Budapest Letters #39
👋 Hi All! Great to have you back. Hope you had a great past week and very much look forward to this upcoming one. 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. Enjoy!
Before we jump into edition #39, 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: ✍️ Fast, a one-click checkout startup from 🇺🇸, and The Family, a startup incubator / investor from 🇫🇷, are both in severe crisis after alleged shady practices from co-founders ✍️ Wert and Better &Better raised 💵 ✍️ Poland’s Netguru acquired minority share in US rival ✍️ Greece’s Woli aims to make it big in the family banking space ✍️ Lucia Cerchlan and Nikita Andersson, two young and talented investors focusing on the Baltics and CEE, wrote a brilliant overview of the region’s startup and investment history
🔥 Story of the Week
Despite that the majority of news here is uplifting and positive - and rightly so, as I do believe that most entrepreneurs are honest, hard working and well intentioned - last week the global startup ecosystem showed its nastier face.
Fortunately, none of the stories below involved CEE but it is still important not to miss these because the 👿 never sleeps. Especially, when even one fraudster can give bad press for an entire scene and fuel negative sentiments towards it; which is more true for this region, where entrepreneurship is still developing.
Starting out with the 🇺🇸 and the story of Fast, a 1-click checkout startup. Founded in 2019 by Dominic “Domm“ Holland and Allison Barr Allen the startup quickly became a darling of US business media, raising more than $100M and was said to be close to achieving 🦄 status, maybe even IPOing. But this will not happen.
Instead, Fast will probably go bust or will be sold after the Information (link above) reported that the company made a meager $600k in revenues last year, against burning ca. $10M / month and having 500+ (!!!) employees. Sure, the signs were there from the start, at least with Holland, just read this from NPR. Bad stuff.
Nonetheless, it is sad to read about this knowing that the consequences will largely fell on good people. Employees. Partners. Clients. Remember this guy?
Not Oscar winning actor Jared Leto, of course. But disgraced WeWork co-founder and CEO Adam Neumann, who he portrays in wecrashed, a series on Apple+. Holland is a bit like Neumann. Self-proclaimed thought leader, business visionary a.k.a. serial bullshiter but who, in the end, managed to fake it till he made it.
So Fast will go down soon, people will loose jobs and livelyhoods which is heartbreaking, even if temporarily, and Allen and Holland will be rich 👎
Moving on to Europe, and 🇫🇷 to be precise, where hyped startup incubator / founder community / VC fund The Family is in crisis. Founded in 2013 by Alice Zagury, Nicolas Colin and Oussama Ammar, the company managed to raise $25M from the likes of Index Ventures and Hummingbird Ventures, and invested in 200+ startups across the globe; mostly in France and Europe. All good, right?
Well, at least not from last Monday it isn’t. As per Zagury, Ammar siphoned $3M off their own company without explanation so in order to recover this money, they are hiring lawyers (+ PwC) and taking their case to courts. Ouch. Although important to note, Ammar is challenging claims and feels no responsibility.
Personal take: until proven guilty by law, both Ammar and the co-founders of Fast need to be considered innocent. Still, these stories look really, really bad.
Show Me Da 💶
👏 Wert, a crypto startup from 🇪🇪, raised ca. €4.5M, led by Tagus Capital (🇬🇧), with participation from other investors, like Element Ventures (🇬🇧) and VR Ventures (🇩🇪). The startup, that enables the purchase of cryptocurrencies via any mobile application or website, will use the fresh money to expand and fine-tune its tech.
👏 Better & Better, an oral health care startup from 🇺🇸 with 🇷🇸 founder, bagged €3.6M from the likes of Fifth Quarter Ventures and Dreamers VC. The company, that makes natural and vegan toothpaste, vitamines and toothbrushes (most from organic sources), will use the new capital to boost its presence in the US.
👏 Netguru, a software development startup from 🇵🇱, took part in an undisclosed 8 figure investment into Pilot44, a well regarded US corporate innovation studio. The investment, which guarantees Netguru a significant minority stake in Pilot (with the aim of acquiring it fully in next years), will accelarate the Polish startups US expansion + will support its aim to better serve its large Corporate customers.
👏 Additional investment news that you should know about…
Sofia Angels Ventures (🇧🇬), an EIF backed venture fund took part in Hoting Innovations (🇸🇪) €3.5M seed round: more info via Trending Topics
Madalina Seghete’s (🇷🇴) startup Branch, founded/based in the US, valued at $4B after raising $270M earlier this year: more info via The Recursive
Machina (🇺🇦), a newly launched investment firm aims to invest between $50M to $100M in Ukrainan startups and SMEs: more info via AIN
Nexo (🇧🇬), a startup making crypto investments traditional finance friendly, launched Nexo Ventures, a $150M investment fund for Web3, DeFi, NFT and metaverse projects: more info via Trending Topics (TT)
Congrats to all!
🚨 Startup Alert
This week’s alert is on Woli, a fintech startup from 🇬🇷, backed by Bulgaria’s Hristo Borisov (Payhawk) and Eleven Ventures, among other regional investors, in a fresh €700k seed round that hopes to accelerate the companies European expansion.
According to the startup, its family finance app and debit card is designed for kids (10-18 year old, typically), co-managed by their parents. The app’s main feature, besides banking regulars, are financial education via fun quizzez.
Looks and feels cool, if you ask me. Wish them the best, although the European family banking space is pretty crowded with the likes of Revolut Junior, Starling Kite, RoosterMoney, nimbl, HyperJar and of course, goHenry. But never know.
🧠 Food
Nothing from me here this week. Instead, hopp over to Medium and read Lucia Cerchlan’s (LUMUS Collective) and Nikita Andresson’s (Hummingbird Ventures) brilliant piece on startup history á la CEE / Baltics, called “From Seeds to Unicorns: A History of Startups and Investing in the Baltics and CEE“. Great stuff!