Budapest Letters #10
👋 Hi All! Great to have you back! Before we jump in, big shout out to our new subscribers, welcome, good to have you with us. And one more thing before we roll, if you like what you read, subscribe to Budapest Letters (if you had not done it) and share.
Cheers, Aron
📢 TL;DR
Top stories this week: ✍️ NATO launches €1bn investment fund for war startups ✍️ Rohlik Group, Skeleton Technologies and Longenesis raised 💰 ✍️ 10Lines, a startup developing autonomous line-marking robots, is making road and parking lot building more efficient ✍️ CEE region recorded its second best year (ever) for VC and private equity investments, an encouraging story in COVID-19 times
🔥 Story of the Week
The North Atlantic Treaty Organization (NATO) announced its intetion of launching a startup accelerator and a €1bn investment fund for war startups. NATO argues that in order to keep up with fast developing nations, especially China, the transatlantic alliance needs to boost its innovation capability or risks falling behind. Proposed funding will target the following strategic fields:
Autonomy
Bioengineering
Data and computing
Artificial intelligence
Human enhancements
Quantum-enabled technologies
Hypersonic technology and space
Current expectation from NATO is to have the so-called Defence Innovation Accelerator for the North Atlantic (DIANA) up and running until 2023 with voluntary participation from members states, that today counts 30 nations.
DIANA will mirror a similar US initiative from the late 1990’s which is considered to be a successs that helped the US military getting access to top notch talent and innovation. If DIANA can replicate this, that would be beneficial for the bloc.
Show Me Da 💶
👏 Rohlik Group, an online grocery startup from 🇨🇿, became Europe’s latest tech unicorn (i.e. with a min. valuation of €1bn) after it raised €100M in fresh funding, led by Index Ventures, a heavyweight VC firm from 🇬🇧; and just 3 months after its last, $230M funding round. Big win for Tomáš Čupr, its founder, and Czechia.
🧐 Personal take: Hailing from Hungary, I have a special attachment to all things coming from the so-called Visegrad countries (🇵🇱, 🇨🇿, 🇸🇰, 🇭🇺), thus the success of Rohlik is close to my heart. It is an enourmes achievement, especially having in mind that within CEE that Baltics were and still are THE unicorn builders. Čupr himself noted in Sifted that “I thought, we’re a hidden company, based in Central Europe… If we present a plan with 15 countries [on the roadmap], people are going to laugh” - well, it seems that not only they are not laughing, they are putting in 💰
Of course, one can argue, as the online grocery space is getting crowded (+ huge investment are flying around so more unicorns are expected), why Rohlik would succeed in the long run? While I cannot tell for certain that they will, I can tell you (as a customer) what they are doing in Czechia, Austria and Hungary is 💯 💯 💯
Simple and easy-to-use mobile app. Quality and wide product portfolio with lots of local producers that would otherwise be hard to find for city people. Quick delivery times (ca. 2 hours after purchase) and customer-oriented customer care.
And my feeling is that with these attributes they will win big in all the markets they aim to distrupt, like Germany, Italy and Romania.
👏 Skeleton Technologies, an supercapacitor startup from 🇪🇪, managed to extend its Series D funding round with an additional €29M, reaching a total of €70.4M. The investment was provided by both existing backers (e.g. MM Grupp from 🇪🇪 and Marubeni from 🇯🇵) and new comers, like ex-startup founder business angels.
👏 Longenesis, a biomedical research startup from 🇱🇻, received €1M from various business angels and LongeVC, a well regarded early-stage biotech investor. The company has created an E2E environment for biomedical institutions, patient organizations and research partners to communicate directly, enabling both safe data curation and consent-enabled biomedical data utilization for research.
🚨 Startup Alert
This weeks alert is on 10Lines, a line-marking robot startup from 🇪🇪 that recently raised €700k from Tera Ventures, a local VC firm, and Perot Jain from the US. An interesting side note on the Dallas-based VC fund is - apart from the fact that it was founded by the son of an ex-presidential candidate, who also happens to be the first person to circumnavigate the Earth in a helicopter - despite being primarly US-focused, it does not shy away from investing in CEE. In 2008, just after its founding, it invested $300k in Ustream, a then up-and-coming US/Hungarian technology startup, which was later acquired by IBM for ca. $130M.
But coming back to 10Lines, the Estonian startup developed autonomous parking lot and road marking robots. Of course, you might ask - as I did at first - what is the deal here? Well, quite a lot. You see, building and maintaining parking lots and roads take human effort. A lot, actually. But besides this, it also polluts.
So incomes 10Lines, with its autonomous robots, and these constructions can finally save (big time) on both human effort and CO2 emissions. Win on all sides.
🧠 Food
This week I decided not to write a brainfood section because Invest Europe’s new report on the 2020 CEE investment landscape is gold, from start to finish.
Because of this, I will just insert here a teaser from it:
“(…) Venture capital was the driving force for company investments in 2020 as firms backed 474 start-ups and scale-ups with total investment of €358 million – just 4% below the all-time high achieved in 2019. Overall private equity investment slipped to €1.7 billion in 2020, mainly due to the absence of large buyout transactions involving equity commitments exceeding €300 million during the period.
Poland was the leading destination with a quarter of the region’s total investment value (€431 million) and home to almost a fifth of the companies receiving funding. By investment value, it was followed by Estonia with 21% of the CEE total, the Czech Republic (17%), Hungary (14%) and Croatia (9%). Hungary was the leading destination for investment by deal number with 236 companies receiving €226 million in funding, 220 of those were venture capital. Poland reported a total of 105 new investments, of which 82 were venture deals. Across the region and all investments, ICT was the leading sector, accounting for almost half of companies backed (…)”
And the rest, you should really read, it will worth your time 🙂