Budapest Letters #21
👋 Hi All! Great to have you back. This is Budapest Letters, my newsletter covering startup and small business stories from the CEE region, or interesting developments that might have something to do with this part of Europe. Hope you will enjoy it!
Before we jump into edition #21, big shout out to our new subscribers, good to have you here. And one more thing before we roll, if you like what you read, subscribe + share 🙏
Cheers, Aron
📢 TL;DR
Top stories this week: ✍️ Dealroom.co published the most structured and in-depth reports on the state of CEE startups ✍️ Vue Storefront, Grünfin and Billo raised 💵 ✍️ Debitum is revolutionizing SME finance (or investing, depending on your stance) ✍️ Hungarian startup ecosystem: A tale of two distinct narratives
🔥 Story of the Week
A new report produced by Dealroom.co, in partnership with Google for Startup and Atomico, called “Coming of age: Central and Eastern European startups“ sheds - for the first time in a structured and in-depth manner - light on the regions stunning entrepreneurial performance in the past ca. two decades.
Thanks to this progress, CEE and its companies are now attracting major attention both from global investors and media outlets. And rightly so.
According to Dealroom’s data, the regional ecosystem now houses 34 unicorns (e.g. Bolt, UiPath, Rohlik and Pipedrive) with a €186 billion total valuation.
Awesome news and report. You should give it a go. CEE rocks, officially!
PS: As an additional teaser, here is Andris K. Berzins (Partner @ Change Ventures) interesting Twitter thread on the report, from a Baltic perspective:
Show Me Da 💶
👏 Vue Storefront, an e-commerce software startup from 🇵🇱, received €15M, led by Creandum, with participation from Earlybird Ventures and Paua Ventures. The startup, that provides a cutting-edge frontend solution for e-commerce businesses that can easily connect with any additional e-com systems (e.g. main engines, like Shopify or Magento), will use the fresh funding for expansion.
🧐 Personal take: Barely 6 months passed since Vue raised its first major round from Y Combinator, the legendary 🇺🇸 startup accelerator, and two well-known local VC firms (SMOK and Movens Capital), but here we are. The companies growth is very strong, fuelled chiefly by the COVID pandemic’s few positive effects: small business (SMB) digitalization. Both old and new businesses are setting up shop in the digital sphere like crazy because that is where the majority of customers are. Offline and online sales will soon be balanced in the SMB sector, and in some cases already are, with online - I believe - taking an even bigger part in the next 3-5 years. Due to convenience, safety and lower prices.
And given the fact that Vue’s solution, that can connect with any popular backend e-commerce systems with ease, is perfectly positioned to be a big winner here.
👏 Grünfin, a newly launched investment platform from 🇪🇪, bagged €2M, led by Norrsken VC. The platform, that lets users select the best sustainable exchange-traded funds that consider ESG (Environmental, Social, and Governance) factors as well as UN sustainable goals, will use the money to boost its user base.
Important note: Grünfin was founded by two highly talented women, Triin Hartman (ex-Head of Operations at Wise) and Karin Nemec, an ex-Swedbank banker, whom, btw, are also parents. Inspirational story!
👏 Billo, an adtech startup from 🇱🇹, nabbed ca. €1M, led by SOSV (🇺🇸), with participation from Open Circle and 70 Ventures, two local VC firms. The startup, that connects businesses with content creators (i.e. cutting out ad agencies), allow e-commerce brands to directly publish creative projects to its 3,000+ creators.
Congrats to all teams!
🚨 Startup Alert
This week’s alert is on Debitum from 🇱🇻, a fintech startup that operates a P2B (peer-to-business) platform that lets regulator retail investors (a.k.a. you and me) invest in SMEs via collateralized business loans. Cool stuff for both parties.
How it works is pretty straigthforward from an investor side:
Create a Debitum investment account (personal ID or passport + some information on financial status + valid e-mail address - that is it);
Top up account with money (only in EUR) - min. amount €50, currently;
Search through verified business and lending options available for investment via the platform (important: provided by loan originators);
Invest
For me, the key adventage of Debitum seems to be that the loan offers on its marketplace are from loan originators, not from businesses directly. And it is also a plus that all of the business loan options are collateralized (personal guarantee or actual collateral, like property or inventory). Of course, these are still SMEs and a competitive investment platform so there are no safe bets. Still, as I see it, Debitum is among the most secure and legit European fintechs in this space.
🧠 Food
This week’s brainfood section is more of a personal note since it focuses on Hungary’s startup performance based on the new Dealroom report on the CEE ecosystem that we already discussed above in the “Story of the Week” section.
Depending on what you prefer in relation to 🇭🇺, the glass can be seen as half empty or half full. You could argue that the former is the case and point out that Hungary has no unicorns or soon-to-be ones (Prezi is labelled as such but I do not feel the momentum there - but maybe they will prove me wrong) and its rising stars market is also slightly weaker than others in the region; although the players here, like Shapr3d, Bitrise, AImotive or Seon are as competitive as you can get.
Additionally, as a less than positive attribute, one could also mention that the leading and most active local VC investor is Hiventures, an investment fund backed fully by the Hungarian government. No Skype-like maffia here, sadly.
But on the flipslide, one could argue that the glass is half full because there is a more than decent rising star startup market with great, forward-looking and globally oriented entrepreneurs and companies that all could go big. Really big.
It is also great news that famous international VC firms discovered this market and invested in several players, like Creandum (in Shapr3d, Seon and Craft) and Partech (in Bitrise and Commsignia), while Prezi, one of the OGs of the local startup ecosystem, is still going strong. And, while not having Skype or Wise-like success stories, ex-founders of EPAM, LogMein and Ustream are re-investing their money (+ their know-how, which might be as important) in local companies.
So the future of Hungarian startups are a bit bleak or bright compared to others in the region, as you prefer. But one is for sure, there is one. And that’s good.