The one with more questions than answers
#50
Hello and welcome to a new edition of Sunday CET.
Here’s what I have for you today.
Euro powder
🇪🇸 Kibo Ventures
🇪🇺 Salesforce Ventures
🇩🇪 EON
🇪🇸 Seaya
🇩🇪 ECBF
🇪🇸 Faraday
🇳🇴 Momentum
🇪🇺 White Star Capital
🇳🇱 Rockstart
🇪🇸 Capital Energy
Euro strat
Les Big guns:
🇫🇷 In the past few weeks, French companies raised more than $1bn. This week, there were 5 announcement deals of $10M or higher. Two of those were $94M and $372M. And another two of $160M and $80M were announced last week.
🇳🇱 Speaking of big money and valuations, Messagebird, which was bootstrapped until 3 years ago, is also right there as they raised 200 mil.
Quite a few alternative food deals in this period:
🇩🇪 Prolupin
🇫🇷 Ÿnsect
🇳🇱 Mosa Meat
🇬🇧 Meatless Farm
🇩🇪 Infarm
Other interesting deals:
🇬🇧 VR and AR tech for cars
🇫🇷 satellite-based monitoring solutions for the agricultural sector
🇳🇱 orange peel technology
🇪🇸 education business for kids
🇫🇮 producer of soft drinks containing cannabidiol
🇫🇷 DTC fashion gameswear (they raised €2.5M pre-launch)
🇸🇪 A Swedish e-sport operator raised $56M at $200 mil post money. Those guys built a platform that lets gamers compete and win real money against friends and random opponents. They grew up fast and the model is pretty interesting - raised 12M in 2018 and 25M last year.
The head scratcher is that they only had some $3 millions in revenues last year and expect to get to $300M next year and $1.1bn by 2024.
They’re backed by Swedish investors only, including 2 VCs: Inbox and CNI.
🇬🇧 Crowdcube and Seedrs decided to merge to create 'one of the world’s largest private equity marketplaces'.
In 2019:
Seedrs made a £4.6 million loss on a revenue of £4.2m.
Crowdcube made a loss of £2.47m on revenue of £7.7m.
The combined company will be worth £140 million - that is 10X+ total revenues.
Some assumptions:
Seedrs does about 600 deals a year (250 investments + 320 secondary)
Crowdcube did about 200 deals in 2019 and 60 in Q2 2020 + just started operating secondary.
Side note: Crowdcube made more money than Seedrs at a lower deal operation.
For simplicity assume an average transaction value of £500k. On Seedrs, only 20% raised more than 1M and secondary transactions have a lower unit value.
Assume a 10% cut.
1000 deals * £500k * 10% cut = £50M per year.
It is a very simplistic calculation and likely missing variables out - now at 800 deals they just bring in 12 million.
So is it just me or the valuation is quite high? Will they operate 3-4k deals per year in 3-5 years? What is the realistic TAM?
Other random thoughts:
Europe has about 10k venture deals per year so that is a roughly 30% share of that deal flow.
Is there an untapped market? Absolutely so, the number of companies not raising from VC is big but most of them are not suitable for risk capital anyways.
Crowdfunding is an alternative for the long tail, question is - is it just a lower hanging fruit for those not qualifying for going direct to professional investment houses?
Or turning the q upside down, is the 3-4k from what VCs presumably turned down a reasonable number still suitable to raise money?
Other non-equity financial products are emerging as well. Market overall is liquid as is flooded with venture money so competition is there as well.
Is the secondary market a nice to have or a serious revenue driver?
Who is it going to be active in the secondary? Lazy (angels) investors missing out? Second tier VCs? Why would they trade on crowdfunding when public stocks are cheap?
The secondary market is by definition weak in Europe and there is less PE activity in the lower market (<10M). Besides, Europeans don’t really have this quick growing by acquisition tactic in the playbook.
Would love to hear/read other opinions on this.
🇸🇪 Klarna, which has historically struggled to get US market share, included equity as an incentive in a distribution deal with Macy’s. They also hired as US strategist the wife of the former US ambassador to Sweden (who is Polish just like Klarna’s boss).
🇪🇸 El Corte Inglés launched a new ‘Amazon-like subscription’ model: for €20/year users will benefit from free 24h deliveries and other perks.
‘Other perks’ is key here, but Amazon needs competition, that is for sure.
🇬🇷 Microsoft announces plans for first datacenter region in Greece. Greece has been an operational hub for MSFT for some time, and this commitment is strategic and quite big, particularly in terms of spillover effects.
🇪🇸 ViacomCBS to launch Pluto TV in Spain by the end of October with Telefonica's Movistar as a sales partner, and plans to expand to France and Italy in 2021.
The content market is super crowded and Europe is super fragmented. What can go wrong?
🇬🇧 3 months later, in the SPAC market: The London Stock Exchange is exploring how to entice “blank cheque companies” to the UK while the US market booms.
The banks see an enormous amount of activity going on in the US and think ‘could that be replicated over here?’
It’s another path to liquidity if it works, Europe needs more liquidity events but not necessarily because it is behind the US. We need to solve a problem because we have one, not because others have solved it already.
🇸🇪 Bonnier AB moving to exit from the U.S. media market.
Euro insights
7 out of 206 transactions account for more than 60% of the dollar investments.
Q3 had more money spent in the venture market than in the entire first part of the year: $2.75bn vs. $2.24bn
🇬🇧 How to raise £110m in 3 days. As a VC.
🇫🇷 How to prepare and deal with your startup’s exit in France.
🇩🇰 Some good points about consumer subscription-based businesses.
🇬🇧 The end of the American internet
🇬🇧 Ada Ventures’ approach to valuations
Euro bits
🇨🇭 Geneva adopts what's believed to be the highest minimum wage in the world, at $25 an hour ($5k/month)
🇳🇱 Who pays for the toilet paper? The big questions of the work-from-home era.
🇫🇷 Three months after her re-election as Paris Mayor, Anne Hidalgo has divulged her plans for the urban transformation of the French capital in the run up to the 2024 Olympics.
🇳🇴 Ex-Norwegian Air Shuttle investor to launch new Norwegian carrier
🇪🇺 Wind’s production is at almost 1/4 of all Europe's electricity.
🇪🇺 Amsterdam and Helsinki launch algorithm registries to bring transparency to public deployments of AI
Reports
A Guide to Marketplaces: Third Edition
The 2020 Data & AI Landscape (Matt Turck)
Reads
The value of an airline is its frequent flyer program.
Facebook to sue companies scraping their data.
Venmo launches its first credit card with scannable QR code.
“Simple Article Sales Service” - SASS
Tesla dissolves its PR department.
Japan’s Super Nintendo World will open in spring 2021
Happy Sunday!
Thanks for reading 🙌
Created every Sunday by @drnovac.
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