• the Euro VC market in Q1
• leveraging tech to adjacent markets for growth search
• the French way of outcompeting US and China

 

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Observations

First quarter of the year is done with and thought it'd be fitting to have a quick look at the numbers and deals to make sense of all of it.

This quarter we tracked 1500 deals worth $27 billion from the Euro private market involving 3000+ active investors. Compared to the same period last year, that's 10% more active investors and extra dealings worth 8 billion.

Key takeaways:

• 70+ mega deals (100M+) vs 40+ last year
• Q1 recorded $13 billion of extra powder raised by 70 funds + the Euro market is evolving in spite of bad macro environment
• Tiger and Insight Ventures dominate the late stage, Speedinvest, Seedcamp and Kima top the early stage transactions
• who's who on the top investors by deal stage

Let's get into it.

Keep reading

 

Cheat sheet and intel reports

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

The best fintech intel
Every month we round up what's important in the fintech dealflow from Europe. You can subscribe for getting it in your inbox alongside access to the best source of Euro data and insights from here.

Recent intel pieces
• the Swedish investors nobody talks about link
• Europe ❤️ marketplaces link
• clones made in the Nordics link

The hottest 160 early stage startups from Europe
We have reviewed more than 2000 early stage deals made in 2021 and profiled 160 interesting startups that are in the market raising money now:

🇬🇧 UK (40 startups)
🇩🇪 Germany (35 startups)
🇫🇷 France (30 startups)
🇸🇪 Sweden (20 startups)
🇩🇰 Denmark (15 startups)
🇫🇮 Finland (10 startups)
🇳🇴 Norway (10 startups)


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

 

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All roads go to 🇪🇸

 

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Notes

🚕 When growth is not enough. Uber announced that it is adding trains, buses, planes and car rentals to its UK app this year - they also listed all New York City taxis on their app too (there's traditional hate between Uber and established taxi cos, btw).

Leveraging tech and market position in adjacent areas is a clear sign of not being able to grow consistently from your core business. In Europe, Uber has knowingly had problems with onboarding enough drivers as the consumer demand is rebounding to post covid levels, and the variable service availability is adjusted by increasing prices. Anecdote-wise: here's a consumer from London + I travelled to two major Euro capitals in the past weeks and was told by locals to switch to Bolt, as Uber has become "expensive and unreliable".

🇫🇷 One year later. Remember Bereal, the French startup that raised $30 million at $150 mil post in an overpriced deal fought over by American VCs almost a year ago? It looks like the money was put to good work as their app started to get traction and made it to the top of UK's App Store.

Truth is that a decent consumer photo sharing app is badly needed in the tech ecosystem and over night success takes ten years usually. Judging from my discovery Bereal timeline, the app is mainly used by high school kids for now, but hey, that's how Facebook and Instagram started 15 years ago.

🇪🇺 More evidence that Euro startups are going en masse in to US. I have said it many times, in the 21st century if you build a tech startup that wants to grow fast internationally, it is a no brainer to buy a plane ticket to a bigger market with investors that are more experienced and professional - the US one that is.

Yes, the local Euro markets have changed in better lately because there's more money on the table and some big names American VCs crossed the ocean to set up shop locally - this impacts positively the way the business is conducted in Europe. Yet, it remains a heterogeneous and highly fragmented market where Americans came just to build an edge on their own practice i.e. get access to cheaper deals early on as the cost of missing out is higher than the cost of doing business out of a London office. For startups, the business devel blueprint of an unicorn wannabe still involves building a solid American leg for market share and sizeable liquidity events that Europe simply cannot provide. If you work with investors, being able to get you to the US should be one of the main differentiators when taking their money. America's where it's at, folks - no European company has become unicorn without doing business in the States and the sooner you build that competitive advantage, the better. link

💲 Good assets are scarce. Say you have two assets to evaluate when making an investment deal:
• one makes $100 million in sales, is valued at 4 billion and is looking to raise 450 million.
• another makes $16 billion in sales, is valued at 100 billion and is looking to raise 1 billion.

What'd you pick?

• the first is Yuga of Bored Apes fame - one of the rare web3 success stories - their pitch deck from just a month before raising that money makes for a good read. 
• the other is also a new gen biz but in a traditional way (i.e. not as risky as the abstract crypto space): Shein - the TikTok of ecommerce -  that's worth more than Zara or H&M.

🇫🇷 The French way. The French are set to open The NFT Factory, a 400 sqm space in Paris in September 2022 and dedicated to hosting events, training courses, and conferences related to everything NFT. Initial reaction was that it's a cool idea that's worth checking out and then I read this from their boss:

If we don’t ride this new wave, we will be overtaken by the United States or China.

The good ol' catchup mentality that will never make Europeans truly innovate. Will still check the venue out when the time comes though. :-)

🇬🇧 Content as marketing. Linkedin will have 200 journalists employed to push the growth of the network via content, 9 of which will be based in the UK.

Linkedin is probably one of the worse pieces of software written for the consumer mass market in our times, at par with Facebook - words simply cannot describe how bad it is. But the shitty quality of the product doesn't really matter, as it is a mainstream successful media property that understood that the content is the glue of great social connections. And a great growth driver too - the beauty of it is that, unlike a standard digital media company, they make money from the job listings - a model akin to a 20th century media company - and from charging access to the graph, which is segmented in multiple commercial ways.

And speaking of Linkedin, researchers discovered over 1,000 fake profiles using AI-generated faces that looked real. Meet Keenan, for example.

 

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Watercooler talk

🇷🇺 Rich people do rich people things. Looks like Roman Abramovich invested a lot of money (as in billions) in American hedge funds by using shell companies. Is anybody in the money business expecting very wealthy people not to be sophisticated investors (or to work with competent advisors) at this point? Not all rich people are dumb, be them oligarchs or not - they may have cash flow problems due to adverse markets, but that's just day-to-day management. Alas, as a Russian friend put it to me - any Abramovich mention in the media may as well be just a part of an orchestrated PR campaign to wash him off from being Putin's puppet.

🇪🇺 The EU has in the works legislation for creating context of interoperability of messaging apps like WhatsApp, Facebook Messenger, and iMessage - the EU says that vendors will have to open up and interoperate with smaller messaging platforms, if they so request. The rule apply to IM providers considered to be gatekeepers, defined as firms with a market capitalization of at least €75 billion.

🇪🇺 Whiners are winners. Since we're at EU legislation, Margrethe Vestager says that it's important for the EU that people complain, because that gives access to how they see the market situation. For example, the EU has had no complaints about the crypto space, so all is good in that area for now.

💪 Wordpress gains 3-4% market share *of the entire web* annually. Quietly conquering the world - Matt Mullenweg is one of the old timers who doesn't seem to have altered his core beliefs and values, like Google and the likes that started in the 2000s. Here's a good interview with him.

🧑‍🤝‍🧑 Superman to the rescue. The story of the week in the tech world was Elon Musk announcing that he'd become Twitter's largest individual shareholder, joining the board as a consequence. His first reaction after the announcement was oh hi lol - it will be interesting to follow his further impact, as over the last decade Twitter has stayed relevant as a medium in spite of being a badly managed product and mainly because Facebook was even worse managed and Google is a sociopath org not capable of producing a social product as it doesn't get human interaction.

🚄 The European Commission has approved the merger of train companies Eurostar and Thalys, clearing the way for the creation of a cross-border rail operator connecting five countries - U.K., France, Belgium, the Netherlands and Germany.

✈️ Airports make money from parking fees. In 2019, Manchester Airport Group’s aviation revenue was £218m yet car-parking alone was £147m. For context, the largest car-parking provider in the UK does only about £250m a year. link

 

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Readings

👀 Great background reading from one of the best European companies out there.

🇬🇧 Should we care if UK market goes down the pan? Not really.

🙅‍♂️ Peter Thiel defined the finance gerontocracy as the enemy hindering bitcoin's progress - you should spend 20 minutes to watch his speech if you want to understand the times we live in.

🤔 How to be a VC. You have social capital in your industry and access to hot startups. You want to ultimately become a VC - how do you raise the first fund? Don't - start with a special vehicle purpose.

🤓 Web 3 = creator economy? Not really - traditional investors associate crypto deals (or web3, whatever) with the so-called creator economy because this is where they see success stories and it's easy to relate. Creator economy, aka the influencers market a decade ago, is just a low hanging fruit for making sense of a complicated and fragmented ecosystem. The good news is that they're working on deciphering it.

🦾 How good VC is done. Competing to win deals.

👓 Demystifying term sheets - an analysis of standard terms of 200+ VCs.

🤔 Scaling a seed fund beyond 150 million. link

☔ JP Morgan: How bad is the European growth outlook? link

🧑 Gen X notes link

🇷🇴 From underdog to decacorn. The remarkable career of Daniel Dines, CEO of UiPath. link

 

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How's your week been?

🤘 Strategy 101 - the enemy's enemy can be your friend, interesting move that can lead to shattering Apple's monopoly on their hardware payments.

🔗 The whole grocery store is basically owned by ~10 companies

🇬🇧 A British VC firm fabricated documents to say it had invested in a company’s seed round.

🤡 Social media galore: the mistakes VCs make are mentally constraining.

🇫🇷 Le Monde has launched an English version of its site and made the announcement in French.

🏠 The average price for an existing home in the Netherlands is €428k. In Belgium it's 282k. link

🇷🇺 A Russian asset tracker, if that's your thing. link

🇺🇦 Pink Floyd have reunited to record their first new material in 28 years, a protest song against the Ukraine war.

 

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