Budapest Letters #40
👋 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 #40, 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 the 🇺🇸, is officially going bust after raising $100+M in the past 3 years ✍️ Nord Security, Mindgram and Kwota raised 💵 ✍️ Czechia’s Fondee aims to make the very conservative investment approach of Czechs a thing of the past ✍️ Despite the successes of the past few years, many 🇪🇺 founders are still relocating to the US
🔥 Story of the Week
Hm, this escalated quickly…
As I wrote last week, per a story by The Information, one-click checkout startup Fast is experiencing deep financial troubles (i.e. burning $10M / month while making 600k total revenue in 2021) and it might as well go bust. Well, it did.
Not suprisingly, Twitter was flooded with people either going after the startup’s two founders (Dominic “Domm” Holland and Allison Barr Allen) or vehemently defended them. Latter group made arguments like “building startups are hard, going bust is always a possibility“ or “don’t blame founders, they tried and hustled but did not succeed which is natural for startups“. True gems. 😒
But if I drop the sarcasm, sure, failing is natural for startups. Heck, most does not even reach Year 1. Not to mention Year 3 or raising 100+M from investors, like Fast did. Nonetheless, one must also acknowledge that its founders (at least Holland, surely) is a shady character who could only thrive because the market environment let him do so. Biz media and investors, especially in the US, adore eccentric, larger than life founders and Holland delivered this. In addition, in the past ca. 10 years money was not an issue. It was plenty. Fortunately, not anymore.
Building a company, serving clients, employing people are serious stuff. It is no joke. It is nothing to mess with or take lightly. Founders need to learn that luxury life (blings, billions, Forbes covers) should not be the goal. It should be a side effect, if all goes swell. But even then honesty and integrity should be kept. Dominic Holland and Allison Barr Allen forgot this. Reality reminded them.
Show Me Da 💶
👏 Nord Security, a cybersec startup from 🇱🇹, raised ca. €92M, led by Novator Ventures (🇮🇸), with participation from Burda Principal Investments (🇩🇪) and General Catalyst (🇺🇸). The startup, whose flagship product is NordVPN, will use the fresh funding to extend its product offering and fuel its global growth.
🔍 Fun fact: This was Nord Security’s first ever investment round. The company was boostrapped until now. For 10 years, to be exact. Mad respect. Oh yeah, and with this additional funding the company is now vauled at $1.6B = 🦄 (!!!)
👏 Mindgram, a healthtech startup from 🇵🇱, bagged €7M, led by Credo Ventures (🇨🇿), with participation from PortfoLion (🇭🇺), Pamoja Capital (🇨🇭) and local VCs Market One Capital and Nunatak Capital. The company, that provides a mental health platform for corporate employees, will use the money for intl. expansion.
👏 Kwota, a cleantech startup from 🇪🇪, snatched €1.5M, led by Change Ventures (🇪🇪), with participation from a sleuth of - mostly - local investors, incl. Startup Wise Guys and Lemonade Stand. The startup, that offers digital validation and trading of recycled material CO₂ emission savings, will use the funding to expand.
👏 Additional investment news that you should know about:
Overview of global investors behind SEE startups via here
🇷🇴 to launch a €400M fund of funds with the EIF - more here
🇧🇬 to allocate €700M for innovations via EU recovery - more here
Congrats to all!
🚨 Startup Alert
This week’s alert is on Fondee, a fintech startup from 🇨🇿, that offers a digital investment platform for users looking to put there money to work; instead of saving it under the pillow (not smart) or keeping it in bank accounts (same).
How Fondee works is simple (i.e. pretty standard robo advisory approach): for starters, after signing up via mobile or desktop, you are asked a bunch of questions that assesses your risk profile. When this is done, you are able to choose an investment portfolio (out of 7 pre-set portfolios) that best suits you. And then you invest your money in this and the platform does the rest.
Portfolios, btw, are loaded with a different share of bond and equity components depending on risk tolerance and investment experience. Easy Pease.
PS: Another Czech investment platform that you should all keep an eye out is Birdwingo, the startup that was formerly known as Tatrym. And not only because their site is 🔥
🧠 Food
Sifted published an interesting piece by Selin Bucak on why European founders are relocating their startups to the US. In sum, while reasons vary, most entrepreneurs noted the larger addressable market (thanks to common language and business environment, unlike the EUs) and the possibility to raise more 💰.
Of course, this is nothing new. Articles, reports, industry analyses are plenty that echoed this sentiment in the past but in the last few years the European startup scene really seemed to catch up with the US. In terms of unicorns and VC money, at least. Sadly, despite positive developments, it is still not enough. Thankfully, there is no shortage of worthy ideas and suggestions on tackling the issue, let it be from European founders or politicians. But as usal, on results, we are failing.
So what shall we do then… well… Gordon has the answer: