• update on smaller markets for European startups
• the BNPL war
• is paying for VC intel worth it?

 

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Observations

This weekend I had a look at what is happening outside of the main hubs in terms of startup investments in Europe. London, Paris, Stockholm and Berlin are commanding most of the Euro dealflow - they have traditionally done so since forever. I looked into a few cities beyond those and thought it'd be interesting to share some of the findings below.

 

🇳🇴 Oslo - population 600k

• 104 deals this year (63 in Q1) vs. 115 deals in H1 2021 (45 in Q1)
• 77% of the total Norwegian dealflow in 2022

Notable deals this year:
• Dune Analytics (developer of Ethereum analytics): $70 million series B
• PortalOne (hybrid games producer) - $60 million series A
• Safety Wing (vertical D2C insurance seller) - $35 million series B

Notable active local investors:
• VCs: Skyfall Ventures, Link VC, Idekapital, SNÖ Ventures, Skagerak
• angels: TRK, Aleksander Larsen, Karl Munthe-Kaas

Active non-local investors:
• Coatue (US), Shell Ventures (US), Speedinvest (Austria), Unpopular Ventures (US), Chris Murphy (Irish) 

Up and coming startups: Unleash, IndyKite, Firi, Fonn, Joystream, Tørn, Skyfri

 

🇪🇸 Madrid - population 3.2 million

• 78 deals this year (46 in Q1) vs. 62 deals in H1 2021 (31 in Q1)
• 42% of the total Spanish dealflow in 2022

Notable deals this year: 
• Travel Perk (end-to-end business travel platform): $115 million series D extension
• Civitatis (online travel agency): $110 million  
• Devo (cloud-native logging and security analytics solutions): $100 million series F

Notable active local investors: 
• VCs: JME Ventures, Inveready, Kibo, Seaya
• angels: Felipe Navio, Gonzalo Manrique, Hugo Arévalo

Active non-local investors: Point Nine (Germany), Cathay (US/France), YC (US), Bynd(Portugal), FJ Labs (US), P101 (Italy)

Up and coming startups: Lang.ai, Circular, Getlife, TaxDown, Boopos

 

🇩🇰 Copenhagen - population 600k

• 74 deals this year (43 in Q1) vs. 130 in H1 2021 (72 in Q1)
• 76% of the total Danish dealflow in 2022

Notable deals this year:
• Veo (developer of AI-based sports technology): $79 million
• Lunar (neo-bank): $77 million series D extension
• ZeroNorth (decarbonisation tools for the shipping industry): $50 million series B
• Labster (developers of VR interactive laboratory simulations): $47 million series C extension

Notable active local investors:
• VCs: Vækstfonden, Seed Capital, PRESeed Ventures, byFounders
• angel investors: Jørgen Balle Olesen, Nicolaj Højer Nielsen, Per Andersen, Tais Clausen

Active non-local investors: Seedcamp (UK), YC (US), Kinnevik (Sweden), Creandum(Sweden), Rockstart (Netherlands)

Up and coming startups: Monta, Fullview, Januar, Nordsense, Exseed

 

🇳🇱 Amsterdam - population 820k

• 73 deals this year (36 in Q1) vs. 61 in H1 2021 (31 in Q1)
• 65% of the total Dutch dealflow in 2022

Notable deals this year:
• Backbase (Engagement Banking Platform): $130 million 
• Pyramid Analytics (developers of an unified decision intelligence platform delivering insights with AI guidance): $120 million series E
• ParkBee (operator of an urban parking marketplace): $33 million series B

Notable local VCs:
• VCs: TIIN Capital, Dutch Founders Fund, Peak Capital, Inkef 
• angels: Arnoud Aalbersberg, Robert Gaal, Maikel Lobbezoo, Kees Koolen

Active non-local VCs: YC (US), Speedinvest (Austria), GFC (Germany), EQT Ventures(Sweden)

Up and coming startups: SingularityNET, Insify, The Fabricant, in3, Source.ag

 

🇩🇪 Munich - population 1.5 million

• 71 deals this year (41 in Q1) vs. 86 in H1 2021 (38 in Q1)
• 20% of the German dealflow in 2022

Notable deals this year:
• Kinexon (developer of cloud services used for connected and automated processes): $130 million
• finn.auto (car subscription service provider): $110 million Series B round
• Xempus (software developer of pension & life insurance distribution platform): $70 million. 

Notable local investors:
• VCs: HV Capital, Picus Capital, UVC Partners
• angels: Hanno Renner, David Balensiefen, Ralf Dümmel  

Active non-local VCs: Speedinvest (Austria), btov (Swiss), YC (US), Insight Partners(US), Creandum (Sweden), Redalpine (Swiss), DN Capital (UK)

Up and coming startups: Rebike Mobility, Arive, Wellster, DyeMansion, Alaiko

 

Quick notes:

• With the exception of Madrid and Munich, all other cities are small markets, under a 1 million population threshold. 2-300 deals a year in a 3 million-people city is very different than in an under-a-million one - a reason for which I think Madrid, and Spain in general, is such an interesting undervalued market.

• Otoh, those 5 markets have different dynamics in terms of consumer profile, purchasing power, legislation and tech adoption - the bigger the market, the more heterogeneous. Alas, the difference is also made by the founders building something with international ambitions from day 0, as opposed to optimising for the local market and, once at a decent PMF, raising VC in order to try to scale in different geos. The stamina of the investors doing deals in the latter category will make the difference for building a huge business - all the big household VCs will chase the international from day zero ones.

• Also please note the vertical variance in the startup profiles getting funded in different geographies - i.e. Spain is a country with a traditionally sizeable hospitality sector and so it makes sense that some of the more frequent deals are made in related verticals.

• Except for Copenhagen, the transaction numbers seem to be up and to the right yoy. Can also be a reporting lag (unlikely to be significant in smaller markets tbh) - however the dealflow pace indicates that those small markets are yet to be affected by the overall market slowdown. 

• Not least, the international investor presence in the local markets has a single common denominator: Y Combinator. Unlike YC, some of the others have usually boots on the local ground - however, running a local office may not be economically feasible unless covering multiple countries. Again, at 2-300 deals on average a year per geography, a VC doing 20-30 international deals a year will want to be locally involved in 5-10 that could fit their thesis and so it makes sense to rather rely on the inbound from their networks rather than working the market themselves.


The data was cranked out from Nordic 9's databases as of June 11, 2022.

 

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Cheat sheet and intel reports

Interesting startups in Europe
• NFTs  
• web3
• RBF
• BNPL
• B2B marketplaces
• Swedish SAAS
• promising French

The latest European intel
• the cybersecurity unicorn emergence
• 4 (four) NFT-enabled software tools raised venture capital
• 1.5 billion worth of more fresh powder

Link. Tomorrow in the AM we're sending the next one, you can subscribe to get it from here - add SundayCET at checkout to get a 10% discount.

The most active investors in Europe in Q1
• in Europe (late stage | early stage | angel investors)
• in the Nordics
• in DACH (Germany, Austria, Switzerland)
• in France
• in the UK
• the Americans


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

 

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US import/export

 

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Watercooler talk

⚔️ Apple casually announced a buy now pay later (BNPL) service as part of its new operating system, iOS 16. BNPL as a standalone business can be (is) profitable at scale but with margins sensible to interest rates fluctuations, like any money selling operation.
• A bigger and more complete strategic game is also contributing to the other side of the market providing complementing solutions in order to help local merchants get more business*. (selling money + complementing tech is the game to play in fintech, see also Juni's pivot into selling money products on top of SAAS).
• As opposed to incumbents dependent on external capital for growth, Apple can easily also afford to go 0% interest and zero fees just to take quickly market share, establish market position and then expand and reinforce its competitive advantages. 
• Siemiatkowski of Klarna (big in Europe) and Levchin of Affirm (big in US) took the news lightly at a PR level saying that Apple's move is just a market validation but make no mistakes, this news simply means war.

*Apple has already laid out its foundations as, for example, it recently acquired UK's Credit Kudos, which uses machine learning to create an alternative to traditional credit scores.

🇳🇱 Most of the money in the Dutch government's fund to boost local innovation has gone to companies outside the Netherlands. Only 161 million euros out of the 500 million euros spent so far by government fund Invest-NL have gone to Dutch companies - despite the fund's original purpose to boost innovations specifically by Dutch businesses. Invest-NL was established in 2020 and given a total budget of 1.7 billion euros. link

🇬🇧 Ferdi Sigona of Local Globe came up with a nice general framework as he tried to figure out the climate tech investment thingie.

🇪🇺 Belgium and the Netherlands consider games with randomized loot boxes to be illegal gambling, so neither country will get to play Diablo: Immortal. link

🇫🇷 In France, it is forbidden to eat lunch at your desk - the French lunch break was born during a public health crisis and was nearly killed in another. link

🇩🇪 Germany's chancellor Olaf Scholz had to go and apply for a passport and ID card in person because it was not possible online. Tech is easier to regulate than to adopt and implement. 
• Anecdotally, travelling from Scandinavia to the German countries can be a cultural shock in terms of daily tech usage or even for the simple fact that cash is still king in more places than not (high cc banking fees may have also something to do with this)

🇪🇺 The EU agreed upon new legislation that requires all phones and electronics to use a standard charger, requiring Apple and other smartphone makers to support USB-C as part of a single charging standard for mobile devices across the European Union by as early as the fall of 2024. A nice little improvement for consumer, a huge mess for producers.

🦾 Tiger tells startups that it is one of Bain’s largest clients and that it pays the company more than $100 million a year.
• On a first impulse, it doesn't seem too much for a multibillion asset manager, does it? I mean, sure, it may seem a lot if we're to consider that an average VC house is usually tight with cost-of-business money and employs a dozen consultants that do just about everything to make the business happen.
• But fact is that being great at intel strategy is different than doing portfolio allocation management as well as from founders advisory - not easy to find individuals mastering all of those, particularly in Europe. 
• Alas, the VC competition would be pleased to learn that Tiger also told investors it is concentrating on fewer stocks, cutting its management fee by 0.5 percentage point and allowing investors to withdraw more of their money this year than it historically allowed. link

👂 The market says Given the extent of the asset bubble & destruction in the markets, given what's going on in Ukraine, giving zero Covid policy in China, I don't take a lot of comfort from that. So I assume & pretty strongly, soon we're going to have a recession sometime in 2023.
• And... if you are an investor and not really passionate, if don't love this stuff, go do something else. I have guys who have IQs 50, 60 points higher than me, who stink in my business...Learn all the assets categories and how they integrate.

link

👞 Amazon launched Virtual Try-On for Shoes, an interactive mobile experience that allows customers to visualize how a pair of shoes will look on themselves from every angle and to better inform purchasing decisions, from the comfort of their home or on the go. link

🦴 Mastercard partnered with numerous crypto asset providers to make it simpler for consumers to acquire and trade NFTs on its payment network.

🏟️ The Economics of Stadium Names Sell your stock in (most) companies that buy them. link

💲 A Netflix engineer went through 7 onsites and received 7 offers from Airbnb, Google, Snap, Roblox, Stripe, AtoB, and a quant trading firm. Offer ranges: $325k - $800k - in US that is.
• That shouldn't be a surprise because job postings for software developers in the U.S. are up 120% above an early 2020 pre-coronavirus pandemic baseline.
• On the other hand, there's an argument that all those redundancies currently made by startups because of unreasonable growth expectations are within reasonable limits if they're at around 10%. The average annual employee attrition in a startup ranges between 13% and 25% - a 10% reduction-in-force (RIF) is less than the quantum of employees the business would have expected to lose throughout the year.

🇹🇭 Thailand officially decriminalized cannabis, becoming the first Asian country to decriminalize weed for medical and industrial purposes. Warning for tourists - recreational use is still illegal though.

🇳🇿 New Zealand plans to tax cow and sheep burps in a bid to tackle one of the country's biggest sources of greenhouse gases. It would make it the first nation to charge farmers for the methane emissions from the animals they keep.

🤔 Nobel laureates answer some of the world’s biggest boffins, how much they do or don’t know about their jobs, life and everything else besides.

🪝 Caviar ‘Bumps’ Are All the Rage After ordering a seafood platter, he opened a gold tin of Regiis Ova caviar, poured a spoonful on his fist between his thumb and index finger, and then proceeded to lick it off with his tongue, like salt after a tequila shot. link

🍆 Insurance company Geico was ordered to pay a woman $5.2 million after she contracted HPV, a sexually transmitted disease, after having sex in a car that was insured by the company. ln US, that is

 

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