Intel updates - Sunday CET

deals galore

Sunday CET 15 August 2021

This Sunday:
- Europe's most interesting deals this summer
- Europeans are famous for knowing how to live, not how to do business.
- learnings from Messi's transfer in France



✍️ Observations

Holiday notes

From time to time, I like to take a step back and look at the big picture - how is everything connected and what makes sense or not, what are some predictable moves and trajectories in the market and what stands out as odd, either in a good way or in a bad way? Sometimes I send people emails just to pick up their minds about it too.

And so, this week, I took a couple of hours and looked at the investment deals made in Europe in the past 10 weeks or so. It was a frantic pace, with more than 1000 deals tracked over at Nordic 9 from June to mid August.

I screened through all 1000 of them and selected about 120 that I found interesting. I mostly ignored the unicorn deals and the likes of grocery investments - you can read about all those in the media every day. I preferred to sniff at emerging verticals, new business models and interesting founders and their stories. 

Here's some of the things that I noticed:

  • Open banking is one of the most interesting verticals in Europe, with less money invested than the size of the opportunity - Tink from Sweden set up a great liquidity precedent as it was acquired for $2.2 billion by Visa. Yapily will be an unicorn in 6-12 months, Codat also looks like a rocket and I'd keep an eye on the likes of NordigenAirbank and Open Payments.
  • In the so-called fintech space (which is a silly name for startups doing financial services) the Danish from Lunar and Pleo exploded this year.
  • Turkey has become a hotbed for gaming, with folks actively exploring to replicate Peak Games exit to Zynga from 2020. This week Rovio snapped another startup from Izmir. There will be many good spillover effects from this in the years to come.
  • Europe has an emerging and intriguing space vertical, with OneWeb at the forefront - raised about 1.3 billion this year from the likes of Eutelsat and the largest Korean conglomerate (announced this week), and is backed by Softbank. It seems like a medium with many isolated deals with interesting and ambitious angles, a few small-ish ecosystems and add to that this week's mission control-as-a-service SAAS developer pre-seeded by the fine people from Icebreaker.
  • More and more real estate tech startups started getting into buying the hard asset business, following an established business case and famous pivot made by the American Zillow a couple years ago. It is an interesting and rewarding play but doing real estate is different than selling tech, combining it requires focus and competence on multiple fronts simultaneously. 
  • Many vehicle-as-a-service companies raising money for expanding to Europe from different corners of the continent. Same goes for EV chargers providers, the more interesting ones playing either a marketplace model or a B2B model.
  • Quite a few startups doing B2B mental health services - burnout/personnel wellbeing is the elephant in the room in many-many companies, and more often than not one of the reasons for churn.  
  • Heart Aerospace is going to be huge, EQT was really on the spot when it backed them pre-everything upon graduating from YC a couple years ago.
  • Education providers on an ISA model - a huge market to disrupt with a good model. Two Spanish startups to mention here: StudentFinance and MicroverseStepExfrom the UK is one that's up and coming.
  • Found a few startups doing grocery delivery in a smart way (really) - i.e. with a clear, differentiated value proposition. If they execute right, they have a good chance after the drunkness from the main street will pass.
  • Also I love the French creativity - the '100 euro in 3 minutes' (Bling) and 'foie gras alternative' (Gourmey) are nice marketing hooks.
  • Speaking of it, the secret for both alternative food producers and CPG is the distribution. The better the GTM approach, the better odds to success. I found a few ones who nailed the distribution as well.
  • Not as many dark kitchens raising money as I expected. I believe that more restaurant businesses will also run a dark op in parallel to the front facing one, with low marginal costs.
  • Quite a few German startups building predictive sales tools for consumer/B2B business. It is definitely an interesting problem to solve but is the market as interesting? Fwiw SAP has been doing this for 5-6 years already.
  • This summer (this year, really), there's been an explosion of carbon trackers providers, in all sorts of shapes and forms. Yes, it's cool and eye-catching, easy to sell to investors, but business models are not as straightforward. Au contraire.
  • The market is flooded with money and it's never been easier to raise in Europe. But if you are an outsider and have no network, European investors are still mostly behaving like prima donnas, are hard to get to and initiate a relationship - it's both bad social skills and heavy workload as they can hardly manage what they have on their plate. The mileage can vary and, as always, traction and great KPIs will compensate if you're an outsider and make a for a great sales intro.
  • Also, another anecdote, more and more startup founders work with coaches and advisors from very early stages, which will usually increase the probability of setting the right business trajectory and building the right story for investors.
  • Not least, quite a few startups moving HQ to London and/or to the US. But this is not new at all.

Anything else worth noting? Let me know. Granted, the sample is small - 1000 deals from 10 weeks. You can dig the whole list by yourself here or by region - DACHNordics + BalticsFranceUK.



Cheat sheet reports

The most interesting deals over the summer of 2021:

The new wave of European VCs
Top 140 active VC investors in Europe in H1 2021
Portfolio analysis of the most active angel investors in Europe in H1 2021
Is Klarna really worth its valuation?

Note: the reports are for Nordic 9 paying customers only. You can become one from here.



Home is where your wallet is


Long on bikes


Never underestimate Amazon



✔️ Other notes

🌪️ This summer in:

  • GoPuff acquired Dija 
  • DoorDash involved in a firesale deal to acquire Gorillas 
  • Cajoo acquired by Carrefour 
  • Getir bought Blok from Spain

All those 'if we could capture a piece from the 5-10% conversion from off-line to online grocery spending'* calculations made back in the winter seem to have been short term-minded, as VCs ran out of patience and are looking for quick exits.

It only took them about 6-12 months and a few billions to see whether it's working out or not.** You can look at it as a test the hypothesis process, even though I am not sure you need so much money and time to figure out that people in city centres do not need essentials delivered in 20 minutes, as an alternative to, say, already established networks of proximity stores.

Truth is building an ecommerce startup is harder than toying with a macro number that looks good on paper, and in this particular case switching costs are super low, competition is hard and scaling an op is even harder, requiring heavy stuff investments in the backend ops. And Europe is an even more difficult case because of the cultural differences from major city to major city.

There's going to be very few winners in this game, an exercise that it's part of the Euro VCs transitioning from the teenage years.

* Ironically, one of the rookie mistakes done by startups when pitching VCs about TAM is 'we only need to get 1% from the universe of X'
** Fwiw Getir's CEO admitted that it took him 10 years to figure out the business. But he is an entrepreneur not a VC.

🇸🇪 Still on the grocery retail topic - here's a nice photo coverage of a Swedish grocery retailer that actually operates a chain of 27 un-manned stores, aimed to cover rural parts of the country.

The stores come in two sizes - 25 or 50 sqm - and are made so that they fit on a truck in order to be transported, and can be made functional in a couple of hours. Raised about $10 million from professional investors, and produced sales of around $2 million last year.

🇩🇪 Adidas sold Reebook to ABG for 2.5 billion. The Germans bought it for $3.8 billion as they wanted to compete with Nike 15 years ago.

The $1.3 billion difference means (almost) 100 million lost every year for 15 years straight - but hey, Europeans are famous for knowing how to live, not how to do business.

🇫🇷 Those past weeks, everybody followed feverishly the soap opera of a football star who moved his business from Spain to France and signed with PSG.

Two things caught my attention: PSG sold €20 million worth of Messi shirts in seven minutes (may be a hoax though), which is roughly the equivalent of his signing bonus + Messi's wage package included a significant component of cryptocurrency fan tokens. 

🇨🇭 Reinsurance giant Swiss Re (insurer for insurers) said that total economic losses caused by natural and man-made disasters hit an estimated $77 billion in the first half of 2021. Severe weather events including winter storm Uri in the United States and June storms in Germany and its neighbours pushed up the losses.

🇹🇷 How Turkey became a star of European tech (TL/DR: gaming and online retail)

🇨🇭 Silicon Valley of smell lies at the outskirts of Geneva, in Switzerland - smell espionage is real and a code of silence surrounds the companies’ clientele. 

🇮🇪 There's a case for a secondary market in Europe.

🇪🇺 Lazard on the European venture and growth ecosystem.

🇪🇺 Where did the European politicians go for the summer holidays.

🇪🇺 Cultural differences in Europe in a tweet:

The cooking instructions in Norwegian and Swedish and Danish for the *same rice* use different techniques! 

👍 Salesforce gets into the media content with a standalone business unit.

I have sold and implemented tons of such projects for both corporations and startups in a different life with one of my companies, on the basic premise that if your marketing spend involves paid media, earned media and owned media, then the latter, if done smart, will have much-much attractive unit economics.

This is exactly what a16z is doing in the VC world. Fundamentals in business are the same, the verticals, the hype and the cycles vary. The devil lies in the implementation details, as always.

💢 Another established SAAS struggling to monetise via content, Medium, revamped its economics:

If a writer got 100 readers to sign up for a monthly Medium membership through their referral, that would net the writer $227 per month.

Other than VCs and some random people discovering publishing tools, I don't really know folks using Medium. It has raised a whopping $130 million in 10 years of existence, now competes with the likes of Substack (which gets a 10% cut from subscriptions) and the Dutch from Revue, acquired by Twitter earlier this year.

It is an interesting and crowded space, with multiple market positions, business models and scaling strategies, which also includes Mailchimp (in talks to be acquired for 10 billionat $300M EBITDA), Hubspot and indie developers such as Vero (via which you receive this email) or Convertkit.

📰 The New York Times runs 50 newsletters (reach of 15 million), out of which 11 are only sent to paying subscribers. They have 8 million subscriptions and 100 million registered users.

👍 Most of the M&A deals don't work for various reasons. Here's one that worked and that's been well documented.

🤡 Everybody and their mother will be an angel investor 10 years from now

⚙️ The VC tech stack

⚔️ TikTok has overtaken Facebook as world's most downloaded app. The 2-5 spots are comfortably controlled by Zuck with FB, WhatsApp, Insta, and FB Messenger - this gives him time to figure out the metaverse thingie, which should be the future.

💸 The value of Reddit (dubbed as an online discussion forum by the old school FT guys) jumps to $10bn after new fundraising - 16 years old, 50M DAU, $100M revenue in Q1 2021.

🧘‍♂️ Masayoshi Son said he would begin to make personal investments alongside SoftBank Group Corp.’s Vision Fund

SoftBank to cut China investments until tech sector calms. 

🕶️ The going rate for base pay for first-year analysts, the most junior full-time rank on Wall Street, is now at least $100,000 across many banks. Here's a rundown of 13 Wall Street firms.

🎥 If you're into movies - interesting podcast with Brian Koppelman (Ocean's Thirteen, Billions) and Quentin Tarantino.
The Coen Brothers split as filmmaking partners.



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Sunday CET Sunday CET

Notes and commentaries about what matters in the European space - concise, no non-sense insights, interesting stories and implications for founders, investors, employees from tech companies or government representatives.

Published every Sunday morning by Dragos Novac and emailed to investors, founders and decisions makers from 50+ countries who want to understand the ecosystem from Europe.