writing this from the French Alps where I am recharging myself and where it’s unusually warm for this time of the year. BUT it started snowing just this morning, and we expect 60-100 cm of fresh powder over the next few days. Speaking of which, we’re doing a snowboarding/skiing get together in the Italian Alps at the end of January, and we have an open spot for a dude or dudette to share in a double room. Let me know if you’re interested or know anybody who’s wants in - gracias!

This week’s newsletter includes:

• interesting Euro startups doing early stage SAAS

• will OpenAI be bought by Microsoft?

• guide for startups in Germany

Let’s get to it!

Observations

One way for my staying updated on specific intel from the European investment deals is using trackers over at Nordic 9.

It’s a good way to quickly scan who did what and taking the pulse of what happened in the Euro investment world on a given week - I go about it either generically, following specific country + vertical, or granularly, by setting up a specific group of investors from one or more countries, by ticket size and industry, as you can see below.

The trackers are a free feature to use btw, you just need to create an account.

Click here to continue reading.

All the up and coming software startups, about 50 or so, are available in a cheat sheet over at Nordic 9, which I will update on constant basis (available for our customers).

Open AI

🤖 OpenAI, the American startup doing open source AI and which managed to change the public narrative from the crypto scams and economic crisis in the last couple of months, is considering selling shares at a valuation of around $29 billion, which makes it one of the most valuable startups out there.

Everybody seems to believe that Microsoft will eventually buy OpenAI, since it’s already a shareholder in the company. Just because it can doesn't mean it should - for once, the OpenAI investment was strategic in the form of Azure credits, and this kind of deal is a typical Microsoft biz devel tactic for becoming the go-to-infrastructure play for would-be software behemoths. The more you grow, the higher the switching costs to competing vendors such as Google or Amazon.*

OpenAI, said to reach to 1 bill in sales in the next year, operates an economic model powering startups run their business with embedded ChatGPT tech and, at the end of the day, that simply means that the OpenAI economy will run on Microsoft technology. That’s likely Microsoft’s end game, a similar one to being an early investor in Facebook, for those of us old enough to remember that deal.

OpenAI will end up listing on the public market for providing investors with liquidity, not being acquired - Sam Altman is in for the glory not for getting rich by selling out to corporate droids.

*AWS is the most used cloud platform for developers, Azure is second and Google Cloud third - the tools and technologies developers are currently using and what they want to use

Cheat Sheets

🗣️ Cheat sheets

• The most interesting 150 early stage deals closed in Europe in Q4

• European SAAS startups to watch in 2023

• Super founders of Europe

• Investors in Europe:

  • early stage, series A

  • scouts and the new wave of Euro investors

  • angel investors: French, American, fintech backers

Sign up and become a subscriber from here - use SundayCET for getting 10% off at checkout.

Good to know basis

🇩🇪 Guide for startups in Germany - basic stuff
👉 What it takes to be a founder? - first principles
🤔 Worst VC or angel experience for founders - the usual
🇨🇭 What to expect in 2023 - according to Swiss VCs
👏 Macro VC: what happened in 2022, what’s in store for 2023.

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

Notes

🤔 Everybody is a VC nowadays Here’s a good quote:

VC investing structurally shifted from incentivizing “non-consensus” thinking to becoming a “consensus-driven” industry

Food for thought: what VCs consider top 1% of companies at preseed/seed and price accordingly may not deliver the expected returns down the line because it is consensus. FOMO, herd thinking etc.

✨ The next big thing in the VC world 2023 will be... some 50 folks and their hot takes. Bonus: a less anecdotal report.

🇫🇷 French innovation The La Poste edition, which is looking to cut costs by stopping the daily postal deliveries in France:

• Instead of using a timbre rouge to send an urgent letter, people will need to buy the e-Lettre service online on the La Poste website at €1.49 per letter

• They will then need to scan the letter to digitise it

• The contents of the letter will then be printed and put in an envelope at the closest post office to the final destination, to speed up delivery.

• The eight million people in France who do not yet have internet at home – or cannot use it – will be able to go to a La Poste office directly with their paper letter and have it scanned there.

At least it doesn’t seem they copied the Americans on this one, right? 🙃 The US Postal Service will move to an all-electric delivery fleet, btw.

🇩🇰 No cash, no problems. Denmark did not have a single bank robbery in 2023 - cashless society.

🍺 Retail sales of nonalcoholic beverages grew more than 20% last year, and 120% over three years. Meanwhile, sales of alcoholic beer and wine have declined year over year, and alcoholic spirit sales grew less than 1% annually. In USA that is.

🇨🇳 State vs Capitalism, the Chinese edition: Chinese billionaire Jack Ma will no longer control Ant Group. Dude has disappeared from public view and moved to Tokyo since giving a speech that criticized Chinese regulators in 2020.

🕸️ Your go-to social network is where your graph is Why would anyone use another centralized social media service after this? link

🤑 BNPL done in America Buy now, regret later? link

Factoids

🇪🇺 Cash was used in 59% of transactions in Europe in 2022, down from 72% in 2019.

💶 What can you buy in Europe with just one euro?

⚡ 13 power systems around the world. link

💲 NFT creators diversify into real-world assets to generate new revenues.

🧜‍♀️ Over 50% of Disney+ subscribers are adults without kids link

🏸 The Americans have developed an obsession with Pickleball - but is it really a workout?

🇳🇱 More people died than were born in the Netherlands for the first time since 1900. There’s 17.8 million people living in NL.

🇪🇺 It’s legal to break out of prison in Belgium, Germany, the Netherlands, Sweden, and Austria… and more.

Quickies

🦆 How to duck More tech layoffs are coming, if you’re in sales, here are some things you can do to make sure you’re not included.

👶 Hands-free, AI buggy Self-driving stroller aims to reduce parents’ stress – $3300 a pop.

🔥 Sergey Brin: "Irate call from Steve Jobs"

🙈 People are weird An American indie romance author who faked her own death for over two years, announced she was alive and ready to start writing again.

🎥 Best movie posters of 2022. link

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

This week:

• who are the late stage investors taking a portfolio cut

• how will Apple trick the EU next?

• German startup closed down as it got robbed

Let’s dive in.

Dragos

Interesting Euro deals

🇸🇪 SimPPL, which sells gift cards with a planet-positive twist, raised $500k.
🇳🇴 Bandit, building an e-commerce marketplace that wants to compete on price with Amazon, raised $1 million.
🇫🇷 Giskard, building a framework used to test AI models, raised $1.6 million.
🇨🇭 Oxyle, developing clean tech used to degrade hazardous micropollutants from wastewater, such as pesticides or chemicals, raised $2.8 million.
🇩🇪 Bling, building a banking service for parents, raised $3.8 million.
🇩🇰 Mxney, which sells financial services for ecommerce operators, raised $4.6 million.
🇸🇪 Sib, selling a video analytics platform for logistics customers, raised $4.9 million.
🇨🇭 SmartHelio, developer of an advanced analytics platform to increase solar PV plant performance, raised $5 million.
🇬🇧 Qkine, manufacturer of growth factor proteins for stem cell, organoid and cellular agriculture applications, raised $5.3 million.
🇳🇱 Viktor, developing and operating a platform for developing applications that automate workflows, raised $5.4 million.
🇬🇧 Primary Portal, building a digital platform that aggregates and digitises equity capital market deals for banks and asset managers, raised $6.5 million.
🇬🇧 Tepeo, developing a consumer low-cost, easy-to-install low carbon boiler as a direct replacement for the gas or oil ones, raised $13 million.

Source: N9

More intel bits

🗣️ Cheat sheets

• Investors in Europe:

  • early stage, series A

  • scouts and the new wave of Euro investors

  • angel investors: French, American, fintech backers

• Super founders of Europe

• European startups at YCS22

• What numbers are investors looking for?

• How do you calculate the value of your startup?

💲 Fresh powder:

• Munich Private Equity Partners held the final closing of its fourth fund-of-funds programme, MPEP IV, with capital commitments of around €392 million.

• Speedinvest raised €300 million for its fourth flagship fund and another €200m for an overage fund.

• Fondo Italiano di Investimento announced the first closing of a €130 million food and agritech fund.

• People Ventures launched a new Nordic fund of €100 million to back early-stage tech startups with a soft focus on Digital Health and B2B software.

• Foundamental, a German VC firm, raised $85 million for a fund focused on early-stage construction tech startups.

• Baltic Sandbox Ventures raised €10 million for a deeptech fund out of Lithuania.

🚶 On the move

• Damon Buffini, former head of Permira, was named deputy chair of the BBC.

• Andrea Donzelli is stepping down as CEO of Credit Suisse’s Italy business in order to join Jefferies.

• Laurent-David Charbit jumped ship from Unilever into private equity as Tikehau Capital’s co-head of its regenerative agriculture practice.

• Glenn Hutchins, co-founder of Silver Lake, was named an independent director of Banco Santander.

👓 Also notable

• BGF exited its £12 million investment in British furniture retailer Furniture Village via a company share buyback, after 8 years.

• Seedcamp, Force Over Mass and Ascension exited from Libryo, acquired by an American company. Libryo has raised about 5 million since being founded in 2016.

• Bitcoin Group from Germany bought a local traditional bank from Munich for a mere 14 million.

• Microsoft bought a 4% stake in the London Stock Exchange Group, valued at £1.5 billion, as part of a larger commercial partnership - that’d be a net of 60 million equity stake for a massive product implementation deal spread across 10 years with a $2.8 billion LTV. The equity seller was Blackstone/Thomson Reuters.

• Checkout.com joins the European club of unicorns slashing their internal valuation to about $11 billion, from the 40 billion in January 2022.

💲 Who are the late stage investors taking a portfolio cut

Founder rightly says that the valuation is an investors problem, and indeed it is, so I looked a bit into the late stage VC deals numbers this morning - who are the ones taking European portfolio haircuts.

click here to read more (available for Nordic9 customers)

Nordic 9 numbers for 2022

• new European startups added in DB: 9800

• investors tracked this year in Europe: 8200, of which 3400 angel investors

• new transactions added in the DB: 11800, of which 6400 done this year.

• cheat sheets added this year: 46 (almost one every week)

N9 tracks all the investment deals from the VC market in Europe, the DB has roughly 40,000 deals and 20,000 investors active in 30 countries. The data is proprietary i.e. we’re not scrapping other people’s work but work our asses off for building quality sets and use a fairly comprehensive methodology for collecting and cleaning it up. Our customers love the product, you should give it a try too.

You can sign up and become a subscriber from here.

Observations

The story of the week in European tech is Apple’s official admission to working to comply with the EU regulation in order to allow alternate app stores on its iPhone and iPads. That means app developers can have their customers download (and pay) apps on Apple devices from outside sources, bypassing Apple’s 30% cut.

This whole dance EU vs tech American companies is not about the end user, as both parties imply, it never was - rather look at it as a part of a never-ending fascinating Capitalism vs State fight for power. On one side, you have smart people producing tangible societal innovation and profiting from a powerful market position. On the other you have politicians catching up on business in order to balance out their arbiter position of making sure the market is functional in the name protecting the taxpayers as much as possible. And the economy as a whole - alas, politicians have always been behind tech innovators - probably a handy example of this is how Europe has lost hundreds of billions of dollars in taxes because American tech companies used a tax loophole for more than a decade.

Back to our specific case, the enforcement is a result of the EU simply claiming Apple has too much market power and it’s abusing it to the detriment of other value contributors. It will be interesting to see the actual implementation of it, because Apple’s stake is as high as about $95 billion in sales produced in Europe, and you will never see a rich dude pissing away their wealth because some clueless politician dictates them to do so. One of Apple’s counter-ways to protect itself could be having vendors willing to do sideloading (the process of making iOS downloads available outside Apple Stores) to be pre-certified against a yearly fee in the name of meeting certain security requirements. And/or simply selling them API access in order to be Apple-compliant - they will find a smart way to respond, to which the EU will take another 5-10 years to analyse and counter and so on.

Biggest Euro $ producers for the Apple Store are not Europeans btw - they are the European operations of other American vendors such as the gaming and media companies (and Chinese i.e. TikTok). I am also curious whether and how Spotify will react as a result - right now, the Swedes don’t allow their users to subscribe via Apple’s assets, as there’s not too much love between Stockholm and Cupertino.

All in all, this is a big deal and a precedent - this together with forcing Apple to provide a standard USB-C connector on their next devices are a direct change result of European regulation via the DMA, with significant impact on the business side.

Closing notes

🇩🇪 Watchmaster, one of Europe’s largest pre-owned retailers in Berlin, closed down shop last month as it saw $10 million worth of luxury watches stolen from its facility by professional thieves. Just like in the Wild Wild West - it’s unclear why they folded the business as they claim to have been insured. Watchmaster is a VC-backed company that’s raised north of $30 million from the likes of Cherry Ventures, Piton Capital and Milano Investment Partners.

🤖 Uber Eats launches robot delivery service in Miami. You get an alert, go outside and unlock the stuff with your phone. I love the idea but - speaking of wild Wild West theft, btw - the big problem is that those robots may get stolen and sold for pieces, if nothing else. I mean, to take a random example, in wealthy Sweden nowadays criminals steal gas from the cars tanks that’s worth less than $100, how about a little robot that has merchandise and/or food?

🌟 Tell me the NFTs are a fad without telling me that. Just about when a whole ecosystem is crumbling, Trump is selling a collection of NFT trading cards at $99 a pop featuring his head photoshopped onto the bodies of NASCAR drivers, astronauts, Wild West sheriffs, and the like. To make it commercial, the campaign activation includes sweepstakes with prizes such as a dinner, a golf outing, and even a Zoom call with Trump. Cringy, but if there’s demand, there will be supply.

💲 Rich Norwegians flee to low-tax Switzerland - a total of 30 last year, with more likely to follow suit. They fret about tax changes and say they hurt the country’s competitiveness - yeah, Switzerland is not famous for competitiveness either but offers better tax deals, particularly to foreigners. However, some of them rich dudes (a tech startup founder, of course) make a good point that Norway, like the other Nordic countries, taxes un-realised revenues from stock options, which is unfair. On top of that, Norway has a so-called wealth tax, an extra 0.95 percent for net wealth between NOK 1.7M-20M, and 1.1 percent for net wealth above NOK 20M. NOK 1M = $100k.

One last piece of info, for context - an entry level salary for a software developer out of ETH at FAANG in Switzerland starts from $140-160k, incl. stocks and perks, which is awfully close to the NOK 1.7M ($170k) low limit from the wealth tax range above.

🇳🇱 A republican organization is suing the king and the Dutch state, arguing the existence of a monarchy violates fair trial rights. They’re pissed the royals have privileges.

🔥 Bereal’s users demographic in France, Germany and the UK - kids, mostly females.

⏏️ The golden age of the streaming wars has ended. Netflix has been crap for a long time now anyways.

💶 The times we live in - corruption is everywhere and at all levels, you just have to understand how things work, the EU chapter.

👽 James Cameron says Avatar 2 needs to bring in $2 billion to break even. Confession: I haven’t seen the first one, nor do I intend to see this one. And I find the superhero movies boring af.

⚽ British soccer fans at the World Cup in Qatar behaved impeccably and none were arrested, which is a first, according to the Brits police. Many were quick to point to the difficulty of acquiring alcohol, which is tightly controlled in the Muslim nation, as the reason British fans avoided trips to Qatari jails.

🐟 Big bada-boom in Berlin. Berlin's giant AquaDom hotel aquarium containing 1,500 fish exploded this week, flooding the hotel and nearby streets. The vast majority of the fish died and two people were injured - the incident happened at 5 in the morning. The aquarium was described as the largest free-standing cylindrical aquarium in the world.

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.

Welcome to a new edition of Sunday CET, which covers what’s interesting in the startup ecosystem from Europe.

This week’s lineup:

• it’s good to be investor, but better to be a founder

• Euro hot markets are consolidating

• Europe became a digital colony

Enjoy,
Dragos

Observations

🙈 2021 was the largest short-lived aberration in VC history, a combination of greed and incompetence where everyone - LPs, founders, and fund managers - were complicit and incented for it. Today, the exuberance is seemingly getting back on a somewhat normal trajectory curve as the money has become expensive and fund managers are finally being held accountable for their gamblings.

Looking back 12-24 months, other than the grocery delivery business which I’ll discuss in the next segment (part of an e-commerce trend altered by covid), notable big European bets were made on Amazon business aggregators (also e-commerce), BNPL, neo-banks and financial services, events (remember “the fastest unicorn in Euro history” Hopin that’s done 3 rounds of layoffs this year?), electric scooters/mobility or energy-related manufacturing and services (augmented by the Russian war).

Most European VC deals are SAAS and consumer-focused - putting aside the now-usual American clones, some also address big market gaps and macro transitions towards different consumer behaviour. In general we’re at a paradigm shifts moment in history, mostly impacted by the advance of technology use in society and which constructs solid premises of generational change and implicit economic value to be created and extracted. If you understand this shift, it’s not a bad moment to be an investor tbh, which has become fairly easy nowadays, and a great time to be an entrepreneur, which is way harder and more rewarding.

Also notably, this past couple of years included a fair number of investment deals explicitly made to find the next stage sucker by pushing unsustainable growth built on fake biz grounds - that’s what the 2021 abnormal unicorn spike from the above graph is a result of, and why you read about some of those doing layoffs these days.

Looking ahead, the next year will hopefully teach a whole class of first-time founders how to build properly, and focus more on fundamentals rather than listen to consultants advising on wealth growing schemes - they come and go as soon as they reached their number, while building great sustainable companies is a greater mission and more fulfilling than getting rich quickly, imho. Alas, it also boils down to personal values, this stuff is not taught in schools and it is easy to get distracted, that’s why good advisors matter and are hard to find.

It won’t be an easy period but totally worth the experience as those forefront guys are the future investors and/or serial entrepreneurs in the next 10-20 years, accumulating solid knowledge for building the next startup generations in Europe. And that’s a good reason to be positive in spite of bad macro conjuncture - some of my favs, right out of my fantasy portfolio include Crisp, Depict, Enode, Humaans, Heart, Ledgy, Lightdash, Monta, Nomagic, Payhawk, Peptone, Rayon, Sorare, Tinybird, TrueLayer or Upway.

🇩🇪 Getir finally acquired Gorillas for $1.2 billion, mostly with stock. After 20-24 months of “VC learnings” the whole quick commerce brouhaha from Europe has reached a consolidating point with multiple investors having lost money at peak market and two winners which took the cream: the Turkish Getir, now valued at $10 billion, and the American DoorDash, which took a solid Euro chunk via a $8 billion acquisition and a minority stake in a $2.1 billion asset a year ago. They’re the contenders to the more established likes Delivery Hero, Just Eat Takeway or Glovo.

Notably, Getir is also an American investors affair, as it was seeded by Michael Moritz of Sequoia’s fame (great timely catch, right?) and then flipped to series A to Tiger and Goodwater which took care of the later funding developments.

Other VCs holding European grocery chips include Index Ventures (Rohlik - raised $230M in June 2022), Target Global (Crisp - raised $70M in Oct 2022), Insight Partners (Modern Milkman - just raised $60M), Atomico and Lightspeed (both Zapp - last raised $200M in Jan 2022). Their companies are smaller contenders active on local basis, and presumably focused on profitability rather than growth as we’re all heading to an economic recession.

Last but not least, GoPuff and Jokr should get a mention in this VC malaise:

• GoPuff, American startup that’s raised some 4 billion from, among others, Accel, Softbank, Blackstone, Peter Thiel’s Valor and US-German Headline, bought Dija and Fancy to grab share in Europe in 2021, where it is active in the UK and France - was also in Spain, and pulled out after trying for 6 months.

• Jokr, w/ a German founder HQ’ed in NYC and active in Latin America, which raised about half a billion from the likes of Tiger, Softbank and Balderton (which got in opportunistically, at a high price). Jokr exited the Euro market at the beginning of the year, after it tried to build and sell a bridge op and couldn’t.

Interesting Euro deals

🇸🇪 Novatron Fusion, developing a new proprietary fusion power concept, was seeded.
🇬🇧 Charter, developing logistics software for satellite companies, was seeded.
🇪🇸 Magnettü, selling SAAS that helps companies sell more improving their employees personal brand, raised $170k.
🇳🇱 Pixyle, developing image recognition tools that detects fashion items in images, raised $1 million.
🇸🇪 Enerpoly, producing rechargeable zinc-ion batteries, raised $1.5 million.
🇷🇴 Nestor, YC alumni doing HR SAAS, raised $2 million seed.
🇫🇷 La Tournée, which does food delivery in Paris, raised $2.1 million.
🇫🇷 Rize, helping farmers build new income streams by earning carbon credits, raised $3.1 million seed.
🇫🇷 Cubzh, developing a free-to-play video game involving user-generated 3D content building (next Minecraft), raised $3 million seed.
🇬🇧 Phlux, a photonics company developing infrared sensors used for light detector and imaging systems, raised $4.9 million.
🇩🇰 Dreamdata, developer of SAAS for B2B attribution and revenue data, raised $6 million series A.
🇩🇪 Ostrom, reseller of energy in the consumer market, raised $10 million series A.

Source: N9

More intel bits

💲 Fresh powder:

• AlbaCore Capital Group of London raised €2.2 billion for its third direct lending fund.

• One Peak, which does growth stage B2B software companies in Europe and Israel, closed a third fund at hard cap of around €1 billion.

• Iris Venture, a Paris, Berlin, and Munich-based VC firm, announced the first closing of its new €150 million venture fund dedicated to Seed and Series A investments.

• Partech of Paris raised €120 million for its fourth seed fund focused on European and international startups at the pre-seed and seed stage.

• Cavalry Ventures of Berlin raised €100 million of a target €160m fund — its third investing in early-stage technology companies

• SquareOne (fka Paua Ventures), German early-stage investor, launched a third fund at €100 million, targeting B2B Enterprise Software / SaaS startups in Europe.

• Jenson Funding Partners, a British early stage firm, launched a £60 million fund for startups focused on the energy transition to net-zero carbon emissions.

🗣️ Cheat sheets:

• Investors in Europe:

  • early stage, series A

  • scouts and the new wave of Euro investors

  • angel investors: French, American, fintech backers

• Super founders of Europe

• European startups at YCS22

Good to know basis

👉 What numbers are investors looking for? - basic stuff
👏 What to do when investors say no? - be human
🤔 Big tech cos are laying off, early stage startups AREN’T - founders sentiment
✴️ The European venture funding review - the 2022 edition
ℹ️ Forbes Midas List for 2022 - Europe & global

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

How to find investors for your startup?

Tomorrow evening we’re running a workshop with practical advice helping startup founders find investors and evaluate who is right or not for them.

We still have a few spots open, email me if you want in, first come first served.

Reality checks

🇬🇧 The UK startup Nothing, with $20 million revenue and 500,000 iPhone copycat sales so far, is going the U.S. with a phone that already looks like an iPhone replica, running Android and featuring a rear-facing lighting system that’s more a marketing gimmick than a useful feature.

• I give it 6 months until they give up, and it’d be a really nice surprise if they proved me wrong. Nothing raised $70 million last spring, notably from Google’s investment arm GV and a bunch of second-tier investors.

🇮🇪 The Irish backdoor The European Data Protection Board regulator is about to overrule the Irish Data Protection Commission and declare Facebook's business model illegal.

• TL;DR: In 2018 the EDPB has decided that Meta cannot force users to agree to personalized ads. Meta Ireland believed it could "bypass" the requirement by simply adding a provision in the TOC. Now the EDPB found Meta's alleged "bypass" of the GDPR illegal and rejected the view of the Irish Data Protection Commission who previously sided with Meta, after taking four years to investigate the case.

• Context: When Big Tech companies violated the GDPR, they'd have to account for themselves to the privacy regulator in Ireland. For multinational corporations, Ireland is what old-time con-artists used to call a MadeTown, where the cop on the beat is in on the side of the criminals.

🇫🇷 Sovereignty ain’t paying bills Qwant, once a poster child for European tech sovereignty, came so close to bankruptcy that the company was forced to seek an €8 million loan from Huawei in 2021. Its founder left and started Altrnativ, an investigative platform that can collect, correlate, process and analyze data on a massive scale including by searching the dark web.

• Altrnativ is called France's version of Palantir and its cybersurveillance op is monetised by investigating the critics, rivals and employees of some of the biggest brands in France.

🤔 How pros are doing it Thoma Bravo raised $32.4 billion for three new tech-focused funds in one of the biggest hauls by a private-equity firm this year even as some rivals struggle to close out funding rounds.

• Thoma Bravo will collect $2 billion/year in fees to buy otherwise strong software businesses that are facing macro, temporary multiple compression - then flip them back in the market when the interest rates become normal.

  How’s that for a business model?

🇫🇷 Brad Pitt sold his movie production company for $300 million to a French SPAC, founded by the telecoms billionaire Xavier Niel, investment banker Matthieu Pigasse and television executive Pierre-Antoine Capton, and whose shareholders include KKR and Bpifrance.

🇸🇪 Polestar, the Sweden-based, Chinese-owned car maker to launch its own electric bike.

🇬🇧 Brits and media Sky TV viewers who fast forward adverts will have to pay a £5 charge.

🇬🇧 Vodafone’s CEO got the boot, three weeks before Christmas.

💲 World’s Richest Family: Read and learn - how Abu Dhabi’s Royals made their wealth.

🖖 How web platforms collapse: the Facebook case study

💳 Credit cards as a legacy system - if credit cards were a person, they’d be retired already. link

🔥 AI Homework - AI output is probabilistic: ChatGPT doesn’t have any internal record of right and wrong, but rather a statistical model about what bits of language go together under different contexts. link

🦾 Comparing Google and ChatGPT Google employees explain why we haven’t seen ChatGPT like functionality in their products; the cost to serve an AI result is 10x to 100x as high as a regular web search today plus they’re too slow relative to how quick search results must be returned.

Closing notes

🔥 Europe became a digital colony.

Europeans went from being part of producing the silk to ending up as prey in the net. A region of 750 million people with few to no major, native tech services. Reduced to a vast pool of data, a captive collection of eyeballs, and potential in-app payment taxes for the great powers of the internet to contest.

This digital colony of Europe has been essential to building some of the most valuable, powerful, and entrenched conglomerates the world has ever seen. Trillion-dollar tech companies that today touch, if not control, all facets of modern life and commerce in our digital age.

DHH for president

👺 Remember Clubhouse? Clubhouse was slapped with a €2 million fine by Italy's privacy regulator for violating the GDPR.

🇫🇷 No more flying in France France will abolish flights between cities that are linked by a train journey of less than 2.5 hours, namely three routes between Paris Orly and Nantes, Lyon, and Bordeaux. The ban will be valid for three years.

🤔 EU to allow calls on flights - the European Commission ruled airlines can provide 5G technology on board planes, alongside slower mobile data.

🇫🇷 The Frenchest things in the world - there is no country on earth like France.

🇩🇪 Germany today The Reichsbürger believe that the modern German state, the Federal Republic of Germany, is a fake. They believe that it is not a state, but a private company - you would say, these people are crazy. But they are pretty numerous and active. link

🗽 New York discovered the robot-parking thingie and put it right at the top of the market - it costs $300,000 to $595,000 per year, and that’s on top of your hefty monthly condo payment.

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Great, will forward • Good • Meh

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.