Top of the morning and happy midsummer to my Nordic friends!

Hope you guys are well, ready to fully embrace the minimum eight weeks of downtime Europeans usually kick off around this time of year. 😀 

This week’s product is packed and ready to ship - it’s a banger! We look at unfair comparisons between Europe’s tech trying to compete against Americans, review Europe’s best AI startups, follow up on Lovable’s A round, as well as cover multiple subplots about Helsing, Klarna, Neko or Meta.

And a whole lotta more - hit reply and keep your comments coming!

Enjoy, Dragos

Market talk

Can Europeans really compete with Starlink?

This week, Eutelsat announced a €1.35 billion capital increase in order to, you guessed, build European sovereignty by way of competing to Elon Musk’s Starlink. The money was raised from the French state + an insurance ETF + a shipping group controlled by a local family office + an equivalent Indian holding. Post deal, the French government will become the largest shareholder of the company.

The capital is needed to refinance the company, and de-lever a heavy debt load - and provide some breathing room with capex funding its shift into low-earth-orbit (LEO) broadband. By my quick math, that’s a post-money market cap of roughly €3B - this is a company listed in Europe, btw, which should explain such a low number compared to both Starlink’s $350B or to the huge upside the French claim to be undertaking.

But would you bet on that upside? One one hand, sure, Europe’s stake in everything space-related is borderline a margin error in the grand scheme of things - it can only go up from there, right? Add to that the current political push for Europe to become independent of American tech, and we’ve got a solid bull market.

A bull market doesn’t make a winner though - on the other hand, the French just raised money to avoid default, and you look at past dealings, the balance sheet, captable and the management team (CEO is a telecom career guy), add the inferior tech and we’ve got enough reasons to debate a further execution against an interesting challenge.

Because, let’s be honest, the upside of Eutelsat is rather from Macron pushing customers their way for political reasons. The real talk here is how much risk are the Euro governments willing to take with purchasing subpar products just for meeting the geopolitical agenda to fund an alternative to Starlink?

On a broader level, sure, patriotism is nice but will you stay mediocre and spend a lot of money for it just to have a feeling that you’re independent though you’re really-really not? That’s the story of the EU clerks still trying to figure out what’s realistic beyond the Draghi report - and I hate to say it because I am an Europhile, but this looking into the mirror exercise is hard for those guys.

But who knows, life is like a box of chocolates, right? However, saying Eutelsat competes with Starlink is kind of unfair, they’re simply in two different dimensions and comparing the two is apples to oranges to begin with. Here’s why (data as of 2024):

Satellites:

• 🇫🇷 GEO sats: 36, LEO sats: 600 in orbit

• 🇺🇸 LEO sats: 7000, with 2,400–8,400 to maintain constellation replenishment.

Revenue:

• 🇫🇷 €600M for H1 2024, +5.9% yoy

• 🇺🇸 $7.7B, expected to $11.8 billion in 2025.

KPIs:

• 🇫🇷
  - video services: 6,500 TV channels in 300 million homes - 50–70% of revenue
  - broadband: 300k users - €234 million FY 2023‑24
  - mobile & fixed Connectivity: €159 million and €234 million, respectively, in FY 2023‑24
  - government services: €165 million FY; +10% YoY in Q3

• 🇺🇸 
  - 2.7 million subscribers at $104/month - $3.4B from retail only
  - additional corporate/government revenue - $4.3B.

Starlink is a tech company, fully focused on the space business and leads in scale, subscriber base, and revenue growth, with a vertically integrated model enabling control over hardware, launches, and service delivery.

Eutelsat, on the other hand, is a holding company without a clear focus, that just acquired a sat business (OneWeb in 2023) and is diversified across broadcasting and connectivity, with strengths in enterprise and government sectors and new tech like 5G NTN. It’s notably a marginal player at the edges, growing in single digits in a global satellite broadband/internet market expected to have a 13–17 % annual growth (CAGR) through 2030. Yup, they grow slower than the market while the leader is at 2X+.

And yes, Eutelsat is building capacity to compete and has the political tailwinds, but still trails Starlink in tech R&D, scale and financial muscle. Its main advantages are the localized European focus, government backing, and broadcast legacy - but will this do in the catch-up playing they seem to have embarked on?

Europe’s best AI

A substantive topic point with investors is about the most promising AI assets emerging from Europe - namely, what is actually interesting outside the consensus and the media noise.

Now - that’s a wide discussion and AI can mean anything to anybody, and the sales process to VCs made founders plaster their marketing materials all over with the term, even though their use of AI may be minimal in the value creation process.

Beyond that, it makes for a good debate however - for example, is Helsing a defence or an AI startup? On one hand, it surely is a defence company since customers are spending defence budgets for buying its products - besides, it just bought an airplane maker. On the other, Helsing is a SAAS company at its core, heavily using AI for developing their un-manned drones software, or training programs, and so on. So one could argue that Helsing is an AI startup as well - granted, the German startup doesn’t need an AI label as a sales lubricant for investors, but the broader point is that in general VCs are suckers for trendy stuff and AI has been it for the past 24 months or so.

Anyways, with this caveat in mind, this week I have dug through the European portfolios of the five big multi-stage American investors - a16z, Accel, General Catalyst, Lightspeed and Sequoia - and ended up with a list with fifty or so of their recent investments in local AI assets.

And because any good listing needs to have a ranking, I made one based on the value of the last known funding closed by each startup in the past few years.

Here’s what I got at the top of the rounds higher than $100 million:

🇩🇪 Helsing - $676.8M - Accel, General Catalyst, Lightspeed
🇫🇷 Mistral AI - 508.72M - a16z, General Catalyst, Lightspeed
🇬🇧 Magic dev - 320M - Sequoia
🇧🇪 Collibra - 250M - Sequoia
🇫🇷 H Company - 220M - Accel
🇵🇱 ElevenLabs - 180M - a16z, Sequoia
🇮🇪 Tines - 125M - Accel
🇩🇪 Parloa - 117.81M - General Catalyst
🇬🇧 Tessl - 100M - Accel

Not too many surprises, right? This is what the core of Europe’s best AI looks like - expensive VC bets that hopefully turn into household brands producing value to the European GDP.

Also, please note that Accel (4) and GC (3) are at the top among the five. The two are also leading the pack in the extended list of 50+ transactions - each with 15 AI startups that closed a last deal at a value higher than $5 million.

GC is more balanced across the stages - helped by the fact that they’d acquired the La Famiglia early stage portfolio (a nice subplot here is to monitor the follow-ons), while Accel has a strong footprint at the late and early stage, especially in the UK and Germany. Lightspeed appears more opportunistic (they’re in the top two deals), a16z has made more bets at Series A to mid-stage and Sequoia has a bunch of their assets already up-marked.

I haven’t taken into account their pre-sales efforts at early stage, btw - a16z, Sequoia and Accel to some extent spend a lot of money on scouts and both a16z and Sequoia run an accelerator program.

The full list makes for a whole lot of interesting observations and is available in a cheat sheet for our customers. You can become one from here.

Lovable’s A

Got quite a bit of feedback on this one, with great back and forths - and fun! - followed by a Bloomberg piece leaking a current Lovable pricing at 1.5B, which seems decent albeit at a steep multiplier and a good proxy for the high dry level of promising exploding assets in the European ecosystem.

That was then followed by Anton’s praise of his fellow Swedish investors (a nice gesture simply meaning Creandum is not the lead of the A), and yet another media leak tagging Accel as lead investor.

Deal should be closed by now or the price needs to go up as as well since the boys are at 75M ARR already, up from 60 just a few weeks ago. Btw, also fun to note that the Swedish ARR with 22.5M in VC funding is already way higher than what Mistral had produced in 2024 with financing of 1B+ - and smaller team size too! 😄 Apples and bananas, I know, and great beer talk, but there’s a capital efficiency lesson in there too.

Anyways. When it will be announced, Lovable’s A will go straight up in the above top of the more valuable AI assets emerging from Europe - which is exciting for the Swedes!

Without further ado, below the poll results of who’s going to lead Lovable’s A:

🟩🟩🟩🟩🟩🟩 a16z (34%)
🟨🟨⬜️⬜️⬜️⬜️ General Catalyst (14%)
🟨⬜️⬜️⬜️⬜️⬜️ Lightspeed (6%)
🟨🟨🟨🟨⬜️⬜️ Sequoia (29%)
🟨🟨🟨⬜️⬜️⬜️ Other (17%)

Signals

Interesting deals

🇫🇷 Arlequin AI (AI for massive data analysis) - seed
🇬🇧 Project 11 (crypto registry) - seed
🇸🇮 ​Sunrise Robotics​ (modular robotics) - seed
🇪🇸 Tether (V2G platform) - pre-seed
🇬🇧 Throxy (AI agents for traditional industries) - seed

• we add more of those on Linkedin.

What would you invest in?

I have picked three early stage, seed level startups from Europe with intriguing odds for growing. You're the VC - who gets your term sheet?

Last week’s results:

🟩🟩🟩🟩🟩🟩 🇫🇷 Giskard (Paris) - SAAS for the quality testing of AI models 36% votes
🟨🟨🟨🟨⬜️⬜️ 🇫🇮 Inscripta (Helsinki) - voice to text solution for doctors​ 28% votes
🟩🟩🟩🟩🟩🟩 🇸🇪 Riddle​ (Stockholm) - reconciliation tool for finance 36% votes

Let’s see your say this week - click on the link of your choice below - we’ll add the result next week

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Other notes

🛰️ Speaking of space business in Europe - guess who just opened a brand new office in Luxembourg? Blue Origin, the rocket company founded by Jeff Bezos, which has a multi-launch deal with 3k+ satellites for both its internal biz competing with Starlink (and Eutelsat from above!) as well as for NASA or the American government (Bezos publicly supported Trump’s election).

🇸🇪 Klarna to follow path of Revolut and N26 and launch a mobile phone sub - it is an interesting low hanging fruit move for platform enlargement and customer stickiness purposes. You explore this kind of growth avenue when you run out of other options because this one has rather small margins and is hard to implement, with few if any success stories - there’s been several inverse cases as well with telecoms launching banking (i.e. Orange, Vodafone etc). Btw, MVNO-as-a-service is a business in itself, Revolut is working with Gigs afaik.

🇩🇪 I didn’t really want to get into Helsing’s €12B valuation this week, but read an en passant opinion about being too high as it’s up from 5B last year.

Listen, this is one of the more valuable private European startups and that’s the price the market has settled for - such complaints are usually coming from investors who couldn’t get in the deal. Not only the company is solid and is expanding strategically both horizontally and vertically, but also the valuation is low for one simple reason: the Russian war in Europe is here to stay and Helsing is heavily involved in NATO’s Eastern flank - much more than the PR would allow it to say.

Saying it is a pricey deal is one thing - Helsing ain’t cheap - but saying it is an over-valued asset is not understanding the macro we live in and the unique, highly fluid market dynamics. And if you’re keen on a comparable, here’s one - Rheinmetall’s valuation at the end of last year was about €27B, in March-May it was around €60B if I remember correctly, and as of today it’s roughly at €80B.

🇪🇺 Euro kids are migrating en-masse to San Francisco to build AI tools - I guess they just don’t want to learn or get funded from the local Linkedin/podcasts gurus. 😃 

✍️ Techstars put their accelerators in Berlin and Paris on pause - it now only has a presence in London and Amsterdam. Otoh, the French just opened a startup hub that’s almost as big as Station F from Paris - in Nantes, that is.

🤷 A bunch of high profile CEOs at a conference started talking their competitor’s shop in absentia - in Europe, that is.

🇸🇪 2750*2885 + 80%*1477*2750 = 11.2M - that’s the SEK value of Neko’s scans done in Stockholm in 20224, or a little more than $1M. Kinda low, right? Alas they have limited capacity and the clinics from both London and Sthlm are taking bookings via a waiting list, meaning demand is higher than they can currently handle - can be a FOMO marketing trick just as well. The numbers are from a data-packed report they just put out, which makes for a good read.

💲 One of the more interesting story of these days in big tech is Meta’s hard reality check as it is forcing itself onto the AI market:
i) it fired a bunch of engineers in its AI team because of incompetence.
ii) it made un-reasonably high hiring offers to poach engineers from competition - to no luck.
iii) it tried to acq-hire and was refused by multiple AI startups and eventually settled for a second tier one, for which it paid 2X its $14B value only to see the bulk of its $1B revenue go away because of it.
iv) now it is in talks to hire two VCs by taking a stake in the pair's venture capital firm and indirectly gain interests in its portfolio of AI startups.

Building a culture is hard and Zuckerberg is not exactly famous for running a shop coming up with new ideas - but rather for cloning other people’s products that already work. Money can’t buy you a good DNA and make you an innovator and I guess this is what the market is saying.

🤓 Another one with Meta - after a nice market reception of its Ray-Ban collab with EssilorLuxottica of Italy, the Americans will do a limited edition for a new line of Oakley smart glasses geared toward athletes and which will also incorporate the FBs’ AI assistant.

🎙️ Coatue’s Laffont Brothers pod is good.

🚕 Waymo wants to do robotaxis in NYC while Uber is doing the same with Wayve in London.

🇺🇸 Apparently Harvard has in the works a mindbogglingly’ HISTORIC deal with the American president.

🇬🇧 Wealthy business leaders are fleeing Britain - a Bloomberg analysis of 5 million company filings shows a big spike in departing business leaders over recent months, with more than 4,400 disclosing an overseas move over the last year.

🇬🇧 Meet the members of the Dull Men’s Club.

That’s all folks, have a wonderful week!

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