👋 Hi All! Great to have you. I hope you will enjoy the first edition of Budapest Letters, a bilingual newsletter/blog dedicated to fintech, startup and small business stories from Central and Eastern Europe. If you like what you read, please spread the word 😉
📢 TL;DR
This week we will touch on the following stories: ✍️ UiPath’s NASDAQ listing ✍️ Three fintech startups bagging ca. €70M ✍️ Y Combinator’s latest batch includes 5 promising CEE startups ✍️ Basecamp debacle that might impact others as well
🔥 Story of the Week
Robotic process automation (RPA) software giant UiPath, that hails from 🇷🇴, went public on the New York Stock Exchange (NASDAQ) at the end of last month. The initial public offering (IPO) was the 3rd largest stock market debut for a software company in history. The successful IPO helped the company raise ca. $1.3bn, just after Qualtrics’s $1.8bn (2021) and Snowflake’s - whopping - $3.9bn (2020). Despite a ca. 3% decrease in its initial share price since then, UiPath’ future seems bright. On the one hand, because its revenue had grown by 81% in 2020 to $607.6 million, while its losses had significantly narrowed (to ca. $92 million). On the other hand, its gross margin stands at 89%, which is said to be one of the highest in the game.
🧐 Personal take: I believe that UiPath is on a promising path but not necessarily because the numbers look right. That should come as a no brainer for such an assumption. I think they are solid because what they offer (RPA software), how (in a relatively easy to apply way), when (nowadays) and to whom (legacy industries with humongous administrative structures, like banking, energy, heath). In the age of digitalisation, accelerated by the current pandemic, being cost efficient and leaner is a must to succeed for deep pocketed large corporates; and UiPath targets this segment perfectly with a product that is sought after.
Show Me Da 💶
👏 FintechOS, a London-based startup hailing from Bucharest (🇷🇴), received €51M in fresh funding to boost its growth further by expanding operations to the US, the Middle East and Asia. The low-code fintech that assists (chiefly) incumbent banks and insurers to launch digital products in weeks, rather than months (or years or never ever), is fast becoming a household name in FS circles.
👏 PayHawk, another London-based startup, bagged a €16.5M investment for its expansion. The fintech, originally from Sofia (🇧🇬), provides a one-stop-shop for company finance operations, merging payments, invoices and expenses into one closed platform. This means that users, both big and small businesses, can easily automate spending across any payment methods, drastically decrease manual work and maintain full control over budgets/spending in real-time.
👏 Mindgram, a mental health startup from Warsaw (🇵🇱), raised €1.9M to fuel its own expansion in Poland and the wider CEE region. The company, that aims to support employee wellbeing and productivity via tools and expert advice (provided through a digital platform and a mobile app), might be onto something big since the issues it targets are probably among the most important ones for companies; also, just FYI, its pre-seed investment round was the biggest locally, like ever.
🚨 Startup Alert
5 CEE startups were accepted to Y Combinator’s, probably the worlds most famous and influental seed money accelerator, latest batch. This in itself is a huge achievement since not many succeed from this part of Europe, unfortunately.
So a very big shout out to Juicy Marbles (🇸🇮, food-tech), Datrics (🇺🇦, no code machine learning models), Vue Storefront (🇵🇱, UX for e-commerce), Wasp (🇭🇷, low code web app development) and Authologic (🇵🇱, online identity verification).
🧠 Food
Basecamp, an up until now well regarded US software company, faced a complete PR meltdown last week when it announced changes to its internal policies. The new rules touch on several areas, e.g. 360 feedbacks (ditched) and committee-lead decision-making (ditto), but the ones related to societal and political discussions were the ones that cut really deep since they effectively banned them. Left-leaning and progressive media outlets cried foul, while right-wing ones were mostly silent or supportive; as you would probably expect in these crazy, hyper-political times.
But what does this has to do with CEE? I think a lot. Of course, not the actual issues that the US faces currently, from the BLM movement and trans rights to gun ownership, but corporate activism in general. Let it be top-down (i.e. companies forcing policies on employees that they do not agree with) or bottom-up (i.e. employees forcing issues and distinct stands on companies or fellow employees that the latters would otherwise not support). This is very much present over here as well; although one can argue that its current extent is not as overarching as it is in the States. But it is here, and it might get wider soon.
Why is this important? Mostly because people and companies might see their livelihoods destroyed because of this. Based on US examples, and there are numerous, people who “misstep” in the eyes of progressivism or staunch conservitism are to be either reformed (i.e. apologies and fell in-line) or damned (shamed, fired). But to be clear, having strong views and values are good.
However, what I feel is not right, is to force people and companies into behaving or believing in a certain way. The requirement of “thinking the right way” is, as far as I am concerned, is exceptionally nauseating in CEE where communism rained for decades in its darkest, most brutal and discusting form.
What this means in the context of Basecamp? A private company can and should be able to choose (always) what it allows internally and what not, as long as it is transparent about it so that current and future employees can decide themselves whether they want to work there. On this end, I feel that the Basecamp founders are correct. They have the right to decide on banning societal and political talks on company platforms. They have the right to decide who they want to employ; especially when they are open about this and support those who want to leave. And in return, employees also have the right to leave or remain as a response.
But what is not cool, is to preach openess and transparency (which Basecamp did for years) and then suddenly, presumably as interal dynamics started to shift away from the founders liking, introduce harsh measures to counter these. This is a lame move, so it is not suprising that roughly a third of its workforce left.
Any lesson? Walk the talk. Respect other opinions. And do not be a 🍌
Aron, thanks! Entertaining to read, lightweight and well commented ! Looking forward to the 2nd edition!