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The Climb #13 - A French health hub, more growth financing, food delivery and more 🔥

Hello everyone, As numerous European countries are getting ready to get out of lockdown, the startup
The Climb #13 - A French health hub, more growth financing, food delivery and more 🔥
By Ghislain de Buchet • Issue #13 • View online
Hello everyone,
As numerous European countries are getting ready to get out of lockdown, the startup ecosystem is slowly getting back on its feet. Although most of the deals announced in the last 15 days were already well on track before the coronavirus hit hard, the increase in the number of disclosed deals reflects the renewed confidence of investors in specific segments. In France, the three biggest deals are more or less covid-friendly: second-hand clothing marketplace Vestiaire Collective, Alan in health insurance and Slite in collaboration. 
Be safe 😷

🥖 Funding activity in France
> French insurtech Alan grabbed €50m from Temasek and existing investors (o/w Index) to become a digital one-stop-shop when it comes to health. Until today, the startup has focused on developing a health insurance offer for the French market. It now wants to diversify and become a major health hub. The startup plans to start its international expansion this summer.
> Slite raised €10m from Spark Capital and Index Ventures. The startup, which ignited at eFounders and is a YC 2018 alumnus, has been developing an easy-to-handle collaboration platform since 2016. Its solution aims at helping companies manage their documents easily, helping employees to find the right source of truth when it comes to corporate policies, etc. The collaboration software space is really busy at the moment, composed of old big techs and promising outsiders. Notion, a SF-based co. which operates a tool that overlaps in some extent with Slite, recently disclosed a $50m round led by Index at a $2bn valuation.
> Other funding rounds include second-hand clothing marketplace Vestiaire Collective (€59m), AI-based customer marketing solutions D-Aim (€10m), solar energy self-consumption solution MyLight Systems (€6.5m), professional retraining online coaching Chance (€5.6m), marketplace for freelance designers Creads (€5.5m), online platform for repair of household appliances Spareka (€5m) and payment fintech Libeo (€4m) among others.
⚡ Other hot moves in France
> Amazon was forced to shut down most of its operations in France after workers’ representatives took the company to court as they state Amazon did not implement the necessary security measures to protect its employees working in warehouses. The court only allows Amazon to dispatch medical supplies, hygiene products, and food items. If it fails to do so, Amazon faces a penalty of €1m per day. The company appealed the decision.
🌍 Stories in Europe
> British AI-based identity verification platform Onfido raised a $100m Series C led by TPG Growth. Founded in 2012 as a SaaS for employers to check the background of potential employees, the company now operates AI-based solutions to identify people for two main use cases: i) verification of ID documents issued by 195+ countries ii) biometric analysis. The regtech has become a leading player in the space with 1,500+ customers (e.g. Drivy, Nickel, Revolut, TransferWise) using its solutions.
> The Amazon/Deliveroo deal announced in May 2019, but which was pending for approval since then, was provisionally approved by the UK competition watchdog. Deliveroo and its investors alarmed the authority it could go bust if it does not receive the $575m cash funding from Amazon. The future will tell if Amazon’s unique e-commerce capabilities can help Deliveroo in adapting its food business to the current context.
🤝 Fellow backers
> The EU launched its ESCALAR programme to bridge the growth equity financing gap in Europe. €300m will be invested in investment funds with a focus on growth companies. In pilot phase for 2020, ESCALAR could increase its financing capacity to €1.2bn in the future and become a mainstream European financial instrument.
> Index Ventures announced the closing of two new vehicles: $800m for Index Ventures 10 which will focus on early-stage startups and $1.2bn for Index Growth focused on more mature companies.
> Fortino Capital raised €80m for Fortino Capital Venture II. The money will be deployed in Benelux-based software startups through tickets comprised between €500k and €5m.
> Entrée Capital closed a $100m seed fund to be deployed in Israel-based startups and startups HQed in the US/Europe but led by an Israeli founder. The money will be invested in deep technologies such as quantum computing, VR/AR, AI, digital health and fintech.
🍽️ Let's talk food delivery
Benedict Evans
In a couple of months there’s going to be a whole wave of mourning as people finally start coming out and discovering all of their favourite retailers and restaurants that aren’t coming back
With restaurants that remain closed, people working from home and disrupted supply chains, the food delivery industry is forced to evolve to meet new people’s needs. Let’s see how it goes on 2 segments:
> 🍜 Restaurant delivery: The introduction of the lockdown in Europe has resulted in the closure of all non-essential businesses, including restaurants. This decision, coupled with massive remote working, has put an immediate stop to Uber Eats-like offers. On the demand side, people first decided to cook their own food and save money. Restaurants have been left with close to nothing while they still have to pay for their bills/rent, reimburse their creditors, etc.
Hopefully, weariness of cooking, lack of time and the need for diversified experiences to escape the WFH routine is gradually leading to a resurgence in food delivery demand. Restaurants understood that their business could remain closed for a while. With high fixed costs and low margins, the easiest solution today is to take advantage of delivery platforms to offset part of their losses. It is a matter of life and death.
People seem to get bored of cooking after ~20 days of lockdown - Sources: Andrew Chen, SimilarWeb
People seem to get bored of cooking after ~20 days of lockdown - Sources: Andrew Chen, SimilarWeb
However, unit economics are still a big issue for food delivery marketplaces. Based on a high volume / low margin model, platforms struggle to earn money without grasping the margin on both sides (restaurants and delivery agents). Cloud kitchens is an enticing solution as the model is highly more efficient from a unit economics point of view: data-driven supply, lower rents, optimized marketing, sound logistics, etc. Some traditional restaurants may turn to dark kitchens to take advantage of the model’s benefits. Future will tell.
> 🛍️ Grocery delivery is having strong tailwinds. For too long, the online grocery delivery experience has been terrible. On one hand, traditional retailers uploaded their whole inventory online, which was not user-friendly at all. On the other hand, small players tried to penetrate the space but their offer was either too small, too expensive, not attracting, too slow on delivery or/and limited to urban areas.
However, the pandemic could be the turning point. In reality, the space was already expected to grow fast in the coming years: +66% by 2023 according to IGD. While a lot of people used to like going to the supermarket, it is not so sure in the post-covid era. Although temporary, the lockdown will change habits that were once deeply rooted. Online grocery is all set to boom and players in the industry know it: “The opportunity is so massive that I expect more competition” said Oscar Pierre, CEO of Glovo.
The model that will be adopted for grocery delivery is still to be determined. The entire industry -from food producers to supermarkets to e-commerce veterans to marketplaces to delivery agents, etc.- will have to adapt to meet this new demand. Some recent news in the space:
Berlin-based Choco, which develops a solution that aims at disrupting the supply chain in the food industry, just raised additional $30.2m at a $250m valuation. The company will leverage its network of food suppliers to make their products directly available to end customers through a D2C platform rather than restaurants as those remain closed. The company was founded in 2018 and is backed by Bessemer, Target Global and Greyhound among others.
Carrefour signed a partnership with Uber Eats in France to have its products delivered at home via the platform. Uber Eats saw its demand for groceries surge by c. 60% between February and March in Europe. Today 1,000+ grocery and convenience stores are available via Uber Eats in Europe.
Paris-based Jow raised $7m from Stride.vc, DST Global and e.ventures last November to revolutionize the e-grocery experience.
European grocery startups (sample) - Source: Sifted
European grocery startups (sample) - Source: Sifted
🔥 Meanwhile in the East...
> Blockchain is now officially part of China’s technology strategy. The country just launched its global blockchain platform to promote and support domestic companies in the space. Huawei, Tencent, Baidu, JD.com and c. 70 companies are part of a special committee to move forward in the blockchain scene.
> I talked of Bytedance 15 days ago as TikTok is booming in the West, nearing 2bn downloads. While numerous startups around the world had to start laying off their workforce, Bytedance started a massive wave of hiring (10k open positions globally) to reach 100k people by the end of the year (close to Alibaba’s level). The announcement confirms the huge ambitions of Bytedance, that go far beyond Douyin and TikTok.
💡 Essential content
> It’s time to build: an inspiring essay from Marc Andreessen
That's it for this issue.
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-See you in two weeks-
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Ghislain de Buchet

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