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Hey there,
Welcome to Sunday CET.
This week we talk about health, money, optimism and being a good person - all related to European tech startups 😀
As always, ping me for thoughts and questions.
Enjoy,
Dragos
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Market talk
🇸🇪 Story of the week is the $1.8 billion price tag that American investors put on Neko’s work for building the next gen type of healthcare provider out of Europe.
I already wrote about those guys last year, I am a fan (and a paying customer) - they’re riding a few trends which you cannot neglect if you’re into building startups and/or investing in them.
The way the healthcare is conducted today is a hundred years old, burdened and suffocated by bureaucracy - an old paradigm that’s strained, which today involves long queues for any type of doctors appointments, whom won’t even bother to see you unless you are dying. The pressure is high and and the system is cracking.
Preventative care is more than a lifestyle thing - not a new trend but getting more visibility and adoption everyday now that i) data and AI are making it into mainstream and ii) people are more conscious about healthy living and what it entails.
Technology availability opens up the way for #1 and #2 to significant impact. There’s already a range of products available combining nicely data with AI but this is just the first wave, pioneering the market by challenging the status quo and providing the needed consumer education that things can be done better and cheaper. Next startups waves are going to have awesome value propositions we have never imagined that can be done, and they’re emerging sooner than you think.
Holistic approach of your health - again, it’s all about data and its wide availability, you cannot treat a disease in vacuum but applied to the context of your entire health ecosystem, think a mini clone of you made of data, combining input from general context such as diet, sleep, stress, strength to specific areas i.e diabetes, disorders etc. Again, this is happening already, it’s not a scifi movie.
All this is driving at a super high velocity - founders act on them and build business while early stage investors are aware of growing trends and willing to allocate money accordingly.
Back to Neko, they’re not doing anything revolutionary, on the contrary, they have a traditional approach (i.e. physical clinic) that combines smartly a few elements into a modern, data driven product sold in a friendly manner - simplicity and friendliness are not to be under estimated, they’re features sitting on top of a complex system. I’m already aware of at least a dozen other similar European startups with the same USP minus the clinics, and Neko is by far leading the class.
And so does the market say as well - is it worth 1.8 billion though?
10,000 scans across Stockholm and London within 24 months of existence, translates into some $3-4 million in aggregated revenue - 1.8b makes for a steep multiple for a series B coming out of Europe.
However. The capex need for expansion is sizeable - say 30 new clinics in the next 5 years, 5 million a pop, makes for 150 million. Put in some extra change for developing a badly needed decent native mobile app, expand the USP with moats around the core proposition, hire data scientists and augment an already seemingly solid backend - you can easily get close to 200 million needed for an aggressive expansion plan.
And then there’s other factors such as a $ cushion, the Daniel Ek premium any investor would have to pay (the only Euro founder with two unicorns under his belt), the scarcity (the European market is badly lacking startup heroes) and the upside (Neko is going to be bigger than Spotify today). It all adds up - I can easily see investors buying in, especially since Americans are pricing the upside, as opposed to Europeans pricing the downside.
Btw, Lightspeed and General Catalyst are in the captable of all top three most promising European assets of this decade - Helsing, Mistral and Neko. Not least, for context, Mistral’s B was priced at $6b last year and Helsing’s at €1.7b in 2023 (which is a bit more than $1.8b), marked up at $5.4b in an ulterior round.
Now, let’s see the Swedes providing some execution - namely, how those guys create some shareholders value and turn 1.8 billion into 20 billion by 2030.
🇪🇺 The EU’s boss Ursula von der Leyen said over at Davos this week that Europe’s way out of the current crisis is to “increase productivity by closing the innovation gap”.
Have you noticed politicians have this special gift of throwing complicated syntagms when doing PR which makes it easy to not take them seriously? Before asking yourselves whatever the f the above even means - I took a few minutes this fine morning and translated the wooden language from the said speech. Here’s what I got after cleaning it up, she’s got three directions:
Unified capital market - that’s been long-long due, deep and liquid money markets, and putting to work 1.4 trillion households savings, by somehow connecting it to and making it available to tech startups.
Please note that that money is just stuck in traditional banks charging you obscene fees for holding it, but that topic is for another day.DOGE-like simplification of how the local business world works that should eventually lead to a 28th regime - meaning a single set of rules such as corporate law, insolvency, labour law, taxation, into one single and simple framework across the Union available for a type of company associated with growth. Thank you Elon Musk and Andreas Klinger for getting their eyes open!
Energy independence - via up to date infrastructure and new cleantech sources. Thank you Putin for, again, opening the European eyes!
The devil is in the details though but when you strip away the political fluff, this plan actually doesn’t sound half bad, does it? Of course, like anything in politics, it’s all empty words on a piece of paper for now - the real challenge lies in execution. Transitioning from EU bubble think into the messy, complex real world is no small task. But if von der Leyen can push even part of this agenda forward, maybe - just maybe -there’s some light at the end of Europe’s tunnel, wouldn’t you say? 😀
🇪🇺 On this positive note - there’s something I actually meant to write for a while now, as I got many emails saying my observations sometimes come across as pessimistic about what is going on in Europe.
Listen, I am super high on Europe, it is home, I pay taxes here, and I advise many startups and investors from a bunch of European countries on how to conduct their business. Working closely with those guys makes me realistic - besides, you cannot deny the reality you live in, understanding it means figuring out a way forward.
This email is just a reflection of that, my mental weekly exercise to understand what is going on and not a product optimised for clicks and engagement. Fact is that we live super interesting times, with bad and good - on one hand, with Russians and Chinese using war for imposing dominance they will never be able to get otherwise, in a competitive, market-driven environment, and, on the other, with technology that has never been so advanced and pervasive, opening up incredible society advancements. Those two macro trends alone are creating countless opportunities, and if you’re in the startup world, you’ve got the best seat in the house to witness and shape the future as it unfolds in real time.
I know the European ecosystem to detail, it is my bread and butter and this is a byproduct of it, and I always encourage people to do startups. For those unsure where to begin, I usually point to two broad areas with massive potential ripe to disruptions:
i) health - for the above mentioned reasons and what Neko is doing is a strong evidence of demand for tech startups upping the current level.
ii) finance - Revolut and Wise becoming mainstream names yet niche players are also a strong sign of demand, as they’re a first wave of the startups challenging the status quo of an outdated banking system which lazily sits on the money Ursula above wants to put to better work. Bonus - here’s a good story on how banks cling on their power, leading to having a broken open banking API of European banks.
The time is now and Europe is a good place to build. Here’s one more thing.
Don’t forget to be positive and help one another. This crisis has brought out the worst in many Europeans - hatred, negativity, and a growing tendency to turn against one another. It’s sad, ugly and disheartening - but change starts with us. So be the best version of yourself. Support one another. Build something meaningful. And stay optimistic. 😀
The week at a glance
Interesting startup deals
🇬🇧 Egregious (consumer AI misinformation) - $1 million pre-seed w/ Oxford Capital, Fuel Ventures
🇸🇪 Wingbits (flight data platform) - $5.6 million seed extension co-led by Borderless Capital and Bullish Capital.
🇮🇹 Qomodo (B2B BNPL) - $13 million series A co-led by RTP Global and LMDV Capital
🔒 Premium feature: Europe’s most interesting deals this week: late stage for native GenAI, industrial SAAS or alt food, and early stage for alt nuclear energy, embedded fintech or EV chargers marketplace etc. We see them all and pick the relevant ones, assorted with traction, TAMs and whatnot.
Trends
Bad economy: Stripe is laying off 300 employees.
British DOGE: UK government launches AI agents - a chatbot and digital cards.
Big bank cloning startups goes bad: HSBC to close international payments app Zing a year after launch.
American GTM ftw - there’s a startup providing completely free incorporation service to help tech founders form their startups as Delaware C-Corps, without paying $5,000 in legal fees.
Capitalist but socialist: Mistral is not for sale.
NB. everything is for sale if the price is right, and Mistral is in bed with capitalists who don’t care about some sort of Bastille Day for Europe to become tech independent. 😀
Investor spotlight
Stride VC will not make any investments in new startups out of its second fund.
🔒 Premium feature: why is that, a profile of Stride and their would-be fund returners.
Event radar
Air Street Capital’s Berlin AI meetup on Thursday, February 20 - RSVP
Podcast
Hussein Kanji - founder and managing partner of Hoxton Ventures
NB. refreshing to hear investors talking about fundamentals vs. call options deals in the VC world - see also this re: logo chasers and career climbers.
Periodic reminder that we’re running an intel service that’s data-backed and covering what’s important in the European investment ecosystem - who invested in what, why, how much, inside stuff etc. Zero noise and essential reading if you’re a pro in this space, subscribe from here.
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Also notable
💲 Cheat sheets:
🇫🇷 Creepy story in France involving one of Ledger founders, a French crypto startup that was valued at $1.5 billion in 2021 - he had his hand mutilated while he and his wife were kidnapped.
🇬🇧 More on the where-to-move-from-London discussion.
🇬🇧 Why northern England is poor.
🇪🇺 A look through the debris of the 2024 Euro PE.
🇬🇧 Inside the UK’s bold experiment in AI safety.
🇪🇸 The Spanish are seemingly not getting it how technology works.
🍺 The business under the Irish brand Guinness could be valued at up to $10 billion as Diageo is weighing a sale or spinoff - Diageo is a British-based alcoholic beverages holding listed over at LSE.
🇺🇸 Trump’s call with Danish PM Frederiksen about Greenland takeover was horrendous with Trump being aggressive and making threats after Denmark refused sale.
🇺🇸 First week in:
Donald Trump gave Michael Kratsios and David Sacks 180 days for submitting a plan to sustain and enhance America’s global AI dominance.
Trump also took advice from all the big boys for it.
OpenAI and SoftBank are putting together with Oracle and MGX a $100 billion fund to build data centers.
the Silicon Valley open secret: Elon Musk hates Sam Altman. Doubtful that there’s a lot of love between Musk and Vivek Ramaswamy either, who just quit DOGE.
folks are reportedly not satisfied with Marc Zuckerberg’s ass kissing go to market.
this is an entertaining show on the current situation.
₿ The SEC has rescinded an accounting rule that was deterring banks from owning Bitcoin and other cryptocurrencies.
🇨🇳 ByteDance released Doubao-1.5-pro, a new version of its flagship AI model, which it says outperforms OpenAI’s o1 in a benchmark measuring AI models’ ability to understand and respond to complex instructions.
at par with American’s best, open-source and available to use for free. Hello, Mistral! 😀
🇹🇭 Thailand ordered free public transport in Bangkok for one week, in response to worsening air pollution as dust levels have surged across all districts of the capital.
🍿 The Indian government has a three-tiered system for taxing popcorn depending on if it is packaged or sold loose, carries a brand name or is generic, and is salted or sweet. Caramel popcorn would be taxed at 18% - nearly akin to a luxury product.
🇨🇳 The truth behind your $12 dress: Inside the Chinese factories fuelling Shein's success.
💪 CEOs and investors are positive for the year to come - 77% of CEOs (up from 45% in 2024) and 86% of investors expect the global economy to improve in the first six months of 2025.
💲 State of mobile 2025 report, if data and analysis are your thing.
🚙 Waymo is safer than even the most advanced human-driven vehicles.
😱 No, Elon Musk didn't reach top gamer status on his own - he hired somebody to play on his name and make him look cool.
The Saudis hired composer Hans Zimmer, Christopher Nolan’s go-to guy for film scores, to recreate Saudi Arabia’s national anthem as they wanted adding some dramatic flair.
🖼️ Museums to see in 2025.
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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