the metaverse illusion

#137

Good morning and welcome to Sunday CET.

Let’s get to it.

Dragos

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Interesting Euro deals

🇳🇴 Zerolytics, stealth, pre-launch climate-focused startup, was pre-seeded.
🇸🇪 Leyr, developing a unified API platform to connect to multiple Electronic Medical Records, raised $600k pre-seed.
🇧🇪 ClimateCamp, developing a SAAS that helps companies engage with their suppliers on their carbon emissions, raised $700k.
🇫🇷 Leakmited, software startup using ML models to identify water leaks, raised $1 million.
🇬🇧 Atoa Payments, developing an Open Banking-based payment solution for UK businesses, raised $2.2 million.
🇫🇷 Arsen, selling a phishing simulation SAAS, raised $2.5 million.
🇳🇴 Retyre, alternative rubber producer, raised $3 million.
🇩🇪 Raus, operating a travel service for contemporary retreats, raised $3.1 million.
🇫🇷 EvidenceB, software startup developing new learning tools based on scientific research, raised $4 million.
🇩🇪 Secjur, developing a compliance platform backed by a marketplace of legal and technical experts, raised $5.6 million.
🇱🇻 Giraffe360, selling a sub for a robotic camera used in real estate, raised $16 million series A.
🇬🇧 TreeCard, building a neo-bank, raised $23 million series A.

Source: N9

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More intel bits

💲 Fresh powder:

• CVC Capital Partners raised €6.3 billion for its third European direct lending fund.

• TDR Capital, a British buyout firm, raised €4.2 billion for its fifth flagship fund.

• The Carlyle Group, American asset manager nicknamed the ex-presidents club, raised $3.12 billion its fifth pan-European technology fund.

• Scania, the Swedish truck manufacturer, has launched its VC fund for the B2B tech space, closed at $190 million.

• Peak Capital, Dutch fund with European ambitions, raised €150 million for a fifth fund.

• YZR Capital raised €60 million of a first fund to be deployed on early stage health tech startups out of Munich.

• Nesta Impact Investments announced a £50 million fund investing in (what else) a new generation of game-changing startups.

✍️ Also notable:

• Klarna’s latest numbers reflect the cost savings from the two layoff waves done this year, as their boss says he’s expecting month-over-month profitability next summer. After the 85% valuation cut he had to take this year in order to access emergency funds to re-gain equilibrium, how much VC money will he likely use to finance aggressive growth in the future?

• Spotify’s Daniel Ek shot yet another PR missile at Apple this week, speculating the momentum created by Elon Musk’s ignorant innocent revelation that a 30% cut may not make economic sense for biz at scale operating on Apple’s devices. Spotify’s beefs with Apple are well known as the richest company on the planet uses any edgy move it can make to push its own services at the detriment of smaller competitors. One may argue that Spotify’s disadvantage is that Ek is living in Sweden and doesn’t hang out with the SV’s bros - such as in this case, the fire was put out shortly, Musk had a mano-to-mano meeting with Tim Cook himself to clear the air and deleted his aggressive tweets as a consequence.

• JP Morgan is among the suitors in talks to buy the UK stock trading app Freetrade, last valued at £650 million, w/ 1.3 million users and £15 million in sales.

• The Danish Public Pension fund lost 47.3% during the first three quarters of the year in the alpha mandate where they control 20%.

• Memo to EU unicorns wannabes: you want to build big business, you go the US of A.

• Software engineers in Europe who Twitter tried to fire over email, lawyered up.

🏃‍♂️ On the move:

• LocalGlobe hired Aashima Arora (ex-investment lead at Polygon Technology) and Yvonne Bajela (ex-principal at Impact X Capital Partners) as partners.

• Seed Capital hired Christian Brøndum, ex-CEO at Planday, as managing partner.

• Schibsted Ventures promoted Jussi Lystimäki as Head of Ventures.

• Picus Capital hired Joanna Koczuk (ex-Schroders Capital) as director of IR and business development.

• Capital Dynamics promoted Andrea Mazzaferro to head of European primary investments.

• Isomer Capital hired Andreas Munk Holm and David Cruz e Silva (founders at The European VC podcast) as partners in the company.

• KKR announced a newly promoted group of 27 Managing Directors, about half of which are managing in London, Stockholm and Dublin.

🗣️ Cheat sheets:

• ICYMI: super founders of Europe.

• Active investors: Americans, French, Brits, German, Swedes.

• Interesting startups: climate-focused, marketplaces, cybersecurity, web3.

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Good to know basis

👉 What to do when investors say no? - be human
👏 Building investor signals for a pre-seed startup - basic rules.
✴️ What European VCs are talking about as 2022 winds down - they’re scared.
🤔 What does a Chief of Staff do? - personal assistant to the CEO re-branded.
ℹ️ The state of quantum computing in 2022 - useful
🌱 The European cannabis market - markets in everything
💲 Good investors you won’t read in the media about - link

Have you produced useful resources for the community? They can be events, reports or tools - send me an email with submissions at drnovac@gmail.com

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Reality checks

🇪🇺 The metaverse illusion The EU spent €387,000 to promote a metaverse platform they customised in order to get young people excited about the EU being involved in innovative stuff. The net result of the budget effort was that only 5 (five) people showed up in the metaverse for the kick off event, including journalists.

That is some textbook example of bad marketing. However, the overall experience seems underwhelming - can you blame the marketing entirely when the product you sell has too little value to begin with?

The metaverse is just a half-baked concept which the big tech is hyping up as it’s their next potential growth source and hoping the noobs will adopt it and treat as a real thing. And it’s not only the EU employees in this category cluelessly jumping on the hype without understanding the lack of utility, but also, guess what, even business schools from Europe are “at the forefront of the innovation” by teaching classes of “digital transformation” in the metaverse.

If this sounds silly to you, that’s because it is. No practical sense whatsoever, and just a confirmation that schools are teaching theoretical concepts disjointed from the requirements of the today’s job market. That’s real talk.

Participants on the International Executive MBA will learn about potential business opportunities in the metaverse.

… which opportunities, of course, are theory supported by research made by the likes of McKinsey, which sells reports about un-realized business mirages to big companies who have to justify innovation budgets. The circle is closed, everybody’s ass is covered. The reality is that, except for the VR vendors (i.e. Facebook, Microsoft) who are directly sponsoring all those schools and McKinsey reports, the metaverse business is a gimmick with little traction recently brought into public attention by a dude going by the name Mark as he is trying hard to change the spotlight from his core business problems. The tech behind it has been around for 10 years already, with a lot of talk and no show, and is not even close to some frontier innovation like say, space tech, or biotech, or alternative food etc. And it will remain only as a hyped category at least until the next big iteration when Apple will launch its devices, subject to its sales beyond the VR games. Because Facebook, 12 months after desperately famously pivoting into it, still has nothing to show for the billions it spent for it.

🇪🇺 Oh Europe Switching gears from metaverse innovations to bad legislation enforcement, this week the EU decided to close down national corporate registers of beneficial owners. That means it will no longer be possible for the public to learn who really owns a European company. It’s as if somebody asked those guys to make it difficult to learn who is possibly laundering money across the EU - here’s a fitting €2.2 billion VAT fraud scheme example. Of course nobody did ask anything, it just looks like pure Euro short-sight thinking combined with bureaucrat reactions. Context + more implications.

Anecdotal, over at N9 we’re getting quite a few requests from Euro HNWIs asking to get de-listed from the site and from their investments. We have thousands of such individual records that you won’t find in other investors databases, and as long as the primary data is public, our work of cleaning it out and making it transparent remains valuable and perfectly legit.

🇨🇭 Don’t buy that Tesla yet Switzerland could limit the use of electric vehicles in cases of electricity supply shortages this winter under a new four-step plan to prevent power cuts and blackouts. Driving EVs could be banned in Switzerland unless in cases of “absolutely necessary journeys” in stage three of the power conservation plans. The plan is yet to be adopted.

🇳🇱 Is economic development a good thing? A Dutch city w/ traditional middle-class homes accommodating 14k people is concerned that ASML, Europe’s largest and most important company in the chip sector, is growing too big, too fast leading to building facilities that are high enough and close enough to nearby homes that some would get no sunlight for as long as two months, on top of broader issues related to congestion and strains on resources. ASML initially started in a small office with 100 employees and now occupies more than 225,000 square meters of space — roughly equivalent to New York’s Grand Central Station. link

Meanwhile, ASML’s competitor, the also Dutch ASMI complains about the estimate of the hit from the US export controls of any major European chip company, warning it would affect about 40% of sales to China.

🇵🇱 Oh Poland Poland is seemingly building a house of cards that could lead to an economic collapse for the ages. The EU is likely not going to bail them, a way out is to attract American capital but at -11% real interest rates, it’s hard to see that happening.

🇩🇪 Germany becomes a no-fly zone for low-cost carriers. Ryanair and EasyJet scaled back in Germany over airport fees, as Lufthansa is punching back for getting local market share. EasyJet quit the popular Frankfurt-Berlin route in 2020, and this year Ryanair abandoned Frankfurt altogether, saying the sky-high landing and terminal fees at Germany’s biggest airport - operated by a company partly owned by Lufthansa - rendered service there unprofitable. On domestic routes, Lufthansa and its low-cost subsidiary, Eurowings, have a near-total monopoly, so there’s scant incentive to lower fares. link

🇪🇺 Europe is running out of wind The 2021 “wind drought” hit Northern Europe particularly hard, especially those countries relying most on wind energy - notably Denmark, which gets 44% of its energy from wind, and Ireland, where the share of wind in total energy production is 31%. The IPCC predicts a drop of 6% to 8% in average wind speeds across Europe by 2050.

🇬🇧 The UK will begin trialling Elon Musk’s Starlink technology in its first test of web-linked satellites to provide ultrafast internet to rural areas across the country.

🙈 The UK’s economic mess was caused by Brexit, according to specialists - who would have thought?

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Closing notes

🔥 OpenAI released ChatGPT, a prototype general purpose chatbot using GPT to generate human-like text and which can even trick VCs to invest into compelling AI-generated pitches, among other things. Just kidding, but the tool is actually an amazing piece of tech with many-many business cases to be explored, and which some observers are already dreaming that it’d replace and kill Google. Except that Google’s search engine is not that dumb either, but rather heavily adjusted to extract $ not to showcse a best in class tech product, which is exactly what OpenAI does. And in order to kill Google, it needs to kill its related ad business, or to replace it with a commensurately big scale revenue generator (i.e SAAS?). AI-based products are not something new in 2022, of course, but make for a nice narrative change from topics such as the market disarray, crypto scams, Twitter drama and FB’s VR pivot we’ve been seeing for the past 12-18 months or so.

🇫🇷 How to confuse the French Here’s a fun fact: in French, GPT is slang for "I have farted" acronym in text messages for “J’ai pété” and ChatGPT means "Cat, I have farted". It will be fun to follow how they will further butcher the English language in their quest to adapt the tech-related vocab with French equivalents.

👺 Tesla delivered its first all-electric semitrailer trucks, Semi, about which the German specialists from Mercedes claimed it’s impossible to make.

In related Elon Musk news, his brain-implant startup Neuralink should be ready to test its technology on humans in six months - dude said he’s going to have it implanted it in his head as well.

🤔 Sam Bankman-Fried, who is behind a roughly 10 billion heist of investors money that could damage the entire crypto industry (could?), is seemingly on an apology tour and plays the innocent dumbness, and reverse, role. The more you learn about it, the more dumbfounded you become about how grownup investors fell for a classic scheme, yet another proof that investors will tend to relate to greedy get-rich-fast models rather than to boring lucrative business that needs to get built in decades. Here’s this week’s tour du force:

- NYTimes video + transcript
- NY Magazine - link
- GMA - link

🇫🇷 Allez les baguettes UNESCO named the baguette something worthy of humanity’s preservation and added it to a cultural heritage list. More than six billion baguettes are sold every year in France, for an average price of about 1 euro. Until 1986, it had a fixed price.

🇨🇳 What happens in China stays in China In the short term, Xi has two decisions: how to handle Covid Zero and how severely to crack down on the street and online protests. The key unknown is just how much sustainable momentum there is behind the popular movement today, and how decisions around Covid policy and repression will impact public opinion and the intensity and scale of street protests. link

🖖 10 essential trends on Tinder in 2022 - daters drink less alcohol, don’t dine out as much, appreciate humour (oh!?) and being fresh and forward, as well as are invested in social issues. link

💲 Pro Sports franchises are among the most coveted assets in the world.

🧑‍🚀 Try the astronaut workout If your work involves long hours of sitting in front of a screen - they are not dissimilar, physiologically, to floating in space.

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