Budapest Letters #13
👋 Hi All! Great to have you back! Before we jump in, big shout out to our new subscribers, good to have you on board. And more thing before we roll, if you like what you read, subscribe to Budapest Letters (if you had not done it) and spread the word.
Cheers, Aron
📢 TL;DR
Top stories this week: ✍️ Bistro.sk, the market leader of online food delivery in Slovakia, will be acquired by Just Eat for €50M ✍️ PSC CEE, Postoplan and Colossyan raised 💵 ✍️ Juicy Marbles created the world’s first 100% plant-based filet mignot that looks and tastes like the real deal ✍️ Several leading VC firms closed gigantic new fund raises and eye European startups for investments, while total European early-stage deals, in numbers and ticket sizes, are decreasing
🔥 Story of the Week
Just Eat, an online food delivery giant from 🇳🇱, recently announced that it will purchase Bistro.sk, a similar platform that is the market leader in 🇸🇰, for an est. €50M. Bistro.sk was founded by Milan Dubec, under the umbrella of Axel Springer Media, a German media conglomerate. Today, the company lists around 2k restaurants as partners and serves roughly 400k daily users in major cities.
The acquisition is similar to that of Netpincér from 🇭🇺, a market leader for years in its respective market, that was purchased by Delivery Hero in 2017, a major global rival of Just Eat; although, truth be told, the company was originally purchased by Foodpanda in 2014, another international food delivery startup.
So, consolidation on the online food delivery market continues but as competition is becoming more and more cut-throat, with record investments flowing to popular big European players like Wolt, Rohlik and Bolt Food (latter two with CEE origins), acquisitions such as Bistro.sk’s will be the norm, very soon.
Show Me Da 💶
👏 PSC CEE, a smart payments startup from 🇭🇺, received €2M, led by Hiventures, a government owned local VC fund that is one of the most active players in the region. The company’s flagship product is SmartKasse, an Android-based all-in-one cash register. The tool enables users – typically SMEs – the fulfillment of operational obligations (e.g. direct contact with the tax authority), acceptance of digital payments and the tracking of inventory, in real-time. The fresh funding will be used to strengthen its Hungarian presence and to enter 🇵🇱.
👏 Postoplan, an automated marketing platform from 🇪🇪, bagged ca. €1.3M from TMT Investments and YellowRockets. The startup, despite targeting the very competitive US social media market, had seen both its user and revenue base grow rapidly in the past 12 months so the new funding is grounded and well deserved.
👏 Colossyan, a video creation platform from 🇩🇪 with 🇭🇺 founding team, raised €1M led by Day One, an early-stage VC company from 🇭🇺, and APX from 🇩🇪; fun fact, Day One already popped up on these pages (Budapest Letters #2) when they took part in the financing round of 🇨🇿 cybersec startup, Whalebone. But coming back to Colossyan: the startup enables business to generate cutting-edge video content (internally or for clients) easily and securly. And this, as people tend to prefer virtual storytelling to analog one, provides a great growth curve.
Congrats to all teams!
🚨 Startup Alert
This weeks alert is on Juicy Marbles, a food tech startup from 🇸🇮, that claims to developed the world’s first filet mignon that is 100% plant-based. But there is an additional catch in its innovation as its filet - according to the startup - shares the the same texture, look and taste as an original, animal-based filet mignon, thanks to its “reverse grinder” technology that awaits patenting. Sweet, right?
No suprise that the Ljubljana-based startup reached, and earlier this year graduated Y Combinator, the prestigious 🇺🇸 startup accelerator.
I am sure we will hear more about them. But until then, behold:
🧠 Food
Index Ventures, one of the leading VC firms on the planet, announced that it succesfully closed three new funds at a total value of $3 billion. Yup, b-i-l-l-i-o-n-s, and that three times. Plus, the new triumvirate of funds will cover all relevant startup financing stages: $200M will go for seed, $900M will go for early and a monster-sized $2 billion will go for growth startups. Crazy sums. Crazy times.
But, out of the the VC big league, Index was not the only one announcing mindblowing fund raises in the past weeks: Accel also raised a similar total amount, while Andreessen Horowitz (a.k.a. a16z) closed a slightly smaller one with $2.2 billion; but the latter fund will focus exclusively on crypto investments.
Why is this relevant? I have two reasons:
Firstly, the top 🇺🇸 VC firms are actively looking for investments outside the US, an approach that is quite recent, and Europe is now one of the their main targets. And considering that most are loaded with insane sums and decades of investment experience compared to local counterparts, the playing field is becoming uneven, European VCs are loosing out on home turf.
Secondly, accelerated but not exclusively fuelled by the COVID pandemic, pre-seed / seed / early-stage investment deals are on the decline, while later stages are booming. Both in terms of numbers and ticket sizes. For example, as per Sifted:
In 2020, there were half the number of pre-seed deals in Europe than in 2016. The total capital raised at pre-seed level dropped by half across the same period too.
In light of the above, on the one hand, European VCs, especially smaller ones and/or from less developed regions (like CEE), are loosing deals to bigger players, that are often times not even European. And on the other hand, VCs are increasingly betting on safe bets (i.e. late-stage, neglecting new comers).
Personally, I find the first development healthy. Competition drives ambition, focus and strategy. Competing against the best in the industy will help European VCs to mature and get even better. And in the end, this will benefit local founders.
But re: the second one, I have doubts. If more and more investors neglect founders at an early-stage of development, what happens with new ideas? Who will finance them? Who will guide founders in their most vulnerable early moments?
One obvious answer could be angel investors. But this “industry”, at least in CEE, is even less developed than VC so it will take years until it can step up; if it gets the attention from now on, mind you, which btw it currently does not get. Another one could be the government, like Hiventures in Hungary. And maybe crowdfunding could be an option as well, i.e. small retail investors, but this scene is small even in mature/developed markets where investing is known and liked.
So which one I fancy? I hope angel investing and crowdfunding will grow and will become the norm in CEE. But let us see… and how do you see the above?