Budapest Letters #14
👋 Hi All! Great to have you back after this little break! Last week I was out on vacation with the fam but now I am back, and so is Budapest Letters 😉 But before we jump in, as always, 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, do subscribe (if you had not done it) and share.
Cheers, Aron
📢 TL;DR
Top stories this week: ✍️ Bolt, a popular ride-hailing startup from Estonia, enters the on-demand grocery delivery market ✍️ Novakid, Tenderly, Jutro Medical, Montonio and Outvio raised 💵 ✍️ VC firms from CEE are increasing their focus on early-stage startups with several raising dedicated new funds for them ✍️ Kakao Bank, a digital only bank from Korea, lists on the Seoul Stock Exchange
🔥 Story of the Week
Bolt, a ride-hailing startup from 🇪🇪, raised a whopping €600M to enter the 🔥 on-demand grocery delivery market with its new service, Bolt Market. The monster investment round was led by VC big wig Sequoia and 2 hedge funds, Tekne and Ghisallo, all from the US. The fresh funding boosts Bolt’s total valuation to €4 billion, making sure that it can compete with industry heavyweights, like Uber.
But this new venture is nothing new from the Estonian company. Bolt is transforming rapidly in the past years. What started out as an “old school” ride-hailing business model, now includes on-demand grocery delivery, food delivery (Bolt Food) and a mobility sharing service (Bolt Drive). Pretty compact operation.
🧐 Personal take: Markus Villig, founder and CEO of Bolt, is surely a man with a plan. Starting out with ride-hailing in 2013, his company is now basically in every meaningful urban mobility industry you can name. If you want to rent an e-scooter or a bike. Bolt is there. If you would like to order food from your local pizzeria. Bolt is there. If you would like to order fresh apples. Bolt will be there. In sum, his company is unavoidable in larger cities across Europe, and soon Africa.
Of course, competition on the on-demand delivery scene is though and growing (e.g. Wolt, Rohlik). But thanks to its breadth and scale, Bolt shows promise. A lot. Even more so when we add to this its green pledge, that it is and will remain carbon free. Fully. Across its services. That is something. Bolt is going strong.
Show Me Da 💶
👏 Novakid, an online language learning platform from 🇵🇱, received €29.4M, led by Owl Ventures and Goodwater Capital; but the Series B round includes investors from the previous batch as well, like PortfoLion, a prestigious VC fund from 🇭🇺 and Leta Capital. The startup, which helps kids aged 4-12 to learn English in a fun and digital way, aims to use the fresh capital to boost its international presence.
👏 Tenderly, a blockchain development platform from 🇷🇸, bagged €12.8M, led by Accel, a legendary 🇺🇸 VC firm. The company, that offers tools for Ethereum focused developers (e.g. monitoring smart contracts, real-time alerting and smart contract simulations), will use the investment to grow its team and enhance its offering. Probably no need to state it, but this is a big win for the Balkans.
👏 Jutro Medical, an up-and-coming health startup from 🇵🇱, nabbed €6M from Inovo and Rheingau Founders. The startup offers a hybrid health experience (i.e. both telemedicine and bricks-and-mortar care via clinics) for patience which resonates well with users, who are often times scared of using mobile-only solutions; at least in Poland and the wider CEE region. Backers of the company also include Kogito and Market One Capital, two well regarded local VC funds.
👏 Montonio & Outvio, two startups from beautiful Tallin 🇪🇪, raised €2.5M (each) within days of each other. Estonian startups are crushing it. I could probably write this every week. The performance and success of the local scene is just breathtaking. But coming back to the companies: Montonio offers an aggregated BNPL (i.e. „buy now pay later”) solution for the purchase of new items via e-commerce sites; while Outvio, also operating in the e-commerce space, offers its users (= online businesses) a fracturless, end-to-end post-payment client journey.
Montonio’s investment round was led by Tera Ventures and ffVC (+ business angels, mostly people from Bolt and Wise). Outvio’s was led by Change Ventures.
Congrats to all teams!
🚨 Startup Alert
This week’s alert will not be focusing on a specific startup … but ... drumrolls … on regional VC funds. You see, in the past couple of months Untitled Ventures, OTB Ventures, Vitosha Venture Partners and LaunchHUB all managed to close large, early-stage focused funds that will help promising local startups to grow. An encouraging development considering that overall early funding is steadily decreasing in Europe (see: Budapest Letters #13). So the fact that VC funds in the CEE region are not neglecting this space, while in the West they do, is dope.
Sure, there is still a question mark around how local VCs – despite having money – could realistically compete with the big timers from the US, UK and Berlin for the best startups; and as we see from Tenderly’s case, whose main investors are Accel (🇺🇸), Point Nine Capital (🇩🇪) and Version One (🇺🇸), sometimes not really.
But hey, you win some, you lose some. And the possibility is always there that local VCs team up with the global giants, that is also not bad.
So overall, as far as I am concerned, early-stage financing in CEE looks bright.
🧠 Food
Digital challenger banks will never attract vast amounts of customers. Digital challenger banks will never become profitable. Digital challengers will never be able to challenge the products and services provided by incumbents. Customers will never warm to the idea of using a digital only bank. You are familiar with such headlines, right? Well, in the past years most of these “myths” were debunked by the likes of Revolut, Starling Bank, Nubank and South Korea’s finest, Kakao Bank.
People are using digital challengers in the millions. And some are already making a profit. Especially the ones in Latin America and Asia, like Kakao. Latters story is all the more intriguing since it was just listed on the Seoul Stock Exchange with huge fanfare. And the IPO seems to be a great success as it made Kakao Bank the largest financial corporation in 🇰🇷 by market value. How did this happen?
Firstly, Kakao is not just a financial services provider but a platform, thanks to being the largest chat app operator in the country. So it has a huge customer base (13M+ and counting) that it built up in just a few years’ time. Secondly, it offers unsecured personal loans in a simple way. No hussle or complexity like the solutions from incumbents. And it also provides loans for renting property, a huge burden on Koreans who need to provide these sums well in advance.
No surprise that it became profitable in 2019, only ca. 2 years after its founding. And what is better, is that its future growth curve looks uber impressive, considering that is does not yet offer mortgages, small business loans and its market share for personal loans is still miniscule (6%) vs incumbents.
Oh yeah, and what all this has to do with CEE. Well, for example this…