Happy Sunday,

Welcome to the new people on the list - let’s get right at it.

Next dinner

Next month we’ll organise a new dinner meeting in London. Here’s what we want to do:

• an invite-only event with the objective of matching ambitious founders with open-minded investors, and having them build future business relationships.

• it is not a pitching event but rather an informal setting over a dinner table (think salon), on the premise that people do business by getting to know each other in a relaxed manner as opposed to going to ‘fast food’ pitching gigs.

• as such, the gathering is highly curated and limited to 15-20 founders and investors.

• I already have a long list of folks interested - please let me know if would like to be considered. Priority will have our customers, either N9 ones or the founders I work with over at PA.

Market talk

Lateral thinking

Looking over the intel to be sent to the Pro subscribers on Monday AM (quite a packed one), there’s a funding round that stands out - a Spanish company named Kings League that raised 60 million series A led by Left Lane Capital, American investors doing consumer transactions all over the world.

• it’s an interesting deal showing that good lasting value can be also created outside the verticals Europeans VCs have a sweet spot for these days - SAAS (now with an AI flavour), and energy (augmented by the Russian war with the civilised world).

• in short, Kings League is an alternative global football competition designed and operated for the 21st century - with tweaked rules and combined with instant digital streaming of the tournaments.

• it has 13 million followers on social media, 80 million hours of content viewed, 82 million views on TikTok + its official Twitch channel is the second Spanish-speaking channel in the world, while on TikTok, it is the most viewed soccer league worldwide, above LaLiga or the Premier League.

• not bad numbers for a consumer business started about 12 months ago, right?

• now, it’s also true that the founder is a known football player (Gerard Piqué) and used that in his favour in order to grow quickly, but this makes the accomplishments no less remarkable.

• what’s funny though - the idea is a hard pivot as Piqué’s initial gig was to revamp the Davis Cup, for which it did a 25-year 3 billion deal that ended suddenly last year.

• the world of sports, with its rules and ways of doing business, is an outdated paradigm, run by the same old money dinosaurs, corrupted (i.e. the European football) and which is a kind of a zero sum game in terms of who gets to extract economic value from it. In other words it’s a closed world available only for the chosen ones.

• but this is the tale any SAAS startup sells to VCs about disrupting big 800 pounds gorillas, isn’t this? And that old world of sports, like anything sizeable, is going to be difficult to change radically from within, as well as let new blood take over and adapt it to the times we live in - the market has evolved faster than its underlying economic model.

• that’s the reason for which startups such as Kings League should exist, took off instantly and is projected to to be big in the next decade. Will it work though? 60 million says it will - in a world where the private equity is fighting tooth and nail to buy established sports clubs for multi-billion amounts, this seems like a good bet against an execution that has to be really bad in order to screw it up.

• btw, this reminds me of RFRSH, now Blast, an esports tournament idea done by Nikolaj in Denmark about 8 years ago - sadly it had many challenges and didn’t take off as it could have.

The French strategy

French neobank Lydia is splitting its business into two separate units, branded differently - one for payments (the original business) and one that’s going to be a neo-bank.

• their reasoning is that the app has become more complicated and users were a bit confused.

• this surely sounds like a design problem to which the solution is bearing significant business costs? Conventional thinking says that you don’t solve a design problem with decisions that impact the business in significant way, you just need to do a better UX job. Unless the said move brings increased velocity and better ARPU justifying at least the efforts.

• at the end of the day, the basic objective is the unit economic but from outside, it looks like a risky strategic pivot that can impact significantly overheads and operating costs, the ARPU and the cost of acquiring new customers while sending them on two different brands. It’s overall value prop seems diluted instead of an augmented one.

• sure, you can add different brand extensions tactically for specific markets or demographics but in a fast paced, highly competitive environment you need to be laser focused on new business development. This move sounds like a distraction from the core business - Lydia is not in a dominant market position but rather one of the many in an already fragmented environment, in a growth mode that should be profitable.

• You can also look, for example, at HSBC launching a neo-bank under a different name in order to segment the market and address different demographics while giving the neo banks some competition. But again, Lydia is not there and I don’t see Revolut or Wise spinning off their ops into separate brand units for features just because their users are confused how to access the product.

• fwiw, other than the French, the captable includes Tencent, Accel and some late stage American investors.

• it’s an interesting strategic move nonetheless - am I missing something, what do you guys make of it?

Cheat sheets

• interesting early stage startups from overlooked European markets

• most promising 250 AI startups (and their backers)

• under the radar startups (updated every week)

• AI legal startups - link

• American investments in Europe - H2, H1

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Also notable

🇪🇺 This week there were several announcements from Microsoft and Amazon (1, 2), about business development investments in Europe.

• the context was French president Macron’s shrewdly courting foreign business leaders and having them committed to invest money in France.

• it’s a good thing the Americans are investing in the European infrastructure but here’s a paradox though - the EU is hunting down the American corporations any ways it can, with all sorts of at-the-edge anti-market rules, investigations and hefty fees while the same big tech stubbornly spends shitloads of money on local projects. What gives? 😀 

• as a tangent - Macron did an interview saying that he is open to the possibility of major French banks being bought by European rivals in order to compete with the US and China. He also said that banks should take cue from Arnault:

  • “Bernard Arnault consolidated this market very early, LVMH then consolidated the market in other parts of the world. And thanks to the fact that he's listed in France, we consolidate a lot of value and value creation as well.”

  • the whole interview is interesting, he seemed a bit incoherent at times but dude is a good politician, probably the best one in Europe nowadays.

🇬🇧 FanDuel owner Flutter is moving from the London Stock Exchange to New York at the end of this month.

• the latest company to make the switch in search of higher valuations and deeper trading markets - the LSE is simply not good enough.

• why - Brexit, a reliance on old-line industries like manufacturing and banking, Britain’s lackluster economy - take your pick. A shift among domestic pension funds toward bond portfolios transformed the UK from an equity market to a debt one, which helped private equity firms pick off companies at depressed prices. The British stock market has become a classic value trap, permanently trading at cheap valuations.

🇸🇪 Heart Aerospace moved the core of its ops to the US, which is its primary market and scraped its plans of building a factory in Sweden.

• HQ still in Gothenburg for now, but hearing more similar cases of Swedes exploring alternatives to their home country.

🇸🇪 Speaking of Sweden, here’s something cool - two teenagers built a job portal for 13–25 year olds in Sweden. Make money out of it too.

🇩🇪 German companies plan significant investments in AI.

🇳🇴 Norway now supplies 30% of the EU’s gas.

🇪🇺 Eastern Europe has many unbanked people because of the gray economy and high taxes - many people keep cash because they hide income and taxes.

🇺🇸 The US is sharply raising tariffs on Chinese imports, including EVs, batteries, and semiconductors.

💲 Meta shut down Workplace, its Slack clone business which was turning over 100M from 10M customers.

• that’s by far in tier 1 of what high growth European SAAS startups are able produce at the moment.

• they built it from London, and Julien, who led the clone and turned investor in the meantime, made a nice post mortem for it.

• food for thought - why close it down and not spin it off to PE?

👓 Reddit licensed its data to OpenAI, and OpenAI will also become a Reddit advertising partner.

• the last part is interesting, indicating that Open AI also works on the advertising side of its business.

• if you want to give Google a run for its money, you also need to build an ad-serving side of business. Google is solid on this part, ever since it acquired DoubleClick almost two decades ago (paid 3.1B in 2007) - their ad tech is by far superior to anything else in the market.

• this week, OpenAI also announced GPT-4o, which is what Google Assistant could have been for so many years. Or Siri - remember Siri? 😀 

• No matter how shiny the products though, the key is the go to market and building a business on top of it. In a competitive market, and life in general, the winner is not always the best product and both Google and Apple have solid distribution and market adoption advantages, which makes OpenAI’s GTM interesting to follow.

Current situation

_{Click on it to see it large.} 

Real Time Payments offers a step-function increase in benefits over traditional payment options (ACH, card, and wire) and will grow to become the preferred solution in markets around the world. Bull case.

Mo’ Sundaying 

🤯 While Putin and Xi seem to be best buds, China and Russia issued an extraordinary joint statement that sounds like a declaration of war against the civilised world.

• Western efforts to court China on Ukraine flopped - that ship has sailed.

🤑 Two years after Russia’s full-scale invasion of Ukraine, big European banks continue to operate hefty, increasingly profitable units in the country despite public pledges to wind them down.

• The combined head count of the five European Union banks with the largest Russia operations has fallen by just 3% since the invasion, and earnings have roughly tripled, thanks to the fat interest rates they’re getting on their piles of cash stuck in the country.

• link

🇬🇧 Clickbait, the British edition → pavement dining will become a 'permanent feature of the high street' under plans to cut red tape and make the most of 'Brexit freedoms'.

💭 Lego is looking for a Head of AI product, but it's located in Billund, Denmark.

💪 In China one can have AI cloning of dead relatives and purchase AI replicas from a variety of companies for as little as $150.

💲 The probability of being acquired (and who might buy you).

💲💲 The haves and have-nots: how the Knicks celebrity row works.

🖖🏻 I’m not alone with this, the new Sonos app is really bad.

😉 Small things matter.

🥷 Shōgun is going to have a second and a third season.

🐶 A miniature poodle named Sage has won best in show at the Westminster Kennel Club dog show.

That’s all folks, have a wonderful week!

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Created every Sunday by @drnovac of Nordic 9 with weekly notes and observations from the European startup ecosystem.

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