Accelerators for startups in Europe

Speaking of Europe vs Silicon Valley, it looks like YC increased the number of Euro founders they took into their last batch (26).

What the article doesn’t say is that YC actually is aggressively scaling its operations - just look at the size of the staff (I’ve been saying it for a while). And scaling includes increased scope and size of their school as well, which is a great funnel towards the YC accelerator.

YC is free of charge, open to anybody and competes directly with the local accelerators that matter in Europe, which, in turn, rather focus to convert corporate heads into startup people than having an all-inclusive approach.

In other related news, there is another American accelerator which notably hired two employees to do sales on the European grounds. Their model is different though as they require customers pay for materials and network, and upon graduation may get funded.

Cloning race heating up

It looks like the cloning race has gotten amped up a notch in Europe.

After a timid German start with classic pre-seed announcements, noted in last week’s email, two Italians based in London announced securing funding of $65 million in debt and equity for building a business aggregating Amazon’s SKUs operators.

And just as the week was ending, some of the Germans rebounded and announced adding $25 million to the table (includes a credit line, which is important).

If you’re curious like me, you can read the announcement of one of their investors, which probably is copy/pasted from the investment memo.

It doesn’t say anything else than hope and wishful thinking. I truly wish we could see this type of investments in Europe more often, funding this kind of risks is what makes an investor to be different than a money manager.

But, realistically speaking, this is less of a conviction investment - the likely hedge to putting so much money in a pre-revenue, pre-product, pre-everything, is the fact that the founders just need to copy an already existing blueprint and they were previously employed by McKinsey and Rocket Internet. How badly can they screw it up, right?

Also, you may find handy to learn that Amazon has 65k 3rd party sellers and operates 100k EU marketplaces and some numbers to crunch if you’re into evaluating TAM.

Oh, and there’s also a great interview with the Thrasio CEO, the guy who had the vision, executed it and now is an inspiration for the entrepreneurs part of the Euro ecosystem that wants to compete with Silicon Valley.

The fast unicorn

I am not the type of guy who gets excited about uni or deca or uber corns from Europe or elsewhere, that’s investors job. I am more into interesting stuff built by smart people.

And what Hopin has been doing is nothing far from remarkable for an European startup - if we’re still considering Brits as Europeans, that is. :-)

In 18 months to build something from 0 to 3.5 million users and 50,000 customers bringing in $20M in ARR - this is really inspiring for any founder aiming to build products people want.

Sure, corona played its factor and the timing was perfect, but it really doesn’t matter. Execution does.

It’s true, the $2.1bn+ valuation is a bit too high for a 20 mill a year business, but it factors in the upside, the execution and the demand - investors have not had too many opportunities of this kind in their career in Europe.

The Germans pulling a Rocket Internet. Again.

A hot thing in Germany is investing in aggregators of Amazon-based, small retailers. The trick is to find the top-reviewed, bestselling essential everyday products on Amazon, and buy the brands from the small business owners selling them.

You then build a platform aggregating the products and can have a good DTC op in place with nice economies of scale.

It is a smart insight, the long tail of Amazon is huge and there are a lot of unsung heroes of businesses doing seven figures this way, just out of Amazon infrastructure, which charges about 30% for all the overheads.

Now, don’t imagine for a second that the Germans had this insight or invented something on their own - far from it, they simply pulled a Rocket Internet and cloned the model of some Americans which were just valued $1bn back in July.

And shortly after, we have:

1. Razor, founded in August by, among others, the former venture director at Rocket Internet, and which already raised about $1M from 468, GFC and Redalpine.

2. Seller X, also launched in August by the founder of Dafiti - Zalando for Latin America, also backed by the Rocket Internet. They just raised from Cherry and Felix Cap.

Building startups and raising money in Europe is not that difficult if you come to think of it, right?

Now, can Europe become the most entrepreneurial continent? :D

The European startup model

Cedric O, French junior minister:

“Europe has an economic opportunity, as the US economy isn’t as good as it used to be, and the European model is attractive. Therefore, we need to create the right environment and framework to nurture our startups."

Idle observation: there is no European model and there never will be one. If there were, that would involve a blueprint, alternative to build cool shit and apply to YC.

Besides, Europe is a pot of almost 30 cultures and ways of doing business. French are doing it different than Spanish, who are doing it different than Germans or Swedes.

Brexit ain’t making it easier either, since London is the place to go to take people’s temperature, pre-applying to YC.

PS. “the US economy isn’t as good as it used to be” - the US economy is in better shape than the EU’s.