Good morning,

Welcome to Sunday CET. This week:

• a look at the international investors from local startup markets

• the European startup mentality

• the probability of economic recession

As always, ping me with comments and feedback, let’s make this a conversation. Thanks for reading!

Market talk

👋 While reviewing the deals for the intel digest to be sent to our customers tomorrow, Sequoia’s announcements from this week stood out - a later stage deal and a pre-seed round closed last year.

Both are French - Sequoia has 16 French startups in the portfolio per our tracking over at Nordic9. This made me curious about the more active international investors in the main startup markets in Europe. So I crunched up the data and here’s what I got for 2023:

• in France:

  • YC (by far)

  • Seedcamp

  • FJ Labs

  • Sequoia

  • Speedinvest

  • Pareto

  • Cocoa VC

  • Headline

• in the UK:

  • YC, again

  • Speedinvest

  • Tiny VC

  • Calm/Storm

  • Charlie Songhurst/Acequia

  • GV

  • Sequoia

  • Lowercarbon

  • Lightspeed

  • Insight Ventures

  • EQT Ventures

  • Heartfelt

• in Germany

  • Speedinvest

  • YC

  • b2venture

  • FJ Labs

  • Übermorgen

  • DN Capital

  • Balderton

  • Redalpine

• in Sweden

  • Verdane

  • Butterfly Ventures

  • Inventure

  • Northzone

  • Icebreaker

  • Headline

  • Climentum Cap

  • Balderton

  • Quadrille Capital

Notice some patterns, right?

Sequoia leads the American pack while YC indexes whatever is best at early stage in Europe and sells at markup to whoever is not working the early stage properly.

FJ and Tiny are also super active at pre-seed and seed level in a few markets, with an index-like market approach, similar to what Kima is doing locally in France.

Not least and not surprising to see Seedcamp and Speedinvest, who have been long in the early stage game across Europe - safe to say that now they’re not the only seed options in Europe anymore.

Finally, Balderton and Headline are rather odd names in Sweden (the others are Nordic) - Scandinavia is generally a tough market to crack unless you have a solid network on the ground.

Let’s also see the American pecking order for last year:

• YC

• Plug and Play

• FJ Labs

• Techstars

• Sequoia

• Headline

• Insight Ventures

• Charlie Songhurst

• Accel

• a16z

• General Catalyst

• Lowercarbon

• GV

• Lightspeed

• MassMutual Ventures

The usual suspects, right? Also worth noting, starting with 2024, we’ll add the La Famiglia counter to GC as the Americans acquired the Germans last year - no idea whether they’ll keep the name, which is kinda silly imho. Fwiw, La Famiglia did 12 deals last year - added to GC’s 10, that would top Sequoia’s 19 transactions we have tracked for last year.

✍️ The difference between selling a startup to top Nordic investors vs Silicon Valley investors is huge.

• Applicable to most European ones tbh - I actually had an interesting discussion this week about the European mentality of being self entitled and not hungry enough, particularly when it comes to building startups.

• Self entitled because on average most people in Europe have a decently nice life with a safety net - conventional wisdom says to graduate from a good uni, get a good job, buy a house and take a mortgage, a few holidays a year and then wait to retire. If you’re also lucky enough to have some money/assets from your old folks, you’re all set for a comfortable living. Pretty straightforward - and in general the state’s got your back as it provides a financial cushion if you lost the job, for example.

• That’s a setting that doesn’t really encourage ambition but rather protects the weak - and sometimes that mentality is also a result of how some societies judge its people i.e (startup) failures are bad, being outside the norms and standing out is not good, selling yourself as the best is weird etc.

• This is at odds with building a startup, which takes you outside this comfort zone of conformity, involves all or nothing risk takings, and multiple failures until you make it right, if that. And that also reflects on the ambitions size and the sales approach when you build a startup - hustling and street smarts are not taught in schools, they’re skills acquired on need-basis or sometimes part of a person’s personality.

• That is why immigrants have a better chance of succeeding at building startups - they’re outliers, hungry and need to stand out in order to make a living in a new environment, which in Europe it’s become increasingly adverse to them.

• The different mentality goes also for the investors - Europeans are the anxious type, who will always worry and grill founders as such about what it can go wrong before investing.

• Don’t get me wrong, not a bad thing to be aware of the risks, however it is the opportunity that matters - its size and unrealised potential - and which make planning a journey more interesting. Don’t fear the unknown, embrace it - European investors are just not wired that way, likely also because of the above-mentioned traits the society values - conformity and failure aversion - which align into a risk adverse attitude.

• Focus on the upside, not on the downside is what I usually tell the founders I work with, mainly because life is about what you can control. The bolder and more ambitious the idea and its execution, the better - combine it with the above mentioned hustler attitude and you may get a winner.

• It takes an optimist and a visionary to figure it out - and this, in my opinion, is what the European investor archetype lacks badly.

• Is that a problem, or an opportunity though? :-)

Intel

Cheat sheets

• active angels and interesting angel deals in Europe in Q4 - link

• active angels and interesting angel deals in Europe in Q3 - link

• startups doing EV charging stations in Europe - link

• startups building robots-based business in Europe - link

• notable AI deals - link

• more

Deal highlights from this week 

🇱🇹 ​Leya AI​, developing an AI-Tutor used for English learning, raised $1.1 million pre-seed with V-Sharp Venture Studio, Inventure, BADideas fund and angel investors via LitBAN.

🇬🇧 ​Tortus​, developing an AI agent for doing healthcare tasks, raised $4.2 million seed in a round backed by Khosla Ventures.

🇫🇷 ​Guided Energy​, doing a smart energy platform used for the optimisation of EV fleet management, made public last year's $5.2 million pre-seed round co-led by Sequoia and Dynamo Ventures.

🇪🇪 ​Starship Technologies​, robotics startup operating self-driving delivery fleet of robots, raised a $90 million growth round co-led by Plural and Iconical.

• seemingly a Skype​ affair all over - co-founded by two ex-Skype guys, Janus Friis and Ahti Heinla, while the current round is backed by Taavet and Sten (both ex-Skype) on behalf of Plural, and by Iconical which is the investment vehicle of the above-mentioned Janus. For the noobs out there, Skype was one of the first tech startups that has become big out of Europe in the 2000s.

• the Starships robots are used to deliver food, grocery and packages and have become quite popular in the home country, where it's some sort of a national symbol.

• this is what the future should look like, right? Indeed - however, while an emerging vertical augmented by the AI investment craze, the autonomous robot business is a super crowded space with multiple plays and cases, on both sides of the Atlantic.

• one one hand there's the big retailers with Amazon at the forefront, with heavy financing both internally within their ops and externally via revenue deals against equity positions in strategic robots manufacturers. 

• on the other, there's an army of Chinese vendors competing on price everywhere they can or are allowed to. 

• startups building an edge are somewhere caught in between when looking to scale. Here’s a look at the unit economics and their business model.

To continue reading a deeper strategy analysis of Starship, you need to subscribe. You will get it in the inbox tomorrow morning, along with a curation of early stage deals and comprehensive VC intel from Europe.

It’s the best intel coverage in Europe, I am told.

Also notable 

🇬🇧 HSBC has been fined for failing to adequately protect customer deposits in the event that the bank collapsed.

• the Silicon Valley Bank lesson is still fresh - it happened 11 months ago.

• related data point: US commercial real estate contagion is now moving to Europe.

🇪🇺 The EU is updating its Market Definition terms - it last coined how they treat tech business in 1997.

• about time, huh?

• in 1997 anything software-related was called an IT business or an IT highway.

• for the young ones - IT stands for information technology and it was the only-tech-related class taught in business schools back in the 90s.

🇬🇧 Citigroup will cut off 10% of wealth employees in London - roles are from assistant vice president to director level.

 🇫🇷 The French state will guarantee €2 billion in loans for companies to invest in adapting to climate change.

• the Finance minister said they’d give it away for free in the form of grants but the public finances are too stretched for the moment.

🇪🇺 Probability of recession this year is high - below the results of a survey of experts that showed elevated recession risks due to geopolitical conflicts and heightened energy costs in Europe.

🤔 OpenAI CEO Sam Altman seeks as much as $7 trillion for new AI chip project - he wants to create OpenAI’s very own semiconductor supplier.

• 7T is a tall task even for the most powerful VCs out there - but quite sure some folks will take it as a good challenge to manufacture a deal.

• that’s almost 10X of Taiwan’s GDP btw.

• it’ll be fun to see so many chip experts and think pieces on Linkedin yet again.

🇺🇸 Chris Dixon's new crypto book may be a New York Times bestseller, but a Vice investigation is attributing its success in part to bulk orders by companies linked to Andreessen Horowitz and Dixon.

• I wouldn’t be surprised if true - a16z is the same gang hyping the shit out of web3 a couple of years ago, after having re-branded it from crypto, just because they’ve invested billions in the space and it wouldn’t take off.

🇺🇸 Adam Neumann is trying to buy WeWork out of bankruptcy and said that he had money from investor Dan Loeb of Third Point Capital.

• however, Loeb said that he has not committed to financing Neumann’s bid - they just had some talks. In October! We’re in February now.

• fake it till you make it - oldest trick in the book, right?

💲 Peter Thiel and a group of venture capitalists are funding the Enhanced Games, an Olympic-style competition that allows performance-enhancing drugs - Olympics on steroids.

🦆 Google finally launched their ChatGPT version in the market this week.

• competition is great. Google’s model is not open source and competes head to head to a bunch of other LLMs with a freemium model, with the paid tier bundled with 2TB storage on top of their SAAS products. Not the worst pricing bundle idea - Msft is doing the same btw.

• you can use Google’s free version at your own risk though:

  Please don’t enter confidential information in your conversations or any data you wouldn’t want a reviewer to see or Google to use to improve our products, services, and machine learning technologies. - TOC

• btw, selling in bundle matters as LLMs’ compete on price now, no idea what makes them different other than the occasional hot takes on social media:

  • ChatGPT: $20/mo

  • Poe: $20/mo

  • Perplexity: $20/mo

  • Gemini: $20/mo

  • Claude: $20/mo

💡 in other LLM news:

• Apple has released MGIE, a new open-source AI model that can edit images based on natural language instructions

• OpenAI is working on a type of agent software to automate complex tasks by taking over a users' device. Yup, a kind of chatbot as a service.

💰 Another one with Google - the company spent $2.1 billion last year and $700 million in January alone, on severance and expenses layoffs.

Mo’ Sundaying 

🇮🇹 Richest five families in Florence from 1427 are still the richest today - any family who was in the (1427) top third is almost certain to still be there today. Likely many Florences out there.

• related: crazy European rich.

🇬🇧 A Brit went back visiting Silicon Valley and had this to say.

🇬🇧 A Tory MP said he quit his ministerial role because he could not afford to pay his mortgage on a salary of £118,300. He probably didn’t make friends with the right people.

🇫🇮 Finnair is weighing passengers voluntarily, as well as their carry-on luggage, for three months on flights from Helsinki Airport in Finland.

🤘 Metallica goes on tour across Europe this summer, and will have some of its guitars and drums hauled in trucks powered by hydrogen fuel cells.

• Trucks are done by Iveco as the band is keen to cut the carbon footprint of its tours.

🇬🇧 Dozens of British wind farms run by some of Europe’s largest energy companies have routinely overestimated how much power they’ll produce, adding millions of pounds a year to consumers’ electricity bills.

🇦🇹 Why would Austrians want the Ukrainian war to end when the Russians help them make so much money?

🇪🇸 Barcelona declared drought emergency, with big fines for breaking water rules.

• Shit got serious - washing a car, watering a garden or filling a swimming pool could result in fines of up to €50. If a citizen in Barcelona committed a serious 'water offence', they could be fined up to €3,000.

📈 Benchmarks

• $17 million net worth makes you top .1% of wealth in Switzerland.

• $3.4M in Italy and $900k in Romania.

🖖🏻 NYC has about 100 ecommerce exchange zones for people to meet for FB marketplace/craigslist transactions that are monitored 24/7 by camera.

🤙 The Brits travelling to Germany for Euro 2024 were warned that the German beer is stronger than what they consume locally. The lads took it as a killjoy.

🤭 The US is the Wild Wild West - the explosion of the e-commerce economy has created an opportunity for thieves doing freight trains jobs.

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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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