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2020 Vision: predictions from 28 big-hitters in Europe’s startup scene

What will 2020 bring for European startups? We hear from startup experts such as Jan Hammer at Index Ventures, Taavet Hinrikus at Transferwise and Roxanne Varza at Station F.

By Sifted reporters

Daisy Onubogu, new COO of Diversity VC

Is 2020 going to be the year when European startups start to poach talent from the US? Is it going to be the year when American money pours into Europe?

Or will this be the year when remote working finally takes off, bullshit startup mission statements die and impact startups dominate?

These are just some of the big predictions for 2020 made by some of the brightest minds in the world of European startups — from investors such as Index Venture’s Jan Hammer, founders like Taavet Hinrikus from TransferWise and community builders like Roxanne Varza from Station F — brought to you by our team of startup reporters across the continent.

There is not much they agree on, except that 2020 is going to be another huge year for the development of the European startup scene.

It’s a bit of a monster list of luminaries, so we suggest you click and jump to the ones that look interesting. We have also tried to theme them by job role. Please read, share, discuss and disagree.

The investors predict

The founders predict

 

The ecosystem builders predict

 


 

The year bullshit startup “mission statements” die

Daisy Onubogu startup events Backed VC
Daisy Onubogu, head of venture scouts at Backed VC

I think 2020 will be a year of greater nuance. We’re reaching saturation point on glibly mislabelling things in order to tell a convenient story. In particular, I think about three words that have been everywhere in 2019: “mission”, “community” and “diversity”. 

Not everything is a mission, but we’ve allowed so many startups over the last few years to take that powerful word and stretch it to cover everything under the sun. It boggles the mind that someone could boldly call putting nice luggage in people’s hands a world-changing mission.

At some point we figured out that if you tell ambitious millennials that they are doing something that matters they are willing to sacrifice personal wants, needs and preferences. Companies who can’t really claim mission to simply win and retain talent by catering to those wants, needs or preferences, have been trying to masquerade for the sake of keeping personnel costs low and margins high. 

Ditto community, we finally noticed that if people feel a sense of belonging it generates powerful energy and goodwill that can serve as an incredible catalyst for action that you’d normally have to pay or beg to make happen. Actions like evangelising our products, paying a premium for it, or staying stubbornly loyal no matter what.

Calling everybody who buys your product part of a community when you have done nothing to foster meaningful bonds between them is a lie. Calling everyone who uses your coworking space a community because they are spatially close and you host a Thursday evening yoga class is a lie; and none of it will hold for much longer.

It’s only easy to convince people that any old nonsense is community until they have real spaces of belonging in their lives to measure against. Those spaces are a-coming. More organisations seeking to create community for its own sake or in order to leverage it are going beyond lip service, are bringing in people who get community, and committing real resources to make it happen. Those who don’t want to bother will find themselves left behind real quick. 

Finally, diversity. Frankly, I don’t even know where to start. I suppose the gist of it is: I’m hoping more than predicting that 2019 is the end of the first wave of “tick-box diversity action defined by well-intentioned empty talk and putting illusory change in place for appearance’s sake in order to act as a shield against diversity-related criticism.

I really believe that with the rise of diversity-focused funds, and funds with champions of diversity and inclusion (D&I) on the investment teams, you’re going to see more founders who are women and people of colour (POC) get their day, and that they are going to keep building companies in ways that reject the status quo and, before you know it, we won’t be begging anyone to change, it’ll be adapt or die.

The biggest worry for 2020?

I’m concerned that addressing the biggest societal issues we’re facing (climate crisis, inequality, etc.) will require real sacrifice and uncomfortable choices that we, in our obsession with win-win solutions, will avoid until it’s too late.

The most exciting sector for 2020?

Legaltech. It’s been one of the slowest sectors to be meaningfully disrupted or augmented by tech. Now that some of the base/entry products are in place already, I think there’s room for the unboxing of legal fees and complexity when it comes to process and documentation; these solutions should end 2020 in game-changing positions.

The company to watch in 2020?

Afrocenchix. One of the smartest and hardest-working teams I’ve ever met, and hustlers through and through. They are staring down a gigantic and grossly underserved market and have everything it takes to execute. Plus, Rachael and Joy are the sort of founders who truly care about the type of company and workplace they build to get there.

Daisy Onubogu is head of venture scouts at Backed VC

The year fintechs go global

GoCardless CEO Hiroki Takeuchi
GoCardless chief executive Hiroki Takeuchi

I believe that 2020 will be remembered as the year fintechs truly go global. Not only is this an exciting moment in our industry, it crucially introduces innovative business models to new markets, helping to solve pain points for consumers and companies around the world.

You could argue this trend is an extension of how we ended 2019. This year numerous fintechs, from Monzo to N26 to TransferWise, either made their first push into new markets or continued to expand their international footprint. At GoCardless we announced the world’s first global network for direct debit. Soon American-grown competitors such as Robinhood will be coming to our shores. 

All this means businesses and individuals will have access to — among other things — easier banking, more transparent exchange rates, commission-free investing and a simpler way to collect international payments.

This trend represents a step-change in financial services: moving from a group of traditional providers that offer a wide range of products in a specific geography to fintechs with much more focused offerings that expand all over the world. We’ll all face challenges as we enter different markets, from adapting to customer behaviour to navigating regulatory environments. But whatever the outcome, the shift is a welcome one as we reach the tipping point when fintechs can really play our role in fixing financial services on a global scale.

The biggest worry for 2020?

Brexit and the uncertainty it continues to create

The country with the biggest step-change in startup ecosystem?

The trend is more towards technology spreading across all countries. There has never been a better time to start no matter where you are from!

Hiroki Takeuchi is cofounder and chief executive of London-based fintech GoCardless 

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The year US venture money pours into Europe

Hussein Kanji, Hoxton-Ventures
Hussein Kanji, partner at Hoxton Ventures

Europe is on the map of US investors. This side of the pond was all too ignored in the past, with most US companies choosing to focus instead on China, Israel and India.

That’s all rapidly changing. Many of the top US firms — Benchmark, Battery, Lightspeed, Khosla, Kleiner, NEA, Sequoia — are already regularly flying over, courting European entrepreneurs, leading rounds, and competing with and beating incumbent European venture firms.

I see 2015 to 2018 as the experimental years, where much of US activity was centred around investing in the growth stage of a company. 2019 was the year where these companies began to test the hypothesis that they should broaden their activities to earlier stage rounds. 2020 is going to be the year this activity becomes mainstream and where even more companies follow the US leaders.

I wouldn’t at all be surprised to see more US companies announcing a formal presence in Europe. I also wouldn’t be surprised if more and more of the highest potential companies end up taking money from the US venture funds, who will deliver more access, knowledge and networks than the local firms.

For some there will be a dent in national pride and for others we might start hearing more complaints about deals getting too competitive and expensive.

As a whole, this is going to raise everyone’s game in Europe. I think a lot more entrepreneurs will soar to greater heights and create a lot more wealth, which will only accelerate the virtuous cycle of starting great companies from Europe.

The biggest worry for 2020?

More tourists rushing into tech sector (which increases probability of disasters in future years)

The country with the biggest step-change in startup ecosystem?

France. The minister of European affairs has vowed to get to 25 unicorns in two years (which can easily be done by pumping dumb money into the system). But the ecosystem in Paris today is night/day compared to five years ago.

Hussein Kanji is a partner at London-based VC Hoxton Ventures

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The year we talk about values more than unicorns

Roxanne Varza, Station F
Roxanne Varza, director of Paris startup campus Station F

There were quite a few times this year when I heard key people in the ecosystem frustrated with how much attention is given to huge rounds of funding and unicorns.

At the same time we saw a huge shift with regard to values. Some of our ecosystem’s leading chief executives have shown that they don’t always uphold their values when big money is involved — leaving the rest of the ecosystem in a bit of an existential crisis and consumers conflicted, if not downright disgusted.

In 2020 I believe the ecosystem will make a shift away from financial obsession and more towards values obsession, with more emphasis on the role of investors. Not only are consumer trends moving towards more value-based businesses, but investors have a key role to play in the types of businesses and business practices that we enable in our society.

At Station F we will require that every single one of our 1,000 startups adhere to basic values, diversity and sustainability criteria. It isn’t enough just to have good metrics, you need to show that you’re actually using them for good. And we think it’s only a matter of time before funds insist that their portfolio companies do the same.

The biggest worry for 2020?

Fake news 

The most exciting sector for 2020?

Companies founded by underprivileged entrepreneurs 

The companies to watch in 2020?

Neoplants, AgenT Biotech, DigiTall Paris

Roxanne Varza is the director of Paris startup campus Station F

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The year of economic crisis (where startups are winners)

Philippe Collombel, Partech
Philippe Collombel, general partner at Partech

My prediction for 2020 is going against the current: a financial downturn is likely to follow an economic slowdown, but contrary to what a lot of people seem to think, it’s going to be large companies that suffer the most, not European startups.

As a result, there might be a dichotomy between large companies and startups in this coming crisis. Startups will be more resilient because the general state of things in the European tech ecosystem right now is that three out of four companies have business models that are very sound and very solid management teams.

Tech isn’t overvalued, I don’t believe that. There are a few problematic cases here and there, usually very visible ones, but these are anecdotal. There’s no broader negative trend. On the contrary, entrepreneurs are exceptional, startups are able to attract the best talent and they’ve got costs under control. They have a better hold on their unit economics (and access to them in real time) than most larger companies.

This overall trend that I’m describing has a downside for investors though: it means that the problem of finding an exit will pose itself even more acutely. Europe’s biggest companies today still haven’t fully grasped the opportunities that lie for them in the tech and startup space. Contrasting with that timidity, I think we’ll see an inflow of capital from China and takeovers of European startups by Chinese companies. Of course that, in turn, could have important consequences for European innovation.

The biggest worry for 2020?

Lack of exit possibilities in the EU tech ecosystem. Excluding the few major floatations, in 2018 there were less exits in than during the year before that.

The most exciting sector for 2020?

Artificial intelligence is becoming real.

The company to watch in 2020?

UK global marketplace software as a service company Shedul, which owns the platform Fresha.

The region with the biggest step-change in startup ecosystem?

Scandinavia. It has had a tremendous rise, contrasting with Germany’s weakness.

Philippe Collombel is general partner of global venture fund Partech

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The year Europe poaches talent from the valley

Photo of Ophelia Brown, cofounder and partner at London-based VC Blossom Capital.
Ophelia Brown, cofounder and partner at London-based VC Blossom Capital.

When we started Blossom we believed startups would continue to raise Series As from investors who could support them on the ground, but that at growth stage we’d see a global flattening, with the best growth funds investing in the breakout companies wherever they’re located in the world.

That’s started happening faster than we ever expected, with many of the top US growth funds committing to partner time on the ground in Europe and some going as far as hiring local teams.

European founders are increasingly building global businesses from day one. We now frequently see both business-to-consumer and business-to-business startups in Europe who, even at Series A, already have the largest proportion of their revenue or users originating from the US.

As we move onto Europe’s second and third generation of unicorns, startups are able to poach experienced engineers, product and growth hires who’ve seen what it takes to build for hyper-growth — really taking the calibre of people talent to a level comparable to the valley.

This combination of factors is capturing the attention of top tier international growth investors. We see 2020 as a real turning point: the year that we’ll see a majority of the top US growth funds actively investing in European startups at the growth stage.

The most exciting sector for 2020?

Travel

The company to watch in 2020?

Tines.io

The country with the biggest step-change in startup ecosystem?

Germany

Ophelia Brown is cofounder and partner at London-based VC Blossom Capital

The year that fintech gets real

TransferWise founders Taavet Hinrikus and Kristo Kaarmann
TransferWise founders Taavet Hinrikus and Kristo Käärmann

When we started TransferWise in 2010 the word fintech didn’t really exist. In tech it was starting to be applied to a ton of financial services spanning lending to payments, as long as there was new code involved. We knew there was a big job for online-only companies to build consumer trust and fulfil their potential and that honesty and truly delivering on better services for consumers would be vital post financial crisis.

As TransferWise has grown I’ve learned that people don’t care about fintech. What they care about is 10 times better products that do what they promise. They care about getting a business loan approved from home after a long day, sending money to their kids instantly when they get the call and having a real person to speak to when things don’t go to plan. We all want services that genuinely make life better as well as cheaper and that keep pace with technological change. Your bank travels with you in your pocket now, making the smartphone the only bank branch that matters. And that means the branch network, thought of as a huge asset 10 years ago, is now a liability that fintechs don’t need and customers don’t appreciate paying for.

2019 has seen the best of these startups — the likes of Monzo, N26 and Chime as well as TransferWise — build a real foundation of trust, growing rapidly with customer numbers measured in millions, not thousands. 2020 will see this trend grow, bringing fintech into the mainstream with multiple touchpoints for the everyday consumer. With big tech like Google, Uber and Apple launching their own fintech offerings, as well as incumbents like Goldman Sachs and NatWest, it’s becoming clearer that fintech is not a type of company, it’s a mindset. We’re yet to see any incumbent match fintech’s approach, but for me that would be a welcome mark of industry disruption.

2020 will be the year that everyone considers a fintech alternative, whether that’s a 40-person startup or a big tech app, as a serious option for their money. That’s a pretty massive step for a word that barely hatched 10 years ago.

Taavet Hinrikus is cofounder and chairman of London-based fintech TransferWise

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The year of the data startup

Jan Hammer, partner at Index Ventures
Jan Hammer, partner at Index Ventures

2020 will be the year when data will come again to the fore, with a new generation of startups providing data intelligence and proprietary data sets for every industry, from real estate to finance, from construction to healthcare, from transportation to energy. Data intelligence will spur a new wave of innovation in the same way the internet and the app economy did before, and it will be in data intelligence where we will see some of the most effective commercial applications of artificial intelligence.

Which will be the most exciting opportunity/sector for 2020?

It may seem as if we are at the height of the fintech hype cycle, but we haven’t seen anything yet. Yes, in comparison to other industries, fintech businesses valued between $10bn and $30bn seem large, but compared to other big financial institutions we are only at the early innings. The inevitable failure of a few fintech businesses will likely be depicted as the end of the fintech era, but those who ignore the noise will be the ones who will transform the industry.

What’s your biggest worry for 2020?

Building a startup is about having a clarity of focus, a tunnel view that allows you to ignore the naysayers and power through any turbulence along the way. My biggest worry is that Brexit, trade wars, elections and other macroeconomic trends will preoccupy the minds of entrepreneurs and investors. My hope is that their long-term approach and grit will overpower the urge to succumb to unnecessary distractions and they will stay focused on what matters.

Company to watch?

Alan, the Paris-based health insurance company, is one you will be hearing more about, and not just from me. Very quickly Alan has become the primary app to manage your healthcare and insurance in France. Simple, intuitive and smart — all the things people don’t associate with most healthcare systems and insurance providers.

Which country will see the biggest step-change in the startup ecosystem?

I’d have to say the Netherlands because Adyen is such a joyful example of what Europe can achieve. It’s a company enabling things that weren’t possible before, operating globally and delivering incredible growth and profitable since the very early days. It’s a great role model that demonstrates that being profitable and having great cashflow is consistent with high growth, a sound business model and defensible product with a huge growth market. I expect many in the Netherlands to follow its path.

Jan Hammer is a partner at venture capital fund Index Ventures

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The year chickens start eating bug-food

Antoine Hubert, cofounder and CEO of Ynsect
Antoine Hubert, cofounder and chief executive of Ynsect

In 2020 we will hopefully get EU approval for insects to be used in chicken feed and also approval for some species to be used for human consumption. Ynsect currently sells its insect protein for luxury dog and cat food and for fish feed, but chicken feed would be an important new market. Opening up the market for pigs will come much later — in five years. 

Using insects in fertiliser should also get the green light next year. At least in France you wi

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Mark Littlewood
Mark Littlewood

“The year we talk about values more than unicorns.”

This has been a thing for a while in the smart rooms.”Values not Valuations”. https://businessofsoftware.org/2015/09/the-unicorn-bubble/

Jeff
Jeff

As most of the pundits interviewed in these types of prediction piece are investors or companies with significant venture capital funding, it isn’t surprising that the emphasis will be on investment theses. Roxanne is bang on. We should talk more about the stuff that really matters.