Good morning and welcome to Sunday CET.

Lovable made Sweden’s startup scene to be buzzing again - but is it really? This week we have a closer look, with a deep dive into the country’s investment trends and its key players. Also - crypto’s dark side is rearing its head in France, feature vs business in AI is what makes a billion dollar difference, and how to fix the European risk aversion (if that).

And much more - as always, I’m here for your thoughts and comments, just hit reply.

Enjoy,
Dragos

Market talk

What’s going on in Sweden

Sweden keeps popping in investors discussions lately because of Lovable's growth trajectory - as an anecdote, an American investor told me recently that Sweden is the only country on their European radar, while another told me that they prefer not make public their less-than-$1M pre-seed deals in the country, because small checks can be perceived as negative signals by the market. So this week I had a closer look at the actual data we have tracked over at Nordic 9, and at what the usual suspects have done in the past year or so.

Big picture wise, the 2024’s dealflow is lower than the one in the previous year - roughly 600 deals worth $3B vs 700 worth $6.5B in 2023, which is in line with the whole continent’s trajectory. Same delta for the Q1 of this year - an overall downward appetite yoy, last year we have tracked transactions made by 870 investors in the country, down from 940 in 2023 and 1200-ish in each 2022 and 2021.

As a general note, we’ve been tracking comprehensive Swedish data since 2012 and 2021 is the deals peak with 800 deals, followed by 2021 with 700, both above the regular 500 startup transactions done by about 1000 dealers you’d expect Sweden to produce on yearly basis - at least since 2015, when tech has become an interesting asset class for the local investors.

So who is doing those deals? At the head of the market, we’ve got EQT and Kinnevik, completed by new entrant Norrsken (closed a €320M fund in 2024) - all solid incumbents with Sweden part of a larger international play. They’re complemented by the likes of local investors such as Industrifonden, Node, Course Corrected, or Luminar, alongside a bunch of family offices i.e. Navigare/FAM, Philian/DIG, Vargas, Flat etc. A special note for Creandum which closed a €500M fund last year and has been one of the more active Euro VCs of late - they did only two Swedish deals in the past 16 months, Lovable and a Voi bridge follow on. There’s also a few international funds with boots on the ground, while most of the big multi-stage dealers prefer to get a hold of the market by employing local scouts, which is cheaper than running an office.

Deal-wise, more energy and industrial and less SAAS than usual - all driven by the AI fever, with a bit of ‘how do we make money from defence’ flavours. Worth noting that this spring there’s four Swedish startups to join YC, above the yearly average number of three since 2021 - and much better compared to the 2017-2020 draught, when the country only had one in total.

NB. I know of quite a few deals not announced for various reasons but that’s a market I am not running a digital asset for - fwiw, at Nordic9 we only deal with public intel, we’re not in the rumours business.

There’s a whole lot more interesting stuff if you’re into Swedish intel, especially if you would like to learn what investors spent their money on - I dug through the January 2024 - April 2025 data we have tracked over at Nordic9 and looked at:

• the more active VCs

• the more active family offices

• angel investors

• international investors

• growth deals, A, B and expensive seed rounds

• other notable early stage startups.

... and put everything in a Swedish cheat sheet, which is available for our customers.

Crypto games

This week the lil’ tech community in France had a horrible incident - namely, family members of a CEO of a local crypto startup were targeted in a kidnapping attempt in Paris. That’s the third of this kind in a few months - while it is regrettable and rather a society-related business where police should play a role (the French dramatically call it the Mexicanisation of France) it makes you wonder why it happens to crypto folks and not, say AI or fintech or deeptech startup people. As a coincidence, also this week Coinbase just took a $20 million hit after a hacker paid overseas support staff to pull customer personal data, which will require up to $400 million in cleanup costs.

So why are crypto people seemingly more vulnerable targets than tech people? A few particular aspects come to mind:

• instant liquidity Crypto founders often hold large sums in self‑custodied wallets and a criminal needs only to coerce the private key or a direct transfer to get millions, with minimal paper‑trail risk. By contrast, a regular business’ wealth lies in company equity or deferred compensation - not a liquid store of value that can be grabbed in minutes.

• single point of failure Since crypto live and die by a small set of private keys, if you can get someone into handing over a single 12‑word seed phrase or a hardware‑wallet recovery key, you instantly control their entire stash.

• this makes it easy of asking for ransoms Ransoms in crypto require no intermediaries (banks, lawyers), and funds can cross borders instantly, which makes it a lower‑risk, higher‑reward play. In general, in non crypto scenarios, demanding payment in cash or forcing an equity transfer is logistically far more complex, slower, and more easily traced.

• there is already a black market for crypto That means you can cash it out quickly in a parallel ecosystem - exchanges, over‑the‑counter desks, darknet brokers - that will happily turn huge crypto sums into untraceable fiat anywhere on the planet. These networks know how to exploit on‑chain anonymity - again, opposed to an equivalent criminal market for extracting IP or equity from a tech startup overnight.

• living on the edge Many crypto projects operate outside established financial regulations - and without the kind of corporate insurance, board‑approved security policies, or escrowed compensation plans you see in more traditional tech businesses. That means would-be victims have little institutional recourse or insurance payout that might blunt the incentive for criminals.

Tough life, right? Making easy money doing crypto sounds too good to be true - it is seemingly easier but the risks are higher too. Add to it crypto bros using social media as an ego extension for displaying their wealth - this not only makes them personally vulnerable, but also attracts attention to the whole community. And as long as the risk/reward is interesting, the criminal exposure will be part of the cost of doing business until those attackers find easier prey elsewhere.

Why France more than other countries though? Seemingly France alone accounted for 14 of the 50 known crypto‑related kidnappings globally over the 12 months. No idea, I guess it could be just a matter of under-reporting. What do you guys think?

AI feature or AI business

This week Notion released a note-taking feature used to transcribe meetings and provide a summary of the talk points later. Which is not a big deal except that there are dozens of other startups building a similar tool sold as a standalone product. Some of those startups also raised serious amounts of investors money, notably in Europe we have Granola, a VC darling which announced a $43M series B this week or Fyxer AI which bootstrapped its way up to raising $10 million from 20VC earlier this spring.

No public info about Granola's traction - other than signals such as VCs are heavy users and series B without some eight digit $ revenue is hard to come by these days - and Fyxer is said to be on course of getting to $30M ARR this year. Both are great examples of AI‑enabled tools with a meteoric rise in the past 12-18 months because of at least a few reasons:

• low friction onboarding

• easy integration within existing workflows

• quick tangible ROIs

• network effects

• structural tailwinds from remote & hybrid work

The open question is how much of this business is for a feature and how much is for a standalone product that will become a category-defining multi billion company. In other words, is this just a flame that we'll go away as we pass onto another cycle or a devastating fire stealing the lunch of solid software vendors? Or is this maybe a new category in the making? Hard questions with unclear answers - because as Notion above, the big companies are also seeking for AI-related growth avenues and productivity is a low hanging fruit since it is Fortune 500's bread and butter. Besides, history shows us that whenever you see super high growth startups, you need to be wary of the revenue stickiness - and we all remember Hopin, don’t we? That means you need to look for the lock-in and switching costs and correlate to growth - that’s just basic fundamental reality check.

Anyways. Also true is that we’re now in a super cycle providing a lot of investing optionality for making smart bets - it’s one of those rare moments when you need to make sense of where’s the intersection of technology strategy and strategy technology, and the above are the type of questions you need to ask in order to figure it out.

With this in mind, I thought it’d be interesting to talk to an underdog also building its way up the market of note-taking AI and pinged Niklas, founder and CEO of Klang, with a few questions, with answers below (edited for brevity):

What is Klang in a simple sentence and its USP?

Klang will be the European AI for conversations - it captures, analyses and automates workflows from any conversation. We're focused on building great AI for the European market, with a privacy first approach for all data we handle.

Transcribing conversations takes huge amount of time. Understanding them takes even more. We save you that time.

What is the magic underneath the product?

We use self-hosted fine-tuned AI-models for speech to text, diarization and LLM. They are fine-tuned for local languages in EU and can be hosted in EU, in a specific country or on premise. That allows us to guarantee where data is stored and processed, which is very important for sensitive conversations.

Traction and next milestones?

We have achieved significant traction in Sweden with 60,000 users. Amongst our customers is the Swedish parliament and some of Sweden’s largest universities and lawyers. 1 million euro ARR is our next big milestone. We're fairly close to getting there.

Investors - what is it that they understand or didn’t get?

We have some great angel investors that really believe in us as we are a very experienced team. It has therefore been very easy to raise.

We've been rejected for focusing on Sweden in the beginning instead of going global from the get go. I think there is great strength in being strong in specific markets, and expanding from there.

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Signals

Interesting deals

🇩🇪 Penzilla (SAAS for a company pension schemes) - seed
🇭🇺 DiffuseDrive (automated data SAAS for computer vision developers) - seed
🇳🇱 MarvelX AI (smart AI insurance agents) - seed

• started to add more of those on Linkedin, where you can follow - or if you’re serious about it, you can simply join the pros and get yourself updated properly about what is important in the European startup ecosystem.

Liquidity! German software company Hornet Security was acquired by the American Proofpoint for an undisclosed amount.

• Hornet is doing some $160 million ARR and a typical 6-8X ARR multiple would lead to a reasonable estimate for the transaction of around $1.1 billion.

• it’s a PE not a VC deal, happy investors nonetheless - and yes, a European dealer has also made money out of it. 😃 

• fwiw, Proofpoint is also owned by PE - Thoma Bravo paid $12.3B for it in 2021.

Liquidity? The British government wants to launch a regulated secondary market for pre-IPO, growth private companies as a liquidity bridge to the LSE that nobody wants to do business with - expected to go live later this year.

• the Brits are seemingly trying many things, you gotta give them that - as an aside, especially on deep tech they’ve been doing much more than saying lately, and good stuff too that should see results in a few years time.

• but this one, while intriguing, it’s unclear why it will work - like any marketplace, it’s as good as their supply and demand sides.

• what makes me circumspect though, and this is as European as is British - sure, we can work on fragmentation, regulation and even liquidity to some extent, those are some quantifiable problems, but can you fix the de facto local aversion to investment risk? That’s the fundamental not working around here amd where Americans shine, the existing public markets are just poor at evaluating assets - see last week’s Deliveroo delta acquisition - why would this new market be different at pricing tech startups?

• alas, maybe I’m just having a cranky morning, and don’t get me wrong, it’s better to try things out than standing put and we will see how this one works later this year. It just reminds me of that old sexist saying - if the brothel isn’t working, don’t change the beds, change the girls.

Drones Two pieces of news this week:

• Helsing launched an underwater drone.

• Saildrone (Americans also doing underwater drones, launched by a Brit) opened an office in Europe for which it raised $60 million in an equity deal led by the Danish government via EIFO.

Bonus link: American-made drone smashes performance metrics at Chinese prices.

Hyper social networks Brian Chesky is spending more than $200 million to turn Airbnb from a vacation app into a marketplace for services like fitness training and facials.

• while this direction screams risque, it makes sense from a strategy pov and Airbnb needs a new leg for revenue growth, in addition to hospitality. Their core is a well-oiled marketplace, and experiences is something complementary to travel bookings, which btw they’ve been already testing for a while now, to less sucess though. So they double down now, in a very hard and competitive category.

• I had a quick look at what they have in store for London, Paris and Madrid - it’s exactly what you’d expect an American tourist to buy when visiting Europe, which, as tempting as that may be, it is not where the big bucks are. Tourism also makes it prone to scammers, which Airbnb has a reputation for, in spite of them working hard at keeping a clean product.

• perhaps it’s just a matter of time until they fine tune it and figure out a PMF beyond the tourists, both in the States and in Europe. Alas, that’s a tough nut to crack in Europe, which is a super competitive market - each country has at least a few marketplaces, usually controlled by the local media companies, which use their media assets as traffic funnels - something that Airbnb doesn’t have.

• add to it the Facebook Groups, also with a significant share - in general, FB still has a good MSM usage share in Europe, in spite of Mark massively polluting it with borderline‑allowed materials i.e. quasi-porn and AI content for faking engagement.

Other stuff 

• Novo Nordisk abruptly ousted its CEO after sales plummeted amid competition from compounders and Eli Lilly - the firm's market value has dropped by roughly half over the last year.

• svuota Londra - Milano is the post-Brexit banking hub to home UK non-doms and residents seeking an alternative foothold in Europe. It ain’t the tax alone - the sun and simplicity of Italian life is making the country an attractive proposition for Brits. And Italy is not far away in the desert either, like Dubai.

• PayPal reportedly launches iPhone NFC payments in Germany, after the EU's DMA forced Apple to open up.

• Epic Games claims that Apple is blocking its Fortnite app from the App Stores - Apple denies that, of course.

• also Apple added a warning with a red exclamation mark to scare Europeans from using iOS apps that support alternative payment options - a move that even hardcore Apple people find pathetic.

• in 2024, General Atlantic distributed back to LPs just $3.9 billion overall, the lowest amount in the past five years and 40% short of its target.

• Xi defiance pays off as Trump meets most China trade demands

• the most important decision of the Trump administration - question mark.

• 2025 State of the Satellite Industry report

• the most widespread global restaurant chain is no longer McDonald's or Starbucks, it's a Chinese franchise called Mixue Ice Cream & Tea with 46,000+ outlets - 9 of the top 25 chains are Chinese.

• why don’t billionaires invest in longevity?

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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