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Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

By Mike Butcher

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

Vitosha Venture Partners launches $30M fund to back Bulgarian-related early-stage startups

By Mike Butcher

Vitosha Venture Partners is a brand new venture fund launching out of Bulgaria, and backed by the Bulgarian government. The 26 million euro ($30M) fund aims to invest in approximately 100 companies, starting from low ticket sizes all the way up to a million, in early-stage and growth-stage companies that are based in or related to Bulgaria.

Vitosha will be co-financed by the European Structural and Investment Funds under the Operational Programme for Innovation and Competitiveness 2014-2020, managed by the Fund of Funds in Bulgaria. Beyond standard VC conventions, it will also back companies that matter for the growth, sustainability, and development of the local economy in Bulgaria and the Central European region.

Speaking to me over a call, co-founder Max Gurvits said: “Bulgaria and this whole region of South-eastern Europe is a very early ecosystem. The cool thing that’s happening here and that’s something we’re excited about and proud of is that because Bulgaria started a little earlier in tech than the neighboring countries, it’s still very early, but there are 1000s of people now in startups.”

He added: “I do think that in Bulgaria, something like the emergence of a unicorn-like UIPath might happen in the next two or three years. So we’re slowly but surely catching up.”

“There’s a lot of FoodTech / AgTech here, there there’s a lot of connected hardware manufacturing like electric bicycles. While those companies might not be groundbreaking or world-changing they are actually quite solid fast-growing businesses that have a pretty high probability of exiting for 2x 3x 4x 5x or more.”

Vitosha Accelerate also run an acceleration program.

The team consists of:
Erik Anderson- Managing Partner (ex WiseGuys)
Max Gurvits – Managing partner
Marin Iliev- Managing partner
Maris Prii – Managing Partner
Nikola Stojanow – Managing Partner
Paul Weinberger- Managing partner
Kamen Bankovski – Principal
Stoyan Nedin – Venture Partner

Portfolio – 17 companies up to date
Investments between EUR 150k and EUR 800k
Hobo – https://hobo.bg
Quendoo – https://www.quendoo.com
Econic One – https://econicone.com
Eirene Studio- https://eirenestudio.com
Tokwise- https://www.tokwise.com
Omnio-https://omniotech.net
Petmall- https://petmall.bg
Assen Aero- http://assen.aero
MeatMe Bar- https://www.meatmebar.com/bg
PelletBox- Stealth

Vitosha ACCELERATE startups (tickets up to EUR 50k)
Gridmetrics – https://www.gridmetrics.co
Trace the Taste- Stealth
FidU Trade-https://fidutrade.com
Augment- https://augment.gg
NulaBG-https://nula.bg
Bye Bye Stuttering- https://www.byebyestuttering.com
Ecopolitech- Stealth

The companies that became part of Vitosha’s portfolio in April are:
Tokwise- €150K
Omnio-€200K
Petmall- €800K
Assen Aero- €600K
MeatMe Bar- €400K
PelletBox- €200K
Gridmetrics-€50K
Trace the Taste-€50K
FidU Trade-€75K
Augment-€50K
NulaBG-€50K
Bye Bye Stuttering-€50K
EcoPolytech-€50K

Croatia’s Gideon Brothers raises $31M for its 3D vision-enabled autonomous warehouse robots

By Mike Butcher

Proving that Central and Eastern Europe remains a powerhouse of hardware engineering matched with software, Gideon Brothers (GB), a Zagreb, Croatia-based robotics and AI startup, has raised a $31 million Series A round led by Koch Disruptive Technologies (KDT), the venture and growth arm of Koch Industries Inc., with participation from DB Schenker, Prologis Ventures and Rite-Hite.

The round also includes participation from several of Gideon Brothers’ existing backers: Taavet Hinrikus (co-founder of TransferWise), Pentland Ventures, Peaksjah, HCVC (Hardware Club), Ivan Topčić, Nenad Bakić and Luca Ascani.

The investment will be used to accelerate the development and commercialization of GB’s AI and 3D vision-based “autonomous mobile robots” or “AMRs”. These perform simple tasks such as transporting, picking up and dropping off products in order to free up humans to perform more valuable tasks.

The company will also expand its operations in the EU and U.S. by opening offices in Munich, Germany and Boston, Massachusetts, respectively.

Gideon Brothers founders

Gideon Brothers founders. Image Credits: Gideon Brothers

Gideon Brothers make robots and the accompanying software platform that specializes in horizontal and vertical handling processes for logistics, warehousing, manufacturing and retail businesses. For obvious reasons, the need to roboticize supply chains has exploded during the pandemic.

Matija Kopić, CEO of Gideon Brothers, said: “The pandemic has greatly accelerated the adoption of smart automation, and we are ready to meet the unprecedented market demand. The best way to do it is by marrying our proprietary solutions with the largest, most demanding customers out there. Our strategic partners have real challenges that our robots are already solving, and, with us, they’re seizing the incredible opportunity right now to effect robotic-powered change to some of the world’s most innovative organizations.”

He added: “Partnering with these forward-thinking industry leaders will help us expand our global footprint, but we will always stay true to our Croatian roots. That is our superpower. The Croatian startup scene is growing exponentially and we want to unlock further opportunities for our country to become a robotics & AI powerhouse.”

Annant Patel, director at Koch Disruptive Technologies, said: “With more than 300 Koch operations and production units globally, KDT recognizes the unique capabilities of and potential for Gideon Brothers’ technology to substantially transform how businesses can approach warehouse and manufacturing processes through cutting edge AI and 3D AMR technology.”

Xavier Garijo, member of the Board of Management for Contract Logistics, DB Schenker, added: “Our partnership with Gideon Brothers secures our access to best in class robotics and intelligent material handling solutions to serve our customers in the most efficient way.”

GB’s competitors include Seegrid, Teradyne (MiR), Vecna Robotics, Fetch Robotics, AutoGuide Mobile Robots, Geek+ and Otto Motors.

Glovo splurges $208M on three Delivery Hero brands in the Balkans

By Natasha Lomas

The high stakes game of chess (or, well, consolidation chicken) that is on-demand food delivery rolls on today with a little more territorial swapping in Europe: Barcelona-based Glovo has agreed to buy three of Berlin-based Delivery Hero’s food delivery brands in Central and Eastern Europe — with deals that it said are worth a total value of €170 million (~$208M).

Specifically, it’s picking up Delivery Hero’s foodpanda brand in Romania and Bulgaria; the Donesi brand in Serbia, Montenegro, Bosnia and Herzegovina; and Pauza in Croatia.

There’s some notable symmetry here: Last year Delivery Hero shelled out $272M for a bunch of Glovo’s LatAm brands, as the latter gave up on a region it had already started withdrawing from in its quest for profitability.

Glovo said then that it would be focusing on “key markets where we can build a long-term sustainable business and continue to provide our unique multi-category offering to our customers”.

Earlier this month the Barcelona-based ‘deliver anything’ app also announced it was picking up Ehrana, a local delivery company in Slovenia. So it’s been on quite the (local) shopping spree of late.

Its existing operational footprint covers markets in South West Europe, Eastern Europe and Sub-Saharan Africa. So its attention here, on the Balkans, suggests it sees a chance to eke out profitable potential in more of Central Europe too.

Glovo said the transactions in Bosnia Herzegovina, Bulgaria, Croatia, Montenegro and Serbia are expected to close “within the next few weeks”, subject to fulfilment of closing conditions and relevant regulatory approvals.

While it said Romania will be completed following approval from the competition authority — but gave no timeline for that.

Its splurge on Central and Eastern European rival food delivery brands follows a $528M Series F funding round in April — so it’s evidently not short of VC cash to burn spend.

Commenting in a statement, Oscar Pierre, CEO and co-founder, said: “It’s always been central to our long-term strategy to focus on markets where we see clear opportunities to lead and where we can build a sustainable business. Central and Eastern Europe is a very important part of that plan. The region has really embraced on-demand delivery platforms and we’re very excited to be strengthening our presence and increasing our footprint in countries that continue to show enormous potential for growth.” 

In another supporting statement Delivery Hero made it clear it has bigger fish to fry (than can be served up to hungry customers in the Balkans) right now.

“Delivery Hero has built a clear leading business in the Balkan region in the last couple of years. However, with a lot of operational priorities on our plate, we believe Glovo would be better positioned to continue building an amazing experience for our customers in this region,” said Niklas Östberg, its CEO and co-founder.

A relevant, recent development for Delivery Hero‘s business is the decision to re-enter its home market of Germany — Europe’s biggest economy — under its foodpanda brand, starting in its home city of Berlin this summer (but with a national expansion planned to follow).

This is notable because back in 2018 it sold its German operations to another on-demand food delivery rival, the Dutch giant Takeaway.com — in a $1.1BN deal which included the Lieferheld, Pizza.de and foodora brands — temporarily stepping out of the competitive fray. (Meanwhile Takeaway.com has since merged with the UK’s Just Eat to become… Just Eat Takeaway so, uh, keep up.)

Delivery Hero is returning to Germany now because it can, and because the market is huge. A two-year non-compete clause between it and Just Eat Takeaway recently expired — allowing for reheating (rehashing?) of the competitive food delivery mix in German cities.

Speaking to the FT back in May about this market return, Östberg suggested Delivery Hero has girded itself (and its investors) for a long fight.

“We don’t see necessarily that we are going to go in and win the market in the next year or so. This is a 10-year game,” he said. “Of course we will definitely make sure we put in enough money to be the clear number two, the clear challenger [to Just Eat Takeaway.com].”

Winning at food delivery is certainly a(n expensive) marathon, not a sprint.

There are also of course multiple races being run in markets around the world, depending on local conditions and competitive mix — with the chance that the winner of the biggest and most lucrative races will reach such a position of VC-sponsored glory that it can buy up the top competitors from the smaller races and consolidate everything — maximizing economies of scale and gaining the ability to squeeze out fresh competition to grab a juicy profit for themselves.

Or, well, that’s the theory. Competition regulators are likely to take increasing interest in this space, for one thing. Rising awareness of gig economy workers rights is also putting pressure on the model.

For now, the thin-margin food delivery business needs the right base conditions to survive. The model only functions in cities and ideally in highly dense urban environments. Most of the players in this space also do not employ the armies of riders that are needed to make deliveries — because doing so would make the model far more costly. And in Europe political attention on gig economy workers rights could force reforms that raise regional operational costs, putting further pressure on margins.

Spain has its own labor reforms in train that will affect Glovo in its home market, for example.

Achieving sustainability (i.e. profitability without the need for ongoing VC funding injections) remains a huge hurdle for delivery apps. It will likely require massive market consolidation and/or convincing users to switch from making the occasional order of a hot meal on a weekend to relying on app-based delivery for far more of their local shopping needs — not just lunch/dinner but groceries and toiletries, and other fast moving consumers goods and household items.

It’s notable that super fast grocery delivery is a major focus for Glovo, for example — which has recently been building out networks of inner city dark stores to service in-app convenience store shopping.

Lots of other on-demand app players are also ramping up on that front. Including Delivery Hero — which has been paying more attention to groceries (picking up InstaShop last year in a deal worth $360M).

Glovo building out in Central Europe while exiting markets further afield suggests it believes it can use a concentrated market footprint to drive operational efficiencies and strong order margins through a tightly integrated meal delivery and dark store play.

If it can do that — and offer at least the whiff of profitability — it could make its business an attractive future acquisition target for a larger global giant that’s looking to up the ‘consolidation chicken’ stakes by bolting on new regions.

A larger player like Delivery Hero may even be a potential future suitor — having shown it’s happy to return to markets it left earlier. After all, it surely knows Glovo’s business pretty well since they’ve done a number of market swaps. But, for now, that’s pure speculation.

Zooming out, what the on-demand model of app-based urban convenience means for the future of urban environments is a whole other question — and one which both competition and urban regulators will need to ponder very carefully.

If the rush to scale delivery platforms drives unstoppable consolidation that sees smaller players gobbled up by a few global giants — that can then use their size and scale to outcompete local shops — it may spell even more dark times for the traditional High Street and its family-run bodegas.

Local retail in many places has already been hammered by Internet giants like Amazon. Delivery apps are another high tech threat to bricks-and-mortar shopping. Touch of a button convenience does carry wider costs.

 

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