Who will spoil the Euro fintech party, retiring to Greece and the Tesla for chickens.



I’m back from the holidays though still on a lazy, do-nothing mood. I ventured to use international air travel and got post apocalyptic vibes - things are not looking good in the world right now. Hope all of you are well and enjoy the summer, we’ll need energy for what seems be a long second part of the year.

Big welcome to the new subscribers! As a reminder - name is Dragos, I’m a long time tech entrepreneur based in Sweden and this newsletter covers my notes and observations from the Euro startup and investment ecosystem.

Observations, research, data

🇪🇺 Name a software company from Europe which runs a fintech operation bringing in about $100M in revenue every quarter. Hint: it’s from Norway!

There are not too many options but the answer you are looking for is Opera Software. In Q1 2020 Opera brought in $94.7 million driven by 8.6 million financial loans. Yes, the browser company.

A little history

The story goes that in 2016 Opera was in discussions to be acquired for $1.2bn by a Chinese group. Due to privacy concerns, Opera and the Chinese have instead came up with an alternative deal worth $600 million which stripped out some products and services in order to overcome regulatory hurdles.

As such, the Chinese took over the Opera brand, along with the mobile phone and desktop computer browser business, its performance and privacy apps division, its technology licensing business, as well as its stake in Chinese joint venture nHorizon.

Opera’s advertising and marketing business, the TV operations, and game-related apps remained as a standalone biz operating as Otello Corporation.

In 2018, two years after acquiring Opera, the Chinese listed it on Nasdaq in US.

Since then, the company, which is led by CEO Yahui Zhou and COO Lin Song, transitioned the core business from selling advertising to selling consumer financial services, getting from 0 to 70% of its revenue in about two years. In Q1 2020 the ads biz generated some $40 mil.

The business

More interestingly, Opera’s current focus is in Africa and Asia, where most of their users come from. The company’s core products are a multi-device browser, an AI-based news product and financial micro-loans - mostly targeted at African & Asian users.

Now, the move from ads to other service-related business has deep strategic background. When you have an operation solely based on a browser competing with Google, going head-to-head for user share and related ad revenue seems to be a waste of resources. Even in markets where Google is not as strong such as Africa or Asia, it is just a matter of time until you collide and uhm, can’t just be part of a growing story.

And in this position, it seems reasonably strategic to evaluate your core assets and strengths and leverage them towards a more lucrative and growing market. In Opera’s case, the main assets are the good tech, good brand and a 350+ million MAU number, which may be not a big one in the browsers market but in other markets can be a huge figure.

The switch from advertising to a financial services provider was criticized by retail investors, going as far as producing a research report accusing Opera of offering predatory short-term loan products (that means obscenely high interest rates; but legal nonetheless) and further accusing Google being complicit by providing lax Play Store’s policies on short-term and misleading lending apps.

While it is true that the Chinese culture is different and public markets require more transparency, when you attack strategically a new market aiming to totally reinvent your front end business perhaps it is not very wise to lay out your cards upfront. But, especially when in public markets, a lil’ scrutiny is welcome.

However, none of the allegations seemed substantiated and it looks like the market priced accordingly the Opera’s stock, not too far from the 2018 point when it IPO-ed and later made the pivot.

Why the switch to financial services though? Some background arguments:

i) the Chinese shareholders - the group’s largest investor and current Opera Chairman/CEO were recently involved in a Chinese lending business that listed in the U.S. It’s also notable that the above mentioned report mentions this business saw its shares plunge more than 80% in just 2 years amid allegations of fraud and illegal lending practices - again, the Chinese culture is very different than the Western one.

ii) Africa is a lucrative emerging market - large, untapped and with not that much competition, and open to financial services provided via mobile apps because of low tech education/adoption.

iii) the financial services market is at an absolute behemoth size, with its core still very much un-touched by technology. The consumer side has already started to be disrupted in the past 5 years or so. But that’s just scratch on the surface and, besides that, the outdated legacy financial technology companies are next in line to face competition from a new wave of startups.

The strategy book

In the past 6 months, Opera bought two companies from the Baltics: PocoSys, which is a developer of banking technologies from Estonia, and Fjord Bank, a full-digital consumer finance bank from Lithuania.

Not by coincidence, PocoSys also holds a payment institution license and provides financial services in the European Union. Fjord Bank has a specialized bank license issued by the European Central Bank and they too can operate across the Euro market.

And so it is interesting to consider Opera’s options.

On one hand you have an economic mechanism in place, with one foot in the African door, a proof of concept and 300 million users you can cross-sell financial services to. It is a testing market segment at worst and a solid revenue leg at best (today it’s the only one and $4-500M per year is not exactly penny change).

On the other, you built tech, business capabilities and experience so you can also generate rents in Europe, a very fragmented and inviting market. Arguably more lucrative and competitive than Africa - but what the Euro neo-banks/fintech startups are doing* is just the tip of a huge financial service iceberg stuck in the 90s paradigm.

It kinda makes sense for Opera to want a seat at the table, doesn’t it?

Its new acquisition, PocoSys, will launch a consumer card called Pocopay as an European alternative sometimes this year.

The other new acquisition, Fjord Bank, aims to launch its first deposit and loan service in Lithuania during this summer too.

And voila, Opera has sneakily become an European contender with a compelling value proposition.

Africa’s business gives Opera revenue, optionality and breathing room for the stock market. And, equally important, the stock market provides access to liquidity.

The strategy book and choices are wide open.

Will the browser-based tech and African biz experience combo managed by Chinese work for selling financial services in Europe? Hard to tell, Opera, after all, has a small market share in Europe and did I mention that the Chinese culture is different? :-)

Keep in mind though:

i) the browser is a valuable internet point of entry for consumers, a gate which is heavily protected by Google’s cvasi-monopoly with the Android + Play Store + Chrome + Chromebook play - Apple has a 20ish% market share in Europe.

ii) a news product, which Opera already operates, is an asset perfectly suitable for earned media - done right, it can fortify the marketing muscle.

iii) Opera has built Estonia as its fintech hub, besides an existing one in Göteborg, and Estonia is a very good, friendly place to conquer Europe from.

iv) Opera is an European company, from the Nordics, a region with strong fintech tradition. And has a global DNA**, a competitive advantage compared to its startup peers.

Once you have the operating stack in place and all cards in hand, you just need smart marketing and a good pair of strategic balls. What the Chinese did with Opera so far certainly seems to show evidence of the latter.

* Revolut made $73M in 2018, raised a total of $836M, last at $5.5bn in 2020.
N26 made $50M in 2018, raised a total of $783M, last at $3.5 billion in 2020.
Monzo Bank made $50M in 2018, raised a total of $483M, last at $1.5bn in 2020.
Opera Software made $138 million in Q1 2020, $95M of which from financial services.

**The funny thing is that beyond all the European protectionism against foreign buyers of local tech, Opera means a bunch of Chinese operating an European tech company, listed in US, doing business in Africa and Asia and with Euro optionality given by a powerful combo of tech and banking licenses.

🇬🇧 Karma Kitchen has raised £252 million in series A for building a business for shared and private commercial kitchen spaces to rent. Yes, two hundred, not a typo.

There are not too many public details available except for a paywalled article* and one with a rather general spiel, raising more questions than providing answers.

Karma buys spaces and sets them up as cooking facilities, renting out portions of them to teams of cooks not interested in setting up restaurants on their own premises. A backend operation, very asset heavy, including buying the real estate, so that the huge valuation makes sense. It looks like WeWork for dark kitchens, at a similar scale, and we all know how that ended.

Many risks to mitigate on both sides of the market and not clear what part of the chain Karma innovates. The real estate investor backing the deal will get the physical spaces against the financial risk in the worse case scenario with the upside of trying a new rental model on top of real estate. And so Karma is a vertical real estate startup with a different GTM**, more complicated than WeWork but as risky.

Demand side is maybe higher (#restos > #tech startups?) but there is behavior change involved - costly and time consuming. The covid context is a rather favorable conjecture, it’s difficult to imagine the biz at scale in Europe though, also given the huge food culture fragmentation, city regulations etc (London is different than Madrid or Stockholm or Bucharest).

But there’s something there, the due diligence was done and risk has been taken. To paraphrase a movie quote, it is either an incredibly risky or an incredibly smart idea. :-)

* I will never understand why startups do PR to get earned media behind paywalled media. Noticed VCs doing it too, could be quid pro quo for them though.
** Arguably, it is similar to Travis Kalanick’s CloudKitchens - but the US market is very different and CK’s secret sauce is innovating a completely integrated tech-based backend, for which you need vision.

🇫🇷 I really like Bsit’s approach of launching Parentalist, a new standalone product based on a secondary business need.

Bsit is a marketplace for babysitters active in France and Benelux and Parentalist’s aim is to become a knowledge sharing community for parents. From what I gather, Parentalist was rather a result of the Covid situation than a grand strategic scheme - nonetheless the beauty of this play is that it is a secondary product on its own, and depending on its evolution, you can derive other revenue lines later on.

Nowadays, especially in the consumer business, good marketing means a lot of earned media as a result of building a community around your users and providing additional utility, on top of the one derived from the core product’s main proposition. Once you have that community in place, the up-sell and conversion are more natural, easier and with better results. If it also generates money, that means you transform a marketing expense into a revenue line, which is even better.

Not too many similar strategic plays in Euro startupland to my knowledge.


🇪🇺 50 early stage startups from the Nordics that raised money in 2020 and you should look at

🇪🇺 What were top 30 most active investors in the Nordics in the first half of 2020

🇪🇺 The European Space Agency runs no less than 20 startup accelerators across Europe.

🇪🇺 Expanding to Europe - How B2B Software Companies Win (and Lose) In Europe

🇬🇧 The Draper Esprit earnings for the year ended 31 March 2020

🇬🇧 Why I’m building the Glassdoor for VC

🇬🇧 How to hire smarter during the pandemic

🇩🇰 Good podcast with David Helgason, co-founder of Unity Technologies and one of the most prolific investors from the Nordics.

🇫🇷 Under the hood of Kima Ventures

🇬🇧 Under Armour might sell its digital fitness app - they bought it for $475 million from two Brits in 2015.

🇮🇱 Artlist, a platform providing independent creators with royalty-free music access, raised $48 million from PE firm KKR. Artlist competes with Epidemic Sound from Sweden, controlled by EQT Partners, Creandum et all.

🇩🇪 BMW is planning to move some features of its new cars to a subscription model, as they should be software-controlled. Examples: heated seats, adaptive cruise control, high-beam assist or adaptive suspension.

🇹🇷 Turkish startups have seen a 44% rise in investments in the second quarter despite the pandemic (and a hefty Peek Games exit at $1.85bn).

🇬🇷 A bit about the Greek startup ecosystem.

🇬🇷 Speaking of Greece - the government is formally inviting foreign pensioners to shift their tax residence to Greece with the introduction of a single tax rate of 7% for their entire income obtained abroad. Do that for startups too, please!

🇪🇪 Skype cofounder Toivo Annus dies at the age of 48. Life is fucking fragile, man!


🇪🇺 State of the European Foodtech and Agtech Investment Landscape

🇬🇧 The current pandemic has created the tipping point where large scale rent re-negotiation is possible to scale and offer to millions of individuals and small businesses. link

🇫🇷 A retired software sales manager in France, has filed a discrimination complaint against his former employer, accusing the company of making him use a traditional French name at work. He had to change his name to “Antoine,” and was even specified not to use ‘‘Philippe’’ because there were already two in the office.

- What was his real name, you may ask.
- Mohamed.

He is asking for more than 440,000 euro in damages.

🇫🇷 What it means building a career in France starting from school up (very good read)

🇫🇷 France to introduce a controversial nationwide age verification system for pornography websites

🇮🇸 In Iceland you can now identify yourself with the driving license straight from your phone. Really cool.

🇪🇺 Apple has €13bn Irish tax bill overturned

🇪🇺 Google has offered not to use health data of fitness tracker company Fitbit to help it target ads in an attempt to address EU antitrust concerns about its proposed $2.1 billion acquisition.

Right. They must have an workaround already :-).

🇳🇱 The Netherlands signed a quadrilateral treaty allowing for direct train travel between Amsterdam and London without a stop to transfer in Brussels.

🇩🇪 The Germans want to limit the autobahn speed so 130 km/h.

🇬🇧 Britain launches plan to become a "science superpower"

🇪🇸 Barcelona requires landlords to rent vacant units to make more housing available, with the threat that otherwise the city will acquire them at half market value and rent them out as social housing.

🇷🇺 Nowadays the diplomatic relations are taken straight on Twitter. Case in point: the US embassy in Russia vs. the Ministry of Foreign Affairs of Russia.


  • Techstars launched a B2B subscription model

  • CB Insights acquired the VentureSource data assets from Dow Jones.

  • A list with 400 investors “active and engaged today” compiled by Techcrunch based on 1200 founders recommendations

  • Amazon launched Interactive Video Service, enabling anyone to build their own streaming site - Twitch as a Service

More money in the market

🇬🇧ETF Partners
🇪🇸 Nauta
🇬🇧 GP Bullhound
🇮🇱 Amiti Ventures
🇪🇸 Aldea Ventures
🇸🇪 Eir Ventures
🇮🇪 VentureWave Capital
🇪🇸 K Fund
🇫🇷 Axeleo Capital
🇮🇱 VGames
🇵🇹 Indico
🇪🇸 K Founders
🇩🇰 Nordic Makers Pre-Seed
🇬🇧 20VC
🇸🇪 Hjalmar Winbladh leaves EQT

Interesting bets

🇺🇸 the Tesla of chicken (yeah!)
🇬🇧 algorithmic liquidity provider for digital asset trading
🇬🇧 network platform empowering workers to campaign for rights
🇳🇱 automated payment SAAS for online marketplaces
🇷🇴 a platform of gamified tours
🇪🇸 on-demand rental electrical motorcycles
🇮🇸 VR-based meditation service


📚 Books

  • The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It - Amazon or free read.

🗞️ Interesting reads

Happy Sunday!

Thanks for reading 🙌

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