Budapest Letters #33
๐ 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 #33, 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 ๐
Cheers, Aron
๐ข TL;DR
Top stories this week: โ๏ธ UBS, a Swiss investment bank, aims to acquire Wealthfront, an American robo advisory startup for $1.4B โ๏ธ ICEYE, Productboard, Deepnote and Binalyze raises ๐ต โ๏ธ Czechiaโs Bound set to boost transparency in the startup funding space โ๏ธ Women/Business/Angels expert roundtable discusses the role of women in re-launching our economies
๐ฅ Story of the Week
UBS, an investment banking giant from ๐จ๐ญ, aims to acquire ๐บ๐ธ robo advisory scale up Wealthfront for $1.4B (all-cash deal), pending approvals. While I am not fully suprised about the news, I still feel that it sends a signal to the wider fintech scene that incumbents and old school regulated markets are hard to conquer.
Back when Wealthfront and Betterment, its main local rival, were founded in the late 2000s it was common place to read articles and think pieces in Western media outlets that robo advisory startups will revolutionalize the archaic wealth management industry and will make veteran players run for their money.
Well, after a good decade of competition, the results are in folks and it is pretty clear that none of the upstarts had any real chance of beating out the big guys, like Vanguard or Charles Schwab. Nonetheless, on a more realistic note, maybe this was never meant to happen. The media did what it usually does, it created hype. And most founders just jumped on this narrative, either because they themselves believed they might pull this off or because it simply fuelled growth.
But whatever the reason, it is all good, cause these startups achieved (at least) two valuable things. Firstly, they managed to introduce investments to Millenials and GenZ in a fun and digitally native way, two age groups neglected by incumbents. And secondly, they had proven that robo advisory is in fact a valid proposition, not just a futuristic nonsense that some seasoned investors labbeled it to be.
So what comes next for other such startups (e.g. Moneyfarm, Nutmeg and Wealthsimple), is probaly similar to this story: getting bought by an incumbent. And honestly, it makes sense for all stakeholders. Big players will tap into segments and technology that would otherwise be to costly or complex for them to enter/develop. Startups will scale faster, while also earning a decent monetary reward for years of hard work and efforts. And clients will haver more options to trade and earn, making sure that their money works for them in the long run.
PS: What is up with CEE on this front? Mostly, incumbents developing and investing in robo advisory-like features, in-house. Acquisitions, not so much, due to lack of players.
Show Me Da ๐ถ
๐ ICEYE, a space tech startup from ๐ซ๐ฎ with ๐ต๐ฑ co-founder, received ca. โฌ119M, led by Seraphim (๐ฌ๐ง), with participation from other investors, like Kajima Ventures (๐ฏ๐ต), OTB Ventures (๐ต๐ฑ) and BAE Systems, a UK-based arms and aerospace giant. The startup, that provides government and commercial customers with imagery and data drawn via its synthetic aperture radar (SAR) satellites, will use the fresh funding for expanding its manufacturing capabilities and providing additional resources toward, for example, global natural catastrophe monitoring. ย
๐ Productboard, a product management startup from ๐จ๐ฟ, bagged ca. โฌ110M, led by Dragoneer and Tiger Global, with participation from existing investors, like Bessemer, Sequoia, Kleiner Perkins (๐บ๐ธ) and Index Ventures (๐ฌ๐ง), all global VC royalties; but ๐ฅ news is that local VC, Credo, also participated. The company, that provides a centralised hub for its customers that gathers their own clients feedback (and makes it possible to act on them), will use the money to boost its product offering and solidify its market presence. But before that, I am sure the team will pop ๐พ to celebrate their ๐ฆ status, which they now reached ๐ฅณ
๐ Deepnote, a data science startup also from ๐จ๐ฟ, snatched ca. โฌ17.5M, led by Index (๐ฌ๐ง) and Accel (๐บ๐ธ), with participation from earlier investors, like Credo (big week for them) and Y Combinator (๐บ๐ธ). The startup, that offers a cutting-edge data science notebook for professionals, will use its funding to expand on all fronts.
๐ Binalyze, a cybersec startup from ๐ช๐ช, nabbed โฌ9.1M, led by Open Ocean (๐ซ๐ฎ/๐ฌ๐ง), with participation from Earlybird (๐ฉ๐ช). The company, that offers its clients an enterprise forensic platform, will use the money for US / European expansion.
๐ Additional investment news that you should know about:
Treblle (๐ญ๐ท) nabbed โฌ1.2M, led by Nauta Capital - more here
Workee (๐บ๐ฆ) received โฌ600k, led by Lighthouse Ventures - more here
MyCointainer (๐ช๐ช/๐ต๐ฑ) bagged ca. โฌ5.2M from Maple Block - more here
CENOS (๐ฑ๐ป) secured โฌ1M from Startup Wise Guys and Capitalia - more info
๐จ Startup Alert
This weekโs startup alert is on Bound, a business matchmaking platform for startups and VC firms, that was recently launched in ๐จ๐ฟ by Pavel ล รญma, who also happens to be the founder of another local startup, Roivenue.
Boundโs proposition - as per the companies site - is rather simple: โRead anonymized yet verified reviews and ratings from other (startup) founders + discover the area of focus and track record of every VCโ. But it is also very much relevant.
According to ล รญma (per EU-Startups), the problem his startup aims to tackle is the following: โFirst-time founders quickly learn that raising money is the easy part. Selecting the wrong investor is not just a huge waste of time and effort, it can actively hurt your chance of success. But when you have incredibly rich data, with all the different VC signals in one place, and combine it with user reviews, we are rebalancing the market towards founders, making them more likely to succeed in the long run.โ
๐ง Food
Some of you might recall that in past issues (several times) I wrote about the status of women in entrepreneurship and venture financing which is, to put it mildly, less than ideal. But if we are honest, it is just downright shameful.
No matter the many obstacles women face at work (e.g. pay gap) and in private (e.g. most responsibilites with kids) that we are all too familiar with, progress is super slow. That is why it was refreshing to listen to this international expert roundtable discussion organized by Women/Business/Angels, a Hungarian non-profit championing angel investing and the role of women in it. Here it is:
I do not want to summarize all the presentations and arguments of speakers, you should check it. But I do want to say - referencing Janina Lamรธyโs words of Innovation Norway - that meaningful change is not only about โsupporting women in the world of men but the need to build diverse ecosystems, diverse workplaces and diverse enterprisesโ where women can thrive. For this, the participants offered many insights backed up with data, so the only thing is to execute. And we should.
Because we could all benefit!