Hello and welcome to a new edition of Sunday CET.
Let’s get right to it.
Euro strat
Powder:
🇸🇪 EQT Growth
🇩🇪 UVC Partners
🇪🇸 Samaipata
🇫🇮 Open Ocean
🇹🇷 212
🇪🇸 4Founders
Highlights:
🇩🇰 Lunar raised €40 million
🇩🇪 Dance raised €15 million
🇸🇰 Vectary raised $7.3 million
🇩🇪 Razor Group added funding from GFC and Redalpine
Bets:
🇫🇷 stealth backed by US-based Spark Capital and angels - $3.5M
🇦🇹 marketplace for industrial metal scrap - $2.8M
🇸🇪 SAAS startup built by an 18 year old - $2.7M
🇬🇧 digital community business around mental health - £1.4M
🇪🇸 mobile companion app for senior people - €430k
🇩🇪 carbon farming producer - undisclosed amount
🇸🇪 Bisnode, which was owned by Bonnier and Ratos, was acquired by Dun & Bradstreet for about $800M.
Other stuff:
🇸🇪 Klarna’s CEO bought Twitter ads to make the following claim:
Thank you CNBC for making it official: Klarna is now the global innovation leader and Paypal the follower. We are humbled but eager to push the innovation and customer centricity in this industry forward at an increasing pace!
A few observations:
1. No matter how innovative you think you are and how bold your vision is, the difference in the market is made by the strategic execution, not by public statements.
2. Business and thusly the leader and its followers are solely decided by the customers and their wallet, which ultimately dictates everybody’s market share.
3. So why this reaction? Public statements are usually signals you want to send to the market aka your stakeholders.
One way to interpret this is “we’re leaders and not afraid of the threat of increased competition”.
But… it can be translated into showing a lack of self confidence. When you publicly claim you are not afraid, you usually are afraid - leaders are busy leading, not publicly shaming followers. Besides, leaders are always wary of risks which is also controlled fear.
4. Who is the recipient of the message? The customers? The employees? The shareholders? Unlikely. There’s direct better channels for talking to them.
The other competitors, particularly PayPal? Likely. They get a direct mention in an ad purchased by their competitor - btw, comparative advertising is very unusual and generally prohibited in Europe.
But there’s backdoor channels with competitors too.
Fact is, this ad is an unusual move in the European ecosystem. It looks like an impulsive reaction not vetted by the PR and made when you feel threaten.
And another fact is that Paypal is gaining market share in Europe at a higher pace than Klarna has been advancing in the US. And, rather a personal observation, Americans are better at business development than Europeans.
And my intuition tells me that there’s a background story that led to this reaction.
5. Maybe there was a background deal between the two that didn’t work out and this is an ego burst - maybe Paypal wanted to buy Klarna but offered too little money and things escalated, or something.
6. Or maybe Klarna started losing key business to Paypal in its home markets and this is some hurt ego reflection.
Or a combination of both.
7. Also in Paypal’s advantage: better brand awareness and a few strategic acquisitions, including a $2.2bn iZettle from Sweden (Klarna’s turf), a payment processor already working with most of the Euro retailers.
Providing a solution covering the whole spectrum of needs down the chain for a merchant can be a differentiator, see the next point.
8. Also on topic, interesting to note a quote taken this week from the founder of Lunar, a Danish neobank which also wants to eat Klarna’s lunch:
The “schizophrenic” Nordic banking market is the reason why Lunar is launching BNPL. The Nordics is the most profitable banking landscape in the world, but also the most defensive, with least competition from the outside. This means that the traditional banking customer is buying all their financial products from their bank.
It is within this context that Lunar’s BNPL products are built as “post-purchase,” where Lunar will prompt its users after they have bought something. For example, if you were to buy a new television, the app will ask if you want to split the purchase into instalments. This does not require merchant agreements etc, and will work on all transactions both retail and e-commerce.
We do not view Klarna as a direct competitor as they are not in the Nordic clearing system. Hence, you cannot pay your bills, get your salary and use it for daily banking. Klarna is enormous in Sweden, but relatively small in Denmark, Norway and Finland.
9. Whatever. If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.
So there’s that. Increased competition, different points of market attacks and the feeling that all of a sudden you are not just a pioneer opening markets and risking arrows in the back. You are fighting head to head with solid competitors on multiple fronts. The game has changed.
10. It is a complex strategic one that requires different skill sets than building a company from scratch.
It is also a bit unusual that a founder is involved in the management thus far in the company’s lifecycle such as Klarna. At this point, the beast needs to be steered differently and usually investors prefer professional CEOs for handling $6bn companies. Not impossible for founders, take Daniel Ek as an example. But definitely a different cup of tea.
🇪🇸 More competition for Amazon in Spain - the former CEO of local market leader Cortes Ingles, raised €2.8 million from FJ Labs to launch a consumer brand retail marketplace next year.
🇩🇪 Tomorrow Bank raised €3 million in 300 minutes.
Not only a sign that the Germans are building a great business but also that customers are really unhappy with the current banking providers - a reminder that the financial services business controlled by banks is an outdated greedy system that needs to be disrupted.
🇸🇪 Voi started selling its scooters - for now only the used and reconditioned ones.
How long until they add brand new ones? And bikes. And a sub-based business on top of that.
This kinda reminds me of the pivot Vivino made from being a premium social network to being an ecommerce business.
🇪🇸 Inveready returned 6.43X to a €15.5 million fund started in 2009 and spread over 35 companies.
🇨🇭 The overall equity value of all ETH Zurich spin-offs is almost CHF 5 billion ($5.5bn).
🇸🇪 How do you increase the value of your product ecosystem? Connecting it and making it interoperable with another ecosystem. It’s a platform play.
Case in point: Natural Cycles can be used with Oura rings.
Euro insights
🇦🇹 Great interview with a guy behind of a less known European tech startups success story. Less known probably because he didn’t raise (too much) venture money and was not pushed on Techcrunch as such. :D
🇩🇪 Also an interesting background story of a German founder who is building a neo bank in Mexico with the devel out of Berlin. Raised a bit of Euro money too.
🇮🇹 A quick reality check about where Italy stands in terms of startups tech (spoiler: there’s a long way ahead)
Euro bits
🇩🇰 Unity launched a startup accelerator for indie studios developing mobile free-to-play games
🇬🇧 If you’re into mobility and want to invest in the space, check this out, made by a former Tesla guy. You’re welcome.
🇳🇱 The Dutch from Peak Capital opened an office in Oslo - a Romanian is in charge.
🇫🇷 Content bundling: Salto is a joint initiative between TF1, France Télévisions and M6 — three major TV networks.
🇪🇺 Daimler, Swiss Re launch mobility insurance venture
🇪🇺 Eastern Europe has become an e-bike manufacturing hub because Taiwan is fully booked and China charges punitive duties.
🇸🇪 Ikea seeks to disrupt itself before it is disrupted.
🇳🇱 Last week a Dutch security researcher succeeded in logging into the Twitter account of the American President Donald Trump. Trump has 87 million followers, had an extremely weak and easy to guess password (maga2020!) and had according to the researcher, not applied two-step verification.
The whole story here.
🇸🇪 Sweden banned telcos from using Huawei or ZTE network equipment for their 5G at the recommendation of the Swedish Armed Forces and the Swedish Security Service.
The Chinese threatened to retaliate.
🇫🇮 Nokia selected by NASA to build first ever cellular network on the Moon.
🇪🇺 The EU wanted to issue 17 billion euros of debt, and it got demand for 233 billion euros.
🇪🇺 Also the EU decided on Friday that a veggie burger is a burger.
Farmer lobbyists argued no. Environmentalists said yes. The Parliament said yes, too.
Slide of the week
Reads
Facebook starts charging for Whatsapp
Airbnb hires Jony Ive for design consulting
PayPal lets customers buy and sell cryptocurrencies in the US.
Americans spend $20.78 a month on app subscriptions
Happy Sunday!
Thanks for reading 🙌
Created every Sunday by @drnovac.
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