Budapest Letters #6
👋 Hi All! Welcome back. Hope you had a great past week. Before we jump into this week’s edition of Budapest Letters, as always, big welcome to our new subscribers, great to have you with us! One more thing before we get rolling, if you like what you read, subscribe (if you had not done it) and share it with friends. Cheers, Aron
📢 TL;DR
This weeks main stories are as follows: ✍️ EU announces plan to launch a digital identity wallet for the whole bloc ✍️ Recart, Lightyear and Ydistri bagged nice little sums to expand and make their product better ✍️ ProductLead aims to democratize access to social content creation ✍️ Latvia going “all in” on startups
🔥 Story of the Week
The European Commission announced plans to launch a digital indentity wallet that would make it possible for EU citizens to access public and private services with much more ease, anywhere within the bloc. This is big news. Also, according to the Commission, the initiative could create ca. 27k new jobs, generate € 9.6 billion in benefits and save a ton of paper because as we all too familiar, public services across the EU (but especially within CEE) are still mostly paper-based.
Win, win, win.
🧐 Personal take: Honestly, I am super impressed by this project. If the Commission can really pull this off, it could reap huge rewards. A harmonized digital process across 27 nations could lead to reduced paper usage while providing a more efficient and fractureless experience for getting a new job anywhere in the EU (+ hassle free relocation). This could really boost the actual free movement of people, unlike anything we saw in the past.
Nonetheless, as we are talking about a European-wide initiative, a cautious approach is probably due. And I have three reasons to back this up:
Until we reach panacea (i.e. an actual digital identity wallet supported by all EU members states) the Commission needs to plan, discuss and approve the whole system/process with all member countries. Not an easy ride.
Even if this happens within a realistic timeframe (e.g. in 2-3 years time), implementation could add additional time to final delivery since ca. 50% of current EU member states already have some kind of a digital indentity.
Adoption and success will largely depend on usability and scale, but in this regard, if the planned digital vaccine passport (for COVID) will go down well with EU citizens, than I am sure all other functions will be well received. So fingers crossed for this not to crash into the ground, before even flying.
Show Me Da 💶
👏 Recart, a mobile marketing platform from 🇭🇺, bagged €2.8M fresh funding (mainly) from Lead Ventures, a local VC firm. The company, that helps webshops by convincing their customers to complete abandoned purchases (via real-time behavioural data analysis), aims to use its fresh liquidity to enhance its core solution, boost sales, increase its development team and expand in the US.
👏 Lightyear, a soon-to-be-launched stock trading app from 🇪🇪 founded by former Wise employees, got €1.2M investment to make sure it can deliver on its promise to create a truly commission free stock trading app. According to its founders, Lightyear will drastically reduce the barrier of entry to investing and banish the usual high fees, hidden costs, and complicated nature of investing. Promising.
👏 Ydistri, an inventory management platform from 🇨🇿, secured ca. €2.5M in fresh money (among them Márton Szőke from 🇭🇺, ex-founder of Indextools, a startup acquired by Yahoo - long live intra-CEE investments) to help its expansion to new markets. The startup supports companies (small and large) in managing inventory better via reducing dead product stocks (i.e. make sure to hold only what it sales).
🚨 Startup Alert
This weeks alert is on ProductLead, a marketing technology startup from 🇷🇴 that provides cutting-edge content creation solutions for businesses that want to make it big on social media. In practice, the startup is helping companies to adapt their advertising campaigns by leveraging user-generated content and activating social media influencers through automated tools. A super hot topic at the moment.
The raised capital is said to enable ProductLead to strengthen its partnerships with major players in (typically) e-commerce, and enhance its marketplace and tech marketing tools further. But the fresh funding will also help it to speed up its development process by entering foreign markets (CEE, DACH and Nordics).
🧐 Personal take: In a world that is rapidly changing in terms of technology and customer attitudes, the role of marketing is probably more important than ever. Making sure to stay adaptive and relevant while meeting customer needs is a huge challange for business, both large and small. And this existing trend was just accelerated by COVID which forced the overnight digital transformation of numerous companies, especially in financial services. This pressure cannot be sidelined so what ProductLead’s offer solves a real and growing business need.
🧠 Food
The development of the startup ecosystem in Latvia seems very impressive. In sum, the Baltic nation recently announced the need to establish a startup support policy and a dedicated fintech strategy, aiming to cement the countries place among the most startup friendly EU nations. The ambition follows Estonia’s path, its neighbour already known for having a trail blazing approach to startups.
But the country will really put special emphasis on fintechs by introducing the following instruments: 1) Innovation Hub, an open-doors consultative competence body for any fintech at any stage of its development to receive free consultations on the regulation, licensing process, AML framework, IT security management of their company. 2) Regulatory Sandbox, a tool for fintech prototypes to test their business models, innovative financial services in a regulatory environment, while simultaneously being given the flexibility to go through the licensing process. 3) Innovation Center.
🧐 Personal take: It is breathtaking to see how the Baltic region transformed itself from a poor ex-Soviet territory into one of Europe’s most technologically advanced places. It started with Estonia but know both Lithuania and Latvia is catching up. Although they very much follow a similar rulebook, the fact that all of them are making progress and continuously produce big wins (i.e. they now have more tech unicors than all other CEE countries, combined), proves their case.
There is much debate in the region’s larger countries (like Romania, Czechia and Hungary) on how to become European innovation hubs or startup capitals, and the discussion - at least in my experience - mostly goes into the “let us learn from Silicon Valley (or the UK or Israel or China)” but rarely goes into the “let us learn from the Baltics“ direction. Of course, learning anything from the former ones can also have a positive impact on the local ecosystem. However, as I see it, learning from the latter can have an even bigger impact because the Baltics are us.
They are also former satellite countries of the Soviet Union that had weakish institutions, mid- to high corruption levels and legislation (+ government bureaucracies) that were not supportive of competitive business environments. What did they do about it? They changed it. Plain and simple. They are looking forward and are executing. Not just talking, like many other CEE govs like to do.
So dear politicians, government bodies and business founders across CEE, let us start learning the Baltic way. We could all benefit from it. It is proven.