the market uncertainty
• more key data on smaller markets for European startups
• Klarna's valuation is at 2020 levels
• 26 million series A deals are back, baby
Observations
🏙️ More smaller markets for European startups
The previous email covering key data from secondary startup hubs from Europe was appreciated and widely shared by the readers - by popular demand, I did an overview of another 5 European cities in the same category i.e smaller-market cities with active startup activity from Europe.
🇪🇸 Barcelona - population 1.6 million
• 69 deals this year (47 in Q1) vs. 88 deals in H1 2021 (49 in Q1)
• 38% of the total Spanish dealflow in 2022
Notable deals this year:
• Paack (logistics tech for ecommerce deliveries): $227 million series D
• Typeform (SAAS for online surveys): $135 million series C
• Submer (cooling tech for data centers): $34 million series B
Notable active local investors:
• VCs: Aldea VC, Encomenda, Lanai, JME Ventures, Inveready
• angels: Carlos Blanco, René de Jong, Javier Sanchez-Marco, Avi Meir, Josep Maria Tarragó, Andreas Mihalovits
Active non-local investors: Softbank (Japan), YC (US), Nauta Capital (UK), Target Global (Germany), Goodwater Cap (USA)
Up and coming startups: Oliva Health, Quality Clouds, Loyal Guru, Payflow, Hubuc
🇨🇭 Zurich - population 400k
• 46 deals this year (27 in Q1) vs. 44 in H1 2021 (23 in Q1)
• 40% of the total Swiss dealflow in 2022
Notable deals this year:
• Climeworks (developer of a carbon removal technology designed to capture carbon dioxide from the air): $648 million
• Scandit (developer of smart devices for actionable insights and automated end-to-end processes): $150 million series D
• Yokoy (automated spend management tool for medium and big companies): $80 million series B
Notable active local investors:
• VCs: Wingman Ventures, Verve Ventures, Redalpine, Übermorgen Ventures
• angel investors: Roland Brack, Ronald Strässler, BAS, Guillaume Pousaz, Jeremias Meier
Active non-local investors: Sony Innovation Fund (Japan), YC (US), Seed X (Lichtenstein), Sequoia Capital (US), HTGF (Germany)
Up and coming startups: Decentriq, Fotokite, QuantalRF, WalletConnect, Scrona
🇫🇮 Helsinki - population 630k
• 36 deals this year (22 in Q1) vs. 51 in H1 2021 (24 in Q1)
• 50% of the total Finnish dealflow in 2022
Notable deals this year:
• Aiven (cloud infrastructure technology): $210 million series D
• Iceye (manufacturer of SAR satellites): $136 million series D
• Swappie (online marketplace for used/refurbished electronics): $124 million series C
Notable local investors:
• VCs: Inventure, Maki VC, Icebreaker, Lifeline Ventures, Gorilla Capital
• angels: Ali Omar, Ilkka Paananen, Henry Nilert, Katariina Helaniemi, Leena Niemistö
Active non-local investors: David Helgason (Iceland), Nidoco (Sweden), Atomico (UK), Alliance Venture (Norway), General Catalyst (USA)
Up and coming startups: HoxHunt, Zevoy, Service-Flow, Blidz, Kleoverse
🇪🇪 Talinn - population 430k
• 35 deals this year (16 in Q1) vs. 35 in H1 2021 (21 in Q1)
• 90% of the Estonian dealflow in 2022
Notable deals this year:
• Bolt (transportation company): $712 million
• Veriff (identity verification platform): $100 million Series C round
• Skeleton Tech (manufacturer of ultracapacitor-based energy storage systems): $43 million series D extension.
Notable local investors:
• VCs: Specialist VC, Change Venture, Taavet+Sten, Karma Ventures, StartupWise Guys
• angels: Ragnar Sass, Timo Rein, Martin Villig, Taavi Kotka, Martin Henk
Active non-local VCs: Verve Ventures (Swiss), Atomico (UK), TMT Investments(Russia/US)
Up and coming startups: Binalyze, Montonio, Tuum, Cachet, Solid World
🇮🇹 Milan - population 1.3 million
• 34 deals this year (16 in Q1) vs. 38 in H1 2021 (17 in Q1)
• 43% of the Italian dealflow in 2022
Notable deals this year:
• Scalapay (BNPL): $530 million series B
• Moneyfarm (digital wealth manager): $60 million
• DoveVivo (co-living spaces operator): $57 million.
Notable local investors:
• VCs: CDP, Gruppo Azimut, a|impact, Primo Ventures, P101
• angels: Fabio Cannavale, Fabio Mondini de Focatiis, Enrico Pandian, Giorgio Chiellini,
Active non-local investors: Sofinnova (France), Starwood Capital (USA), 360 Capital(France), Fasanara (UK, Picus Capital (Germany)
Up and coming startups: 1000Farmacie, Artemest, Epicode, Apogeo, Folks Finance
The data was cranked out from Nordic 9's databases as of June 18, 2022.
🎢 The beginning of the dip?
The market sentiment + plenty of evidence out there = we're heading to a significant reset. While enjoying the post-covid liberation, more people are getting aware that something is not right in the market, particularly because of too many macro imbalances and unknowns - the Russians, China, de-globalisation movements, gallopant inflation. Granted, a situation a bit different than in 2008, when banks had balance sheet problems that resulted in multiple investors losing money and an overall recession. Today it is more social uncertainty and events waiting for closure leading to global shifts rather than plain investors fraud - but still very significant since unknown leads to uncertainty, uncertainty means additional risks, and more risks means higher chances of losing money. That's basic fundamental thinking.
On the other hand, there's a few questions marks though - i.e. still *plenty* of jobs available, consumer money in the market in excess (just look at the travel levels, airlines/airports simply can't handle the demand). The over-liquidity doesn't seem to be offset by the money scarcity induced by the higher interest rates but I imagine it is just a matter of time.
In the little startup environment from Europe that's mainly funded by private investors money, VCs already sounded the alarm. That simply means they adjusted their exuberant attitude of forced-growth projecting imposed onto founders in order to justify high sky valuations - the greed-based "hire/spend as much as possible in order to build ASAP a rosy picture to be sold to the next series investors" has all of a sudden become a more rational, fundamental-driven approach, based on actually building healthy companies. This attitude change is what market downturn, and the actual reset, means in the investors world - any good founder knows that building a solid company cannot be forced into a 18-24 months frame and it takes a lot (more) of time, patience and navigating through economic cycles, which is in fundamental disagreement to the multiply money as fast possible mantra of any money manager.
Also notable, this period is way different for the private investment ecosystem than the downshifts from 2000 and 2008, for the simple fact that back then the VCs didn't have this much capital available to deploy. Today there's an insane amount of money and a record number of investors in Europe - only this month *alone* in Europe there's been new funds announcements in excess of $4 billion - $1.5 + $1.2 + $1.5 announced just this week (detailed in tomorrow's intel update). Sure, some investors will close shops but the money has to be spent while the cost of capital is increasing by day - unless the LPs will pull it out, that is.
And as sentiments are always validated by the data at hand, I had a quick scan of it - I looked at the deals closed on the first six months of this year and compared them to the ones from the same period last year. Cleaned up the data a bit and I took away the ones containing debt, grants or secondary transactions and considered the plain vanilla equity raise only.
Here's what I have at higher than $100 million equity raise deals:
2022 2021
June 12 deals / $2.2bn 26 deals / $10.2bn
May 15 deals / $2.6bn 20 deals / $6.4bn
April 20 deals / $4.4bn . 11 deals / $2.5bn
March 18 deals / $3.4bn 24 deals / $6bn
Feb 22 deals / $4.4bn 7 deals / $950M
January 31 deals / $7.3bn 14 deals / $3.1bn
TOTAL 118 deals / $24.3bn 102 deals / $29.1bn
In the $50-100 million range:
2022 2021
June 7 deals / $493M 17 deals / $1.2bn
May 15 deals / $953M 16 deals / $1.1bn
April 17 deals / $1.1bn 21 deals / $1.4bn
March 16 deals / $1.2bn 11 deals / $750M
Feb 16 deals / $958M 7 deals / $495M
January 24 deals / $1.6bn 10 deals/ $726M
TOTAL 95 deals / $6.4bn 82 deals / $5.7bn
In the $20-50 million range:
2022 2021
June 20 deals / $622M 40 deals / $1.2bn
May 40 deals / $1.2bn 36 deals / $1.1bn
April 36 deals / $1.1bn 31 deals / $911M
March 42 deals / $1.3bn 40 deals / $1.3bn
Feb 42 deals / $1.3bn 27 deals / $673M
January 50 deals / $1.5bn 35 deals/ $1bn
TOTAL 230 deals / $7bn 209 deals / $6.4bn
In the $10-20 million range:
2022 2021
June 18 deals / $231M 66 deals / $880M
May 58 deals / $755M 48 deals / $661M
April 44 deals / $590M 37 deals / $481M
March 50 deals / $676M 40 deals / $579M
Feb 37 deals / $485M 39 deals / $564M
January 47 deals / $642M 31 deals/ $447M
TOTAL 254 deals / $3.4bn 261 deals / $3.6bn
In the <$10 million range:
2022 2021
June 112 deals / $274M 399 deals / $859M
May 392 deals / $830M 444 deals / $847M
April 317 deals / $744M 397 deals / $709M
March 474 deals / $978M 503 deals / $993M
Feb 334 deals / $803M 348 deals / $668M
January 450 deals / $874M 487 deals/ $660M
TOTAL 2079 deals / $4.5bn 2578 deals / $4.8bn
It looks like the beginning of a decline following an upward trajectory from last year, doesn't it?
Note the deal frequency, which is a better market indicator than the overall money spent - at later stage there were more deals closed than last year, as well as more money deployed. That means more bets at higher stakes. The Q1 looks great and effervescent yoy, as it is mostly inertia from last year - this deals were worked on a few months prior. There's a notable Q2 slowdown though, which is inherently correlated to the war repercussions and the overall sentiment of uncertainty.
At the early stages, the slowdown is evident from the beginning of the year though. January is traditionally slow, February is a shorter month and the war has started in the middle of it. Early stage is where risk means conviction betting rather than excel projections. Doing later stage deals is much easier since companies are already de-risked and there's more data available for making educated guesses.
The data was cranked out from Nordic 9's databases as of June 18, 2022.
Cheat sheet and intel reports
European investors
• pre seed/seed investors
• series A European investors
• late stage investors in Europe
• super angels active in Europe
Active American investors in Europe
• late stage deals (41 investors)
• early stage deals (18 investors)
• angel investors (65 investors)
• the profiles of the most visible ones in Europe (20 investors)
Latest Euro intel
• multiple series A deals at 2021 valuations
• more liquidity events at later stage
• (more) web3, smart fashion tech and fintech in early deals
Link - Tomorrow morning we're sending the next one, you can subscribe to get it from here - add SundayCET at checkout to get a 10% discount.
Watercooler talk
🇪🇪 Speaking of rough times in the Euro startupland, Atomico and Taavet+Sten justco-led a $26 million Series A funding round of a pre-revenue startup that calls itself the Stripe for NFTs.
🇸🇪 Klarna faces valuation slash to $15 billion as it seeks fresh round of funding. That's down from 45.6 billion from exactly a year ago - for context, in 2020 Klarna raised at $10.65 billion valuation, and then in 2021 at $31 billion. Something seems off with this story - one hypothesis is that the financial losses may have commended much higher layoff numbers than the actual, and Siemiatkowski decided to go another route with a budget that works in a less aggressive growth scenario and hence a higher valuation haircut. This can be a very tough spot - what do you choose between losing employees and shareholders value and how do balance it out? Fwiw Klarna cut off 10% of 7000 staff while its net loss in the first quarter of this year was 4X higher than a year earlier at $250 million as credit losses rose by 50%. It may also be that in 6-9 months Klarna does another round of layoffs, if things worsen and the above 'beginning of the dip' goes downward within a longer timeframe. Not least interesting, coincidence or not, Apple's BNPL announcement couldn't have come at a worse moment for Klarna.
🇪🇺 Qualcomm wins fight against $1 billion EU antitrust fine imposed four years ago.
🇸🇪 The Swedish city of Malmö installed public trash cans with audio that conveys sexy comments of encouragement to folks who deposit their litter. The audio uses a female voice saying messages like "Oh, right there, yes!", "Come back soon and do that again!" and "Mmm, a bit more to the left next time".
🇳🇱 Netherlands says Russian spy planned to infiltrate International Criminal Court.
🇬🇧 Netflix is doing Squid Game in the UK for a total cash prize of $45.6 million, just like on the actual show.
🤔 Some finance industry leaders chime in with their best guesses about what might drive the biggest changes between now and 2052. Fun read.
🇨🇳 Publicly, executives say they’re as committed as ever to China but, all in all, the top six global banks made roughly $42 million in China last year.
🇮🇹 Ferrari boss says that there will never be a self-driving Ferrari.
📢 A customer purchased five Sonos speakers. Instead of sending the customer the five speakers he ordered, like a normal company would do, Sonos sent him six of every speaker for a total of 30 speakers.
⚔️ Elon Musk did a Q&A seesion with Twitter's employees.
🦾 Snap is testing a subscription product called Snapchat Plus.
🤔 Four parenting rules from 70 parents who raised highly successful adults.
🚡 The future of transportation - if this is for real, I am not really excited about it.
🦆 Ditto - but for web3.
💲Art as a hedge - on the opening day of Art Basel, the Swiss art fair where dealers bring their most important artworks to sell to their richest clients, it would seem a number of wealthy collectors are also hooked on the stuff - and willing to spend more than ever before.
🖼️ Speaking of art, an AI image tool called DALL·E mini has gone viral - you input in writing any scenario you can come up with, and the tool returns a collage of images that should reflect the text meaning. Kinda big deal.
🎙️ Beyonce will launch a solo studio album called Renaissance this summer, her first since 2016.
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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.