Budapest Letters #25
👋 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 #25, 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: ✍️ Rohlik, the Czech online grocery startup, announced that it will enter three new markets under a unified brand: Sezamo ✍️ Packhelp, Leanpay, Mindsmiths and Okredo raises 💵 ✍️ Lithuania’s LitBAN shows how the post-socialist business past can be overcome ✍️ CEE banking consolidation that was talked about for years, without any seismic changes, might have started
🔥 Story of the Week
Rohlik, an online grocery startup from 🇨🇿, announced that it will enter new markets in Southern Europe (Romania, Italy, Spain) under a unified name: Sezamo. This is a big milestone for the Czech company since it currently operates under 4 different names in its markets (Rohlik – Czechia, Kifli – Hungary, Gurkerl – Austria, Knuspr – Germany). According to Jakub Petřina (CMO) the new name was chosen:
“because (…) in these countries, Romance and Romance languages are spoken. We wanted to continue to use a word that referred to a food as a brand. Sesame seed is popular in all cultures (…)”
The startup unicorn that was valued at the magical €1 billion threshold this summer, after 2 monster investment rounds in ca. 3 months apart, serves roughly 750k customers and generates €300M in revenues, as per its 2020 financials. But this expansion will surely boost these numbers, solidifying Rohlik’s place as one of the pre-eminent online grocers in Europe, competing with big Retailers.
Show Me Da 💶
👏 Packhelp, a packaging startup from 🇵🇱, received €40M, led by Infravia Growth (🇫🇷), with participation from Portfolion Capital (🇭🇺), FJ Labs (🇺🇸), the European Investment Bank and existing investors, including Market One Capital and Inovo, local VC firms. The startup, which operates a custom packaging design platform used by both small and large businesses (e.g. H&M Group), will use the fresh funding for expansion within Europe, where it already serves 50k clients.
👏 Leanpay, a buy-now-pay-later startup from 🇸🇮, bagged €2.5M, led by 🇭🇺 VC Lead Ventures. The company, that offers an instalment payment solution to customers á la Klarna, will use the newly raised sums to grow its current Slovenia/Croatian user base across CEE, starting out with Hungary in 2022. The move makes absolute sense since global players are not super active here.
👏 Mindsmiths, an AI startup from 🇭🇷, nabbed €1.2M, led by Feelsgood Capital, a local VC firm. The startup, that operates a platform which enables the building of autonomous systems (i.e. systems that can accomplish tasks, achieve certain goals or interact with their surroundings with limited to no human involvement = Skynet sends love 🙃 ), will use the new money to fine-tune its tech and expand.
👏 Okredo, a BI startup from 🇱🇹, received €1M, led by Presto Ventures and Business Angels Fund, with participation from various local angels (many via LitBAN) and Startup Wise Guys. The company, that helps (typically) SMEs in assessing the financial credibility of their business partners (i.e. which of them will pay on time), will use the funding to enter Latvia, Poland and the UK. But considering that late payments is an issue everywhere, Okredo’s future seems bright.
🚨 Startup Alert
This week’s alert is yet again not on a startup but on LitBAN, or as it is better known the Lithuanian Business Angels Network, one of Okredo’s investors.
I profile them because of two reasons: Firstly, for me, LitBAN shows that close cooperation within a given small country / investment community can boost not only the success of individual members but the overall community’s. More cooperation means more money that equals more success and visibility for all.
And secondly, in an ex-planned post-socialist economy in which angel investing, entreprenuership and the likes are still not common place, having a professional organization that promotes and accelerates these developments are…
So what LitBAN is doing, I feel, is trailblazing work and thus, if successful, could serve as best practice example for other CEE startup investor communities.
🧠 Food
Financial media pundits, industry insiders and politicians have talked about an imminent CEE banking market consolidation for years. However, until mid to late 2020, nothing seismic happened in this realm. But then in was announced that 3 big Hungarian banks (MKB, Budapest Bank, Takarékbank) will merge and create Magyar Bankholding, an umbrella entity, that will become no.2 on the market; do not worry, the new bank will get a proper name in ca. 2023 😀
In parallel with the news from Hungary, it was also announced in Czechia that Air Bank and the local Home Credit operations (both owned by Czech financial and investment giant PPF Group) will merge with Moneta Bank, creating the third biggest financial services company on that market. Truth be told, for quite sometime it seemed that the deal might fell through but now it seems sealed.
And lastly, just a few days ago, it was revealed that KBC Group, a universal banking group from 🇧🇪, will acquire the Bulgarian arm of Raiffeisen for ca. €1 billion, making it one of the largest players on the local market.
So consolidation time might have actually arrived to CEE and that is great news for customers. Better products and services, lower fees, accelerated digitalization could come from increased competition that most markets did not see, like, ever.