Budapest Letters #2
๐ Hi All! Great to have you back. I hope last week was fun and well spent. Before we jump into this weekโs edition of Budapest Letters, I would like to extend a very warm welcome to our new subscribers, great to have you on board! Only one more thing before we get going, if you like what you read, subscribe (if you had not done it) and share ๐
๐ข TL;DR
This week we will touch on the following stories: โ๏ธ The annual FT 1000 list is out with several CEE companies making the Top50 โ๏ธ Funderbeam, Whalebone and the Lithuanian fintech scene received some serious sums โ๏ธ Strive launched a crypto-focused piggy bank for kids โ๏ธ About 2.2bn people (ca. 65% of the global workforce) are not saving for retirement according to PwC, a Big4 consultancy
๐ฅ Story of the Week
While it is not fresh news, the annual FT 1000 list that was published in March is still a topic worth examining. On the one hand, because it gives a good glimpse into where European businesses and industries are heading - or to put it simple, you can understand what is hot and what is not, where it is wise to consider investments and where not. On the other hand, it also provides a good benchmark regarding how various parts of Europe fair vs each other, in terms of innovation and business performance. So how the CEE region compares to the others?
Well, depends on how strict you are. In terms of raw numbers, the Top50 looks like this per countries: 1) ๐ฌ๐ง (15 biz), 2) ๐ฉ๐ช (11 biz), 3) ๐ฎ๐น (5 biz), 4) ๐ซ๐ท ๐ณ๐ฑ (4-4 biz), 5) ๐ช๐ธ (3 biz), 5) ๐ธ๐ช ๐ช๐ช (2-2 biz), and 6) ๐ต๐ฑ ๐ง๐ฌ ๐ฑ๐ป ๐ฆ๐น (1 biz, each). This translates into 5 companies for the CEE region which makes it on pair with Italy. If you see the glass half empty, this is obviously not a great achievement; even more so considering that the Netherlands, a much smaller country than Italy, is almost on pair with this result as well. But if you see the glass half full, which I prefer to do, one can argue that the region made a decent progress from the 2 companies it gave to the Top50 back in 2017. Especially, if you team this up with the fact that CEE provides more companies to the overall list than ever before. And this years No.2 went to Sun Finance Group, a Riga-based digital consumer lender.
๐ง Personal take: Despite being considered as the slight oddballs of Europe, the former Eastern Block (= CEE) made great progress in the past 5 years when it comes to enterprise building, attracting capital and providing talent to the West. But what is better, many of these aspiring, high-growth business are now able to make it big even from the region without the need to relocate somewhere else, like the US. Of course, and let us not kid ourselves here, moving operations to San Francisco or New York and making gains on that market is still another level.
However, there are already positive examples that there is no need to cut the roots and move everything to the US to make it, because capital will find the good projects even here. And this is great news since the success of these companies can and will lift up all the other companies locally and in the region.
Nonetheless, this will not happen only thanks to the companies themselves, we ourselves (as individuals, the larger societies and the government) need to change as well. Crony capitalism, shady business dealings and the grey economy are all widespread notions in the region. But progress is happening, let us accelerate!
Show Me Da ๐ถ
๐ Funderbeam, a Tallin-based startup (๐ช๐ช), received โฌ4M from legendary US investor Tim Draper, while it also teamed up with Startup Wise Guys, a well-known local startup accelerator. The fresh funding and this partnership will help the popular Estonian equity fundig and trading platform to reach new heigths.
๐ Whalebone, a startup from Brno (๐จ๐ฟ) that provides cybersecurity solutions for internet providers (i.e. mostly Telco companies), bagged $3M from a group of investors led by Day One Capital, one of the leading ๐ญ๐บ VC firms.
๐ Launchpad Capital, a US-based early-stage venture capital firm, intends to use a chunk of its newly launched $35M fund to invest in Lithuanian fintechs. According to the company, its investments will range from $100k to $2M. This is big news for ๐ฑ๐น and a huge nod for the local startup scene, especially fintechs.
๐จ Startup Alert
Strive, a specialized UK challenger bank that focuses on kids (age 5 to 12), unveiled a new product called โPenny the Pigโ which, according to the them, is the world's first child-friendly physical piggy bank that integrates with leading cryptocurrency wallets and are combined with an accompanying app for parents.
The company, that is developed by ff.next (๐ญ๐บ) and GoSave, a startup the former acquired last year, also offers educational materials for young ones so that they can learn more about NFTs, cryptocurrencies and smart contracts. Sounds ๐ฅ
๐ง Personal take: Cutting-edge digital solutions. Fintechs. Financial education. Youth. These themes separately attract attention and money. But putting them together, plus adding a nice little crypto coating to it, is the true nirvana for investors. The holy grail, if you will. So the Strive team, at least as I see it, are on to something here by adding all these up in a neat product that kids might love.
Of course, the youth digital banking space is also getting crowded with some heavy hitters already present on the US/UK markets (e.g. Revolut Junior, Starling Kite, gohenry, Step, Greenlight, BusyKid) but what Strive is offering, that is something unique. A digital app and a cool hardware. Fun collectibles and financial education that points to the future. They are surely a fintech to watch.
๐ง Food
According to PwC, a Big4 consultancy, there are an est. 2.2. billion employees (65% of the global workforce) who do not save for retirement, at all. This is obviously a huge problem for governments since they need to figure out a way to โsupportโ more and more elderly with less and less contributions from citizens. On the flip side, this is a big market opportunity for banks, wealth management firms and fintechs to encourage the people not yet saving and investing to do so.
How can they do this? Well, it is surely easier said than done. Financial literacy programs might help. Simple digital apps and tools that encourage saving and investing might help as well. But changing behavior voluntarely by understanding the need to do so is hard. Even more so when lots of people (unfortunately) have some level of financial troubles. And when ones goal is making ends meet, contemplating about savings and investing in Tesla are not top priorities.
Fortunately, there are positive signs that some challenger banks, at least on the other side of the Atlantic, might be able to crack this problem. One is Current, that raised monster rounds in the past 1 year ($131M and $220M, respectively). And the others are Fortรบ, that targets the unbanked and underbanked Hispanic communities, and First Boulevard, that does the same for Black Americans.
So great examples are out in the open, let us hope CEE will have its own Current or First Boulevard soon, all our societies could benefit from such a proposition.