40 mil for 4 years of stealth
Welcome to Sunday CET. Writing this from Sicily where it’s 22 Celsius and sunny all the way - quiet beach, fried fish, real-taste strawberries and mafia stories, all headed by the almighty Etna. For those who have never been, it’s highly recommended.
Here’s what I got this week:
is spending 40 million in stealth worth it?
the EU is trying hard to get technology
charity with a VC model
Let’s get to it.
10 things you need to know
200+ early stage deals in Europe in Q1 2023 - AI, deep tech, web3, climate et al selected from 1500 startups that got funded in the first three months of the year.
Nordic hype - Swedish startup that raised 40 million in two years, started in 2020 and expects to ship at the end of 2024. Very un-European because it’s super risky, in four years the markets shift, core hypothesis change and overall trends are fading - it’s go big or go home, and then games are just like movies, very few blockbusters out there. Otoh, here’s a good insider piece on what VCs don’t see in gaming - still, it may as well be one of the more expensive stealth startups from Europe and I can’t think of another that became a unicorn after four years of spending 40 millions being in stealth. Can you?
Other Euro gaming startups with high VC hopes Some of the largest funded gaming startups in Europe in the last couple of years:
🇬🇧 Improbable - raised $800 million from a16z, Softbank and crypto investors (made a big bet on metaverse)
🇫🇷 Sorare - raised $740 million from Atomico, Bessemer, Benchmark, IVP
🇹🇷 Dream Games - raised $500 million from Blackrock, Index, Balderton, IVP
🇬🇧 Tripledot - raised $200 million from Lightspeed, Eldridge, 20vc
🇫🇷 Homa - raised $165 million from King, Northzone, Singular, Prima Materia (Daniel Ek)
🇳🇴 Portal One - raised $75 million from Tiger, Temasek, Founders Fund (here’s why was hyped when it was funded)
Best Nordic SAAS is Ardoq - as pronounced at a 1200 people SAAS event in Malmö this week. Ardoq has raised some $160 million, is controlled by PE (EQT and OnePeak) and does some 20 million ARR.
Other contenders: Voyado, LMS365 and Dealfront.
Tech salaries in 2023 France - not too high and not too small for Europe, according to a survey of 2038 professionals from junior to C-Level.
Charity with a VC model - Founders Pledge, a British charity fund donating a part of founders proceeds from their exits, launched a VC fund to exclusively invest in high growth startups that belong to the charity members.
Did I get that right? A charity just launched a VC fund in order to live off its management fees while recycling money back to its donor companies. High profiles behind it.
Raising capital in Italy - from an outsider that backed more than 50 startups operating in Italy. link
The reasons that led Getir to take this decision are specific to France - that’s from an application for redressement judiciare submitted by Getir, a form of restructuring in accordance with French insolvency law. Getir, which bought Gorillas and Frichti in France, has 900 employees supporting 7 French cities, is active in 9 countries and is one of the last Euro startups standing in the 15 minute delivery, thin margins business that drove VCs crazy a couple of years ago.
Euro intel: 30+ curated early stage deals including:
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🇪🇺 The EU is EU-ing
Experts say it is likely impossible for OpenAI to comply with strict data privacy demands made by Italy’s tech regulator before the April 30th deadline, which may result in a longer ChatGPT ban in the country.
Of course it is impossible, it doesn't make sense to try to regulate something that’s still emerging in the first place.
The EU passed a law regulating stablecoins and requiring any company offering crypto services register with a EU member state. It should take effect in July 2024.
Also the EU turned to Elon Musk to replace stalled French rocket and negotiate a security agreement with Americans to keep its space program running. The Commission reckons only SpaceX's Falcon 9 heavy launcher and United Launch Alliance's Vulcan system are up to the job of sending the EU's new geo-navigation Galileo satellites into orbit.
Damn right - the first part in solving a problem is acknowledging you have one. Makes better business sense than the sovereignty ego thing.
The EU launched a new unit in charge to play a major role in interrogating the algorithms of mainstream digital services - such as Facebook, Instagram and TikTok. The aim is helping the European Union regulate AI and Big Tech compliance with the Digital Services Act.
For example, an AI-based recommender system that can be shown is serving discriminatory content despite the platform in question claiming to have taken steps to de-bias output - with the unit’s researchers being tasked with coming up with hard evidence to help the Commission build cases for breaches of the new digital rulebook.
Listen, I understand that those guys are trying hard to figure out AI and crypto and technology but here’s a semi-serious down-to-earth request: Can the EU force the likes of Netflix and Spotify not to discriminate content access by geography? In Italy I can’t access content available in Switzerland, where I can’t access content that’s available in Sweden, where I can’t access content that’s available in Romania and so on. I find this digital rights business model offensive for consumers, it’s 2023 ffs, it’s time for EU to step up its sovereignty play and protect my rights of being able to access whatever content I paid for when I want! 😇 PS. Yes, I know Switzerland is not EU.
🇬🇧 The Brits after Brexit
Britain’s capitalism without capital, the public markets edition:
Take Immunocore, for example - the most successful British biotech company is now really plugged into the American capital markets and companies are following Immunocore to the US. In the first quarter there were just four London listings, raising only £81 million, the sixth-worst quarter for initial public offerings in the UK capital since 1995. Pension schemes and sovereign wealth funds across Canada, Australia and Asia have more leeway from regulators to invest in early-stage companies, listed companies and other asset classes. Partly as a result, British energy, infrastructure, defence and technology assets have fallen into foreign ownership.
Related: building a biotech company in the UK is like trying to grow plants in the desert.
Banks betting on Paris say there really is life after London - for decades London was the main nexus of European finance, melding continental money with transatlantic ideas of what to do with it. But two years after Brexit became a reality, there’s been a clear shift across the Channel - to Paris.
Londoners’ higher salaries relative to the rest of the country are ~entirely consumed by higher housing costs. 15% higher household incomes become ~0% higher after mortgage, rent. thread
🇬🇧 Britain context encore
Google loses more cloud business to Microsoft in London.
Also Google started bargaining with the Brits on the distribution commission it charges for selling apps via Google Play - they conceded a 3 percent off, from 30 to 27%. Developers would also gain the ability to add alternative in-app billing systems alongside Google Play.
Google is giving 3% away as it aims to please regulators claiming it to be a monopoly.
Meta plans to either cut or relocate some of its London-based Instagram employees after CEO Adam Mosseri, who moved to the UK a few months ago, said he would return to the United States.
In the past 6 months or so, Meta laid off about 25% of its staff, getting back at the pre-Covid levels. You gotta admit it, Zuckerberg is trying hard to redeem his credibility on the street, in the light of the Metaverse f-up, and he is moving fast and fearlessly (he controls the board so he can’t be fired) - also I think Elon Musk contributed a bit with setting up an example that running a consumer software company doesn't require as many employees. But Zuckerberg’s big problem remains, he has no vision whatsoever, he’s just copying other people’s ideas, hoping something will eventually stick.
You know Google is desperate to catch up with the AI wave when it is merging two units that hate each other while doing the same thing: Google Research’s Brain and DeepMind, acquired in 2014, which will be led by Demis Hassabis from London.
🇫🇷 Societe Generale-Forge (SG-Forge) has launched EUR CoinVertible, an euro-pegged stablecoin based on the Ethereum blockchain, only available to investors onboarded by Societe Generale through its existing KYC and AML procedures.
🇫🇷 Amazon is frenchifying with an image boosting media plan that copies McDonald’s playbook from the 90s for attacking the French market: Project Ratatouille.
🇸🇪 Ikea is planning a $2.2 billion expansion in the US over the next three years, its largest investment in a single country ever.
🇩🇰 Danish police arrested eight employees at an energy trading company who will face charges of manipulating prices on the Nordic electricity exchange.
🇨🇭 Jenny Wang, the wife of a Chinese billionaire, hired Moelis & Co. to explore a sale of Swiss pro soccer team Grasshopper Club Zurich.
🇪🇺 The IRS (the American tax office) is testing a pilot program with an officer in Frankfurt, Germany, alongside three other countries (Australia, Singapore and Columbia), to help combat the use of cryptocurrency, decentralized finance and mixing services in international financial and tax crimes. Until now, the IRS only had one cyber investigator abroad, in The Hague, Netherlands, mostly working along Europol since 2021.
😮💨 Innovation economy influencers ftw - by Silicon Valley Bank's own admission, 70% of its loans consisted of low credit loss lending to vineyards, private equity funds and innovation economy influencers. About 9% of the total went to companies that the bank considered unlikely to be able to pay back what they owed unless they could find a buyer or raise new money.
💰 Apple announced it will provide a savings account that yields 4.15% for Apple Card users, more than 10 times the American average. The account has no fees, minimum deposit or balance requirements and can be set up from within the Wallet app. The average US bank account savings rate is just 0.37% versus the Fed’s benchmark rate of 4.75 -5%.
Related: Depositors pulled nearly $60 billion from three US banks in Q1 2023 in search of higher returns. Sixty freaking billion.
😬 Shit got serious in the US: folks buy groceries with BNPL.
🛎️ An analysis of the data sets used to train large language models revealed that Wikipedia, piracy sites, and databases of private personal information are among some of the most-used sources.
Related: Stack Overflow is joining Reddit in saying it plans to charge companies like Google and OpenAI to use its data to train large language models and other AI systems.
So, once again, for the analysts in the back, why do you think Google is paying media companies for scraping their content?
🚗 The global EV leaderboard
💲 Elon versus the old Twitter - half of Twitter Blue subscribers have less than 1,000 followers and Twitter’s premium offer in its current form is not working because it doesn’t really provide value. Musk still doesn’t seem to have any clear idea how to monetise a consumer media company and keeps doing weird stuff (this straight out gangsta move shows somebody’s taken it personal) - and tries and tries and tries until he will eventually either get to a PMF or sell the damn thing and start focusing on serious stuff, like rockets.
Related: Twitter feels a little emptier, though certainly not dead. More like the part of the dinner party when only the serious drinkers remain.
⚙️ Why use your brain when it’s easier to copy other people’s ideas:
When Apple takes an interest in a company, it’s the kiss of death. First, you get all excited. Then you realize that the long-term plan is to do it themselves and take it all.
🤔 The American way - CEO of a small digital marketing firm celebrated a worker selling the family dog to be able to go back to the office full-time.
Curated data-based intel from the European startup ecosystem. No noise, all signal - get it with a free trial. 👇
🇪🇸 Real talk (from a broader discussion with a Swedish founder looking to move shop from Sthlm) - is Spain a good place to settle for running a European HQ? Aside from the business part of the conversation, I love Spain, people are great, the country is amazing and the Latin culture is unbeatable in terms of social life in Europe - if you live in a Northern country, for example, you’re desperate for this context, spending time in Spain has even become a social status for Nordic people. Otoh - sunny days are nice but Spain has mostly a desert-like climate, rationing water as currently at the driest April in 60 years and torrid summers that make it dangerous to stay outside. This will only accentuate because of the global warming, and if you combine it with the skin cancer (mostly caused by the sun) that’s on upward trends… 3-4 months of terrible heat at least. This sounded silly to me initially but it’s not without substance, the same applies to Portugal, but is this a real concern? WDYT?
(Somewhat) Related: 36 hours of an American in Lisbon.
✌️ The kids are alright:
1 in 5 of Gen Z already started their own business. 1 in 3 of Gen Z will be making their own clothing 10 years from now on.
6 in 10 young people say: “When it comes to work I would rather stay at a steady level that allows me more balance”
65% of young people say: “exploring and learning about all the different places from around the world is important to me”
🤭 German artist Boris Eldagsen wanted to make a statement about how the art world was not prepared for AI - his photograph won a prize and he turned it down after revealing he generated the image using artificial intelligence. Eldagsen said his ploy was intended to accelerate the debate about what we want to consider photography and what not.
🇨🇭 Sechselaeuten - high-profile members of Zurich society have become embroiled in a racism controversy after a leaked video showed attendees at a party for a spring festival applauding a character in blackface and jokes about minorities.
🇮🇪 Athletics Ireland is sorry for mix-up that led to national 10km race being too short. Reports suggested the race ended up being only 8.5km long.
🇨🇳 The Chinese Ministry of Public Security has established more than 100 illegal police stations around the world. Last fall, the FBI raided such an outpost in Manhattan and made two arrests - dudes acted as Chinese government agents since 2015 in various ways, including by staging public protests against Chinese religious minorities, threatening and pressuring purported Chinese fugitives to return to China, and tracking down Chinese pro-democracy activists. Sounds like Chinese Putinism.
💪 Sales of manga comic books are booming, both in Japan and the United States.
💲 $300K is the new $100K - residents of Honolulu, New York City and San Francisco who earn this amount are taxed roughly 40.5% or higher and have a cost of living more than 82% above the US average. In Europe, on the other hand… :D
🤌 Police search for group of suspects who stole 2 million dimes worth $200,000 from truck in Northeast Philadelphia
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