market talk

#199

In partnership with

Hello,

Welcome to Sunday CET. Let’s get straight at it.

In-depth intel you won’t find elsewhere

Nordic 9 is the best way to get familiar fast and stay updated with who’s who in the Euro VC land.

The startup deals and investors database are assorted with a library of hundreds of cheat sheets + weekly intel covering verticals, geographies and whatnot from the European startup world.

👇 Subscribe now 👇

Market talk

🇫🇷 Mistral finally made public closing a B round at 6 billion - nothing new from what it was already covered by yours truly back in March (1, 2), except maybe who was not in the deal (i.e. Softbank).

  • the hard part is ahead - the French need to make it a big global business ASAP.

  • speaking of Softbank, it just invested in Alphasense at $4 billion.

    • you didn’t really know about Alphasense, did you? :-)

    • Alphasense is originally from Finland, founded in 2011 and seeded by First Fellow Partners, and is one of the many examples of European tech startup that had to move from Europe to US in order to build a multibillion business - it now does 200M ARR (2X yoy).

🇫🇷 In more French tech news that surprised no one - BeReal was sold for 500 million to a French gaming holding.

  • BeReal was a Covid wonder that grew fast but seemingly hit a growth ceiling at 25M users in three core countries (France, US, Japan), which made it difficult to find late stage investors interest, because there was little to scale at risks-adjusted returns.

  • that is not for the lack of trying, for sure, though their strategy of unprofitable growth before figuring out a business model is a more than a decade old playbook that presents serious challenges for consumer tech. Alas it was also a peak ZIRP period, when investors had a different perspective about markets and fundamentals.

  • as such, not really a deal Bereal’s investors will write home about but a great learning experience for an ambitious young team - building a social network with massive audience is not exactly an easy task, any way you look at it.

  • remarkably, the French startups keep on taking stabs at building social networks (i.e. the ex-Snap crew or others) even though they come from a mono-cultural country, which by default is a setback when you want to built a global product.

🇪🇺 This [bureaucracy] is one of the reasons why we incorporated our startup in the UK rather than in Germany, even though both of the founders live in Berlin.

  • that’s one of 500 comments explaining i) why Germany is a terrible choice to incorporate and run a startup and ii) how to work around that.

  • it’s not only German startups switching to the UK for a decent environment to create value - Norwegians are also flocking there.

  • while the UK seems the lowest common denominator for Germans and Norwegians, many Brits consider leaving the country anywhere they get better value for their tax.

🇬🇧 Here’s something related to startups scheming taxes and bureaucracy in the EU - the below graph was circulated in the social media this week:

  • as mr Soundboy would say: UK Stand up Tall!

  • that graph made me wonder how much of that revenue (which presumably is what’s recorded in the local governmental books) is part of the overall global revenue of a medium-sized company - a company doing minimum 25 million in turnover is likely that has international operations already.

  • two additional data points for further food for thought:

    • Europe’s revenue stake for global European (listed) companies is at less than 30% from the overall turnover.

    • a smart CFO’s job is to optimise the books also via tax heavens in order to maximise shareholders value - that number for Italian companies stands at 6.2 billion per year, for example.

🇬🇧 A UK judge lays out how Greek payments company Viva Wallet should be valued, ending a legal battle between its CEO and part-owner JPMorgan.

  • Lawyers for the Greeks argued JPMorgan had been trying to drive down the valuation of Viva by blocking its entry into the US and new European markets - contractually, if Viva was valued at below €5bn by June 2025, JPMorgan could take control of it.

  • Otoh, JPMorgan alleged that Viva had made moves to limit or circumvent contractual and legal rights as an investor.

👓 London Stock Exchange Group is in talks to buy parts of Primarybid, a London-based retail investing platform.

  • revenue diversification since the public market business is not really that great. LSEG is an investor already in Primarybid, which raised $180m+ also from the likes of SoftBank, Molten Ventures and Omers.

  • In other news, it’s not only LSE’s would-be customers moving to the US, but also the LSE itself, as it appointed a new COO, based in New York, to replace an outgoing UK executive - you go where the money is, right?

  • Related:

🇪🇺 Inside the EU’s EV probe investigation that led to European electric tariff increases for China vehicle imports - 55 case handlers, 250 mission days in China, 100 company visits, thousands of pages of evidence.

  • Tesla, which also ships EVs to the EU from China, has asked for lower tariffs on its cars, citing smaller state subsidies on those compared with rivals.

💲 Fastest way to get adopted into the enterprise B2B software space? Get consultants sell it for you.

  • Here’s the OpenAI version, which just signed a major distribution deal with PwC.

  • OpenAI announced another one with Apple this week.

    • there’s a subtle point here though as the deal involves Apple building a wrapper on top of it - think of it as a smart consumer butler - in exchange for OpenAI’s access to Apple’s users data and, eventually, yet-to-be-determined shared revenue done via Apple.

    • it’s similar to any content deal done by LLMs with media companies - at the end of the day a LLM op is a content-hungry business that needs to feed and tune in the models in order to stay relevant.

    • really interesting to see how the open source GTM approach will pan out i.e Facebook, Mistral etc and how/whether the VC-backed startups will survive in a dog-eat-dog, high capex war that should probably lead to 2-3 infra providers while the rest of the value creation will move up the apps chain - the market will probably start to consolidate soon because massive distribution beats marginally better products, and dudes gotta make it a business at the end of the day. (white flags are already waving, btw)

    • we’re still in early days - all those strategic games and moves are fascinating and will be in school books ten years from now on.

  • Fwiw, this year OpenAI is at $3.2 billion ARR, not bad for a Year Three GTM strategy.

  • Reminder, this winter the company was valued at $80B in a secondary transaction.

Presented by

Less than a few days left to invest

Best Buy is the unlikely place to look for home runs: The big box retailer has a proven track record of placing bets on Technology products that dominate their market. Pay attention, because they just unveiled RYSE Smart Shades, a new smart-home product in 100+ stores with massive potential. Only a few days left to invest – learn more here.

Also notable 

Recommended newsletter

The best investors in Europe rely on a PRO newsletter covering long tail deal flow, strategic moves, new funds, exits - essential intel and insightful coverage with what matters in Europe. Start receiving the weekly newsletter here.

More Sunday-ing

🇩🇰 The Danish authorities asked doctors to start switching Ozempic patients to cheaper drugs ahead of stricter subsidies rules to be enforced later this year.

  • The popularity of the weight-loss medication has led to a massive bill for the country’s health system, which in 2023 spent $200 million on Ozempic - 8% of all medicine costs.

🇬🇧 Back on the envelope calculation of how much Revolut is valued for.

🇫🇷 A profile of French secondhand tech marketplace Back Market, which has raised €930M+, generated €320M in 2023 sales, up 45% YoY, and had 4.5M new users in 2023.

💭 LPs are giving VCs the same medicine VCs give to founders - i.e. ghosting, indecision, special terms etc. This kind of behaviour is seemingly industry practice across the whole chain, not an anomaly, which makes founders appreciate even more when finding reasonable investors to do business with.

⚽ Red Bull of Austria purchased a minority stake in Leeds United FC, as part of a sponsorship deal.

🖖🏻 Silly - folks complained to the media that Microsoft AI CEO Mustafa Suleyman is looking at OpenAI's secret algorithms.

🚶 Some people age nicely and some people don’t - Sonos is a company that’s in the former category.

  • been a Sonos customer since 2007 when I bought my first device - still heavily invested in their business but sadly the company seems to have lost the plot.

🇫🇷 Macron just imploded the local political scene this week, and everybody and their mother has an opinion about it - this guy, eh? Chaos is the new cocaine!

  • No matter what you think of him (and I know politics can be a very polarising topic) - the guy has balls, and in life this is a defining trait for winners. Not complacency or being like everybody else, nor quitting, but persisting and finding every possible angles to make things work in your favour, even by changing the rules of the game.

  • ‘If you don’t like the game, change the game’ and having the guts of doing contrarian things is not a popularity contest (meaning that people will either love it or hate it, but won’t remain indifferent) - but a play-to-win move, n'est ce pas?

  • Same goes with startup founders and/or investors, right? :-)

💲 An anecdote, which may or may not be true:

  • Microsoft got into OpenAI and now controls 49% of it because Elon Musk wanted nothing to do with Apple because of the iCar project and Tesla. Meanwhile, MSFT had been trying to get Tesla onto Azure. Every time they approached, Elon just wanted to talk about @OpenAI. Eventually, to get Tesla onto Azure, Microsoft agreed to support OpenAI.

🛬 Wizz Air has been named the worst airline for UK flight delays for the third year in a row, followed by Turkish Airlines and Tui.

🇩🇰 Denmark has recalled several spicy ramen noodle products by South Korean company Samyang, claiming that they may not be healthy.

🇬🇧 How to confuse Americans by inviting them over to dinner, the British edition.

💬 50 ways to fuel a conversation.

🎵 Eminem attempts to make his career disappear with new song Houdini

 

That’s all folks, have a wonderful week!

Did you find this email useful?

Thanks for reading! Please send me feedback by hitting reply.

To support my work, upgrade to one of the subscription options.

If this email was forwarded to you, please subscribe, it’s free!

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

You have received this email as you signed up at Sunday CET or are a Nordic 9 registered user.4