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un-packing PR
#172
Hey there,
Have you seen the latest U2 single? It was launched in a sort of staged but impromptu street event in Vegas. There’s a startup lesson in there - songs are just like startups, if they’re decent, their success is mostly dependent on the distribution. Those guys don’t really have a money problem, but it really matters how you plant early the seed in order to go to market. And I bet it will be a commercial success, not because the song is good or not - that is subjective - but because there is a whole business mechanism behind it, designed to maximise the bang for the buck.
Welcome to Sunday CET, folks! This edition covers early stage startups profiling whereas we learn that it’s actually not that difficult to raise these days, as well as quite a few un-packing of PR announcements, which we had plenty of this week. Let’s get at it.
Dragos
PS In London next week, ping me if you want to hang.
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Deals highlights this week
🇸🇪 QA tech, developing an AI-based QA tester enabling engineers to become more productive by automating testing of applications, raised $1 million pre-seed in a round led by byFounders. (press release)
Quick Q&A with Daniel, QA’s CEO:
How would you sell your product to a non-tech tester?
The first thing would be to tell them the story about testing, how much time it takes, and how important it is. Unless you understand that, it’s hard to convey how much time and money a tool like ours can save.
Our main users are developers, so we really focus on their experience. We want to create the best bug reports ever, making it super simple to be productive and not get slowed down by testing processes.
What does the AI behind the tech actually do in simple words? How much % is your data and how much is third party?
We use LLM-based agents to convert an objective (for example logging in) to a set of actions. To successfully figure out the steps needed we have created a large data set of common patterns and flows on how a login process usually works.
Our system does a lot of preprocessing of the data we send to the agent as well to handle limited context windows and reduce time and cost of usage.
What have you accomplished so far since you started?
Our first milestone was when we created a model that could take any URL and figure out what functionality was present on that site, and then test the functions.
The first function we tested for was a GDPR cookie banner - and we managed to make the agent detect it, then dismiss it, reload the page, and ensure it didn’t appear again. Then clear its cookies, reload, and verify that it would show up again.
What are your next milestones for the startup?
We raised money on a proof of concept so now we’re working in parallel on a few things. The most important one is building the first version of the real product that we aim to have ready by the end of the year.
Aside from that, we’re hiring - we already hired two engineers, and are looking for more, we’re creating the sales funnel, and we’re building out our brand.
How long did the fundraising process take?
About a month from start to close.
From a scale 1 to 10 how difficult was it to raise the money?
I would give it a 3 - we thought it would be much harder than it actually was, due to the overall financial climate. But riding on the AI wave, and being experienced founders with a track record really helped.
It was very easy once we actually started talking to VCs, but we spent way to much time worrying about things like the pitch deck design…
What did the investors backing the round understand about QA Tech and its market?
How huge the market is, and what an incredible time and cost savings a product like ours can offer.
What didn’t the investors who passed understand?
How we differentiate from low-code/no-code tools on the market.
🇫🇷 Rayon, developers of a SAAS design tool for the architecture, engineering and construction industries, raised a $4.4 million seed round co-led by Northzone and Foundamental.
Here’s Bastien, one of Rayon’s co-founders:
What is Rayon’s elevator pitch?
Building design is today an overly-fragmented process, with designers having to jump from one software to the other, and PDF export being the de facto medium for exchanges across the industry.
In a similar way that Figma brought interface design tools to the browser and improved collaboration for web and product designers, Rayon hopes to achieve the same technological shift for architecture, engineering and construction industries (AEC).
What have you accomplished so far since your 2021 start?
Build a first version of the product, a highly technical design tool built from the ground up with state-of-the-art technology: including a core engine, a geometry kernel, and a high performance vector graphics renderer, written in rust, compiled to webassembly, a real time multiplayer server backend, and much more.
Recruited a team of 12 world-class professionals
Launched open access to the product in June 2023, > 30k signups since then.
Launched on content platform with more than 2,000 high quality block models available for free (all of them designed by Rayon)
What are your next milestones for your startup?
Build the best design tool for architectural drawing (many amazing features to come: powerful version control, automatic floor plan creation from images thanks to AI, greatly enhanced performance, API access to enable others to build on top of Rayon etc.)
Create a strong community around architecture drawings : sharing their knowledge and design via Rayon.
Achieving a great acquisition > activation > retention > monetization funnel.
How long did the fundraising process take?
Around one month, start to termsheets, but we had already created long term relationships with great investors.
From a scale 1 to 10 how difficult was it to raise the money?
Hard question, I would say 3. We were lucky that it was not really hard, and we had the chance to be able to pick the investors we wanted.
What did the investors backing the round understand about Rayon and its market?
The market for designing architecture is much vaster than just Architecture firms. A real time browser based tool enables new collaboration workflow and addresses a larger audience than designers. All stakeholders of the design - build - maintain process can become potential users.
2d drawings (CAD) are, and will remain, an essential part of the Architecture, Engineering and Construction (AEC) Industry. Currently, most innovation and investment are geared towards 3d. There is a huge potential in improving current tools used for 2d.
Current incumbents were conceived several decades ago, before the internet, and users are waiting for a new paradigm.
We have a team amazing enough to solve this problem!
What didn’t the investors who passed understand?
You never really know! But I would guess it’s mainly due to the market:
They did not understand the depth of the market.
They felt that challenging the status quo will be very difficult as the AEC is viewed as a very conservative industry.
More deals highlights:
🇬🇧 Flawless, doing an operations observability and incident management SAAS targeting businesses with high-volume, complex operations, raised a $2.2 million seed round led by 42CAP, joined by Picus Capital, Dreamcraft Ventures and Oktogon Ventures. (press release)
🇪🇸 Erudit, doing an AI tool sold as a SAAS to the HR departments, secured $10 million Series A round led by Conexo Ventures, Athos Capital, Ignia Partners, True Blue Partners and Fondo Bolsa Social. (press release)
🇳🇱 Framer, developing a design framework used to make interactive prototypes for iOS, Android, desktop, or the web, raised $27 million in a Series C funding round led by Meritech Capital, joined by Accel and Atomico. (press release)
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We cover (much) more early stage intel from the European long tail every week over at Monday CET.
Cheat sheets
This week we've had a few startups that announced closing early stage deals just within a months period. Not extensions, just consecutive stage deals.
Flawless from above is an example, as this week’s $3 million seed comes after a 1 million pre-seed round in February. Other examples include Apron, which closed $15 million series A after making public a 5 million seed round in back June, or Ivy, which raised 7 million seed this spring, topped up by 20 million series A led by Valar during the summer.
Particularly at early stage this is a strong signal either of investors fomo or of founders getting really good at executing against their sales funnel. Or both.
Either way, and given the severe investment contraction the market is dealing with these days, those are the kind of worth watching startups. So this made us curious about other Euro startups closed at least 2 fundraising deals this year - we tracked about 100, including extensions. Made a selection of the more 30 interesting available in a cheat sheet for our Nordic 9 customers.
Startups cheat sheets
Fintech deals 2023 - who and what
Who invested in AI in H1 2023? link
Overpriced Euro seed deals H1 2023 - link
Q2 series A deals in Europe - link
Investors cheat sheets
Investors who slowed down Europe funding in 2023 - link
Most active investors in Europe 2023 - link
Notable American investments in Europe in H1 2023 - link
American investors in Europe - who are they
What non-locals invested in in Europe in 2023 - link
Remember NFTs?
The energy required to create these NFTs is the C02 equivalent of 16,243,017kg of CO2 which is roughly the yearly emissions of 2048 homes. This energy wastage is massive, and a byproduct of what briefly seemed to be high returns to this malign use of energy.
Other stories
🇫🇷 🇫🇷 🇮🇪 🇳🇴 🇫🇷 🇩🇪🇳🇱
It's proving hard for some big tech companies to make money on AI: according to WSJ sources, Microsoft is losing between $20 and $80 per user per month on its GitHub Copilot AI assistant for programmers because of the servers and pricey chips required to power the service. expensive
Mo’ Sundaying
🇪🇺 🇬🇧🇫🇷🇷🇴💲👁️🗨️🥕.
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