Sandra Yonter talks about Market Expansion in Europe

Sophie on February 19, 2020

As the SVP of Europe, New Markets & Artist Community for Redbubble, Sandra Yonter is an experienced executive with 25 years of experience in building and growing businesses internationally. Currently based in Berlin, she has lived in Singapore and Paris, and worked as a marketing and business leader across various industries including publishing, dating, fashion, home decor and online marketplaces. 

She joined RedBubble in 2015 and was one of the first employees in the region. Since then, she successfully launched German, French and Spanish speaking European markets, opened the entity in Berlin and has grown the team to close to 30+.

What made you choose to launch into the Berlin market?

At the time, Redbubble decided to establish the business in Europe and we had a few places in mind including London and Berlin. For us, the best way to make a collective decision was to create a matrix with a list of agreed criteria to assess and compare each market accordingly. This matrix comprised of elements such as the number of other International e-commerce companies, ease & cost of doing business, talent pool, laws & employment regulations, corporate tax rate or existing direct flights to our Melbourne and San Francisco offices. Unsurprisingly, London was not only much more expensive (both for office rent and talents) but also added an extra hour difference with our Melbourne office. We decided to open an office in Berlin as it was better aligned with our needs, values and constraints; Berlin is the second tech capital of Europe and still growing. It’s also emerging as a creative hub, with such a rich artsy infrastructure!

As a company when did you know you were ready to take on a new region?

What led to Redbubble’s decision to expand into markets beyond our English-speaking historic markets and support it through a dedicated European office is the size of the eCommerce market in Europe (which accounts for 621 billion euros in 2019 and is growing exponentially). Our decision was also based on a community of artists already selling their designs and the organic sales that we were already generating without having operations nor localised platforms in the region yet so expanding in Europe was not a high-risk move.

And we wanted to support this expansion with local talents, who know the local players, the market, and the culture.

How did you find navigating the different tax laws, employment laws, etc?

Foreign companies not experienced in German corporate, labor, accounting and tax need to be aware of all statutes and comply with all requirements. Being a French citizen and Redbubble being an Australian company with offices in Melbourne and San Francisco, establishing a German company and accessing the required information was challenging. We relied a lot on knowledgeable and recognised external partners and German government agencies to tackle the bureaucratic hurdles.

Did you get any sage advice before launching? If so, who from?

Launching in a new location requires patience, internal buy-in and a solid business launch plan. You also need to surround yourself with knowledgeable experts in the various fields that will be covered. So it is beneficial to network and get insight from other people’s experience through conferences, meetups, groups and associations. We were also lucky to benefit from customized consulting and assistance from Berlin Partner für Wirtschaft und Technologie or the Australian Trade Commission (Austrade).

Did you start off with a co-working space, shared office, remote workers, registered office?

We started with a co-working space to bring our first 4 hires together, as it was the most flexible way of settling in Berlin. A shared office provides the ability to connect with other people to expand your network, find partners or potential collaborators and the regular events organised in the space are an accessible way to provide your employees with a nice working environment. More importantly is the flexibility, coworking solutions allowing you to pay for the space you need and expand your space as your team grows.

What would be your top three tips for a company launching into Berlin?

  1. You need to be fully cognizant of the challenges that you will face while starting a business in a country that is not your home. Before you get started, study the laws and requirements for the country you’re interested in.
  2. Identify the cultural differences between your home country and the country you are entering as it can be quite a challenge; do a bit of research in topics such as communication styles, meeting etiquette, hierarchy, time sensitivity, etc.
  3. Then look at the talent pool dynamism of the country and how it is aligned to the company’s culture. In other words, how, as a new company in the market, will you be able to attract talent? It is really key to look at 3 elements: Dynamism amongst the community, Talent pool, Cost of hire 


What market in the EU are you most excited about launching next?

There’s still lots of potential for growth within the markets that we’ve launched. Our market penetration in the newly launched markets is lower than our penetration in the US and the UK. So we think that continuing to invest in French, German or Spanish speaking markets, is a great way to prioritise our efforts.

But we keep on assessing additional markets with high potential through in-depth market research, both within Europe and other regions.

The MitchelLake team would like to thank Sandra for her continuous support. As proud advocates of women in tech, we admire her successful journey as a woman in the digital space as she has been able to successfully grow Redbubble footprint in the European region while being a mum of three. 

The Thibaut Munier story – from sorting Christmas presents to creating a global business.

Sophie on March 30, 2017

Earlier this month, at a Frog Valley event, at Runway East in London, Thibaut Munier, COO Numberly shared his journey of creating, launching and IPO his business originally called 1000mercis, a data marketing, CRM and programmatic advertising company. He described his journey as being extremely focused and data driven.

The Beginning
Thibaut explained where his inspiration came from. One afternoon his life changed when his wife to be, Yseulys Costes, was sorting out gifts for the fast approaching Christmas. She was using Post-Its but realised that there could be a more efficient and modern way of doing, using a computer and a database. This was 17 years ago. From an idea borne in a kitchen, they created a business called 1000Mercis and quickly realised this database was more than sorting out ideas and understanding what consumer want, and all geared towards digital marketing and data usage.

In 2004, they needed to raise money and they were fortunate to meet Marc Simoncini, a serial entrepreneur and investor, who invested €5mill in 1000mercis. Thibaut noted that this was their first and only round of fundraising. At that time no one was truly interested in data with the preference being getting things done the traditional way, however they focused on working with startups, who were the only one giving attention to data, and within a couple of years they became a profitable business.

In 2005/06, the company started to grow significantly. Now in their sixth year, they had 35 employees, data was gaining interesting and the company began to generate a buzz. They were offered acquisition a few times, however they systematically refused, and they decided to go through IPO to boost their growth. They had absolutely no idea about the financial side of things, they did not even have a CFO, however they learnt a lot along the way. They made it happen within four months and in one day went from two shareholders to 13,000 (they kept over 50% of the business equity). Choosing an IPO was a good decision as they did not have pressure from a board of investors, they had six years of learning, and they were ready to face more complex challenges and clients.

Expansion
Following the IPO, one of their employees had to relocate to London, so they grabbed this opportunity to open an office in the UK. They knew nothing about the UK market yet again it was an exciting new venture. They started to work with large corporations, they had to adapt to a more sophisticated way of doing business as they started to work with P&G.

They continued their global expansion and in 2014, Thibaut and his wife moved to Palo Alto, with the view to scale up the business internationally. In addition, they also changed their model to a more product-driven business. On this journey, they discovered Real Time Biding (where cookies are being auctioned). They started to target marketing more efficiently and launched Numberly.

The Culture
Thibaut stated that all of their global offices are run by women and they are really proud of it, because the focus is on building long term relationship, an ability to grow at a steady pace and having a strong work culture was vital, as opposed to focus on scalability only. At the beginning, Thibaut explained they had no one in sales & no one on marketing. Their focus was on delivering top quality services and ensuring repeating business. To this date, they still are working with people they started with 15 years ago. However Thibaut insisted that, all along the journey, they have managed to keep a strong cultural identity, with this being the key to their success and without the loyal team that they have on board, they would not have gone this far. Having loyal people and a strong vision is critical for the business to grow.

Thibaut quoted Brian Chesky, CEO Airbnb who cited:

“After we closed our Series C with Peter Thiel in 2012, we invited him to our office. This was late last year, and we were in the Berlin room showing him various metrics. Midway through the conversation, I asked him what was the single most important piece of advice he had for us.
He replied, “Don’t fuck up the culture’.”

Where we’re at
In addition to sharing his journey, Thibaut shared his view on the digital world: In 2011 machine learning started booming, automated learning researches increased and the end results is that it works. The number of errors have significantly reduced from 28% to 7% for images recognition and down to 4% for speech recognition. The world is becoming about mobile first and Artificial Intelligence. The mobile is eating the world with 2.5bn mobile phones globally. The GAFA (Google, Apple, Facebook, Amazon) are going to rule the world, they currently represent $400bn sales per annum. Denmark was the first to appoint an ambassador dedicated to the GAFA.

Conclusion
Data should be part of everything, especially when you start.
Having a strong culture and having loyal people is key to go on a long journey.
Every entrepreneur should write down what their business represents and reinvent themselves on a regular basis. What is key is to build environment in a positive way…? Remembering to have fun at work otherwise it is not worth it.

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

Sophie Cohen

sophiec@mitchellake.com

Have more bravado, take advice from the Cruel Sea, and buck the trends: What VCs are looking for in 2017

Sophie on February 2, 2017

Last week, Frog Valley presented a Venture Capital-focused event at CAPCO with a panel of experts, looking to the year ahead. The panel comprised of Jeff Tijssen – Head of Fintech and Digital Partnerships at Capco; Gary Stewart -Director of Wayra UK; Cornel Chiriac – Managing Partner of London Venture Factory; and Fernando Valda – Investment Director at Nord Engine Capital. Below are the biggest takeaways from the evening.

2016 and Brexit

You’ve heard about it about extensively; 2016 has been the year of global political, economic and social changes and challenges. In the UK, Brexit came as a surprise and certainly the government was not prepared for it. London is going to face competition from other cities in Europe; we are already seeing governments including Germany, France and Portugal attracting and facilitating the implementation for tech startups in their countries. Some financial institutions have already started to move some of their staff to Frankfurt and Paris. Looking to Asia, Fernando explained that by the UK positioning themselves as a global free trade leader, it could facilitate them doing business with China and other countries globally. Across the Atlantic we’ve seen Trump’s actions on America’s global trade deal. The alternate optimistic view is that the falling sterling has encouraged some foreign investment into the UK. Overall; we haven’t seen a decline in investment yet. Furthermore, London is still the main hub for tech talent in Europe; with over 300.000 developers it has four times more than Berlin or Paris.

Startup challenges

Whilst Brexit is certainly not the challenge number one for the startup community it certainly represents an additional difficulty to the numerous challenges that they already have. The biggest challenge being continuing retaining and attracting tech talent. One out of three tech employees in London are European. To this date, we still don’t know what the status is going to be for Europeans already working and living in the UK, and neither what the new immigration regulations will look like.
All of this uncertainty is surely damaging for those businesses that need to plan for growth and build their vision.
Another challenge that startups in the UK encounter is the lack of local funds with a heavy reliance on US investment. This is a phenomenon that happens at all stages, from Series A to E, where more local investments are needed.
Finally, Jeff commented that more exit are needed in the UK to strengthen and encourage further investment.

Advice to startups
1. Focus on solving a problem; experiment, gain insight and develop traction. You are not expected to know everything from day one, you are on a journey of trying, testing iterating. Once there’s traction is a good time to engage with investors, and then to surround yourself with a team of executives to help scale the business.
2. Choose your investors wisely and maintain a good relationship with them. You must make sure that there’s a good connection and strong communication with your them, otherwise it will be damaging for the performance of your business.
3. Gary made a point that a VC will prefer investing £1m in 30 start-ups who have provided evidence that their idea works, as opposed to investing £30m in one startup who has the idea of the century but no evidence yet. That is far too risky for investors.
4. To quote the Cruel Sea, “You better get a lawyer, son. You better get a real good one”. This is vital whens signing the terms with your investors.
5. Make sure you have an honest appreciation of your company and avoid wrong due diligence as VCs truly dislike bad surprises along the way.

When startups are pitching, what are VCs looking for?
• Ensure that you describe the problem that you are trying to solve. The question is not about disruption; it is about solving a problem. If your product or service solves a problem then you have a greater chance to attract investors.
• Be more American in your business bravado, with Gary commented on how Americans are so openly confident and proud in what they do, to the point that it influences their success.
• Present the cost of customer acquisition, life time value & ROI. If you win that game then you have a great product.
• Have a strong vision and a compelling story.
• Traction, traction, traction, is a must to attract investors. Present evidence that you have a product or service that can generate traction and revenue.

Trend for 2017, where to invest?
Blockchain, Proof of concept, AI, Machine Learning, Medtech and Google Deepmind are the big trends for 2017.
However, Gary made a point here that if you are looking at developing a revolutionary idea, then do not look at the trend. If it is the trend then it may be already too late. Instead he recommends thinking of problems and how to solve a problem and then you may come up with a revolutionary idea.
Vision for 2017
Nobody knows what the future is made of, however the panel gave some tips and strong suggestions for 2017 to ensure London remain a grounded place for startups to grow:
– Reassurance from the government that we will be able to keep our tech talent and attract new ones
– Encourage more local funding as opposed to keep relying on US investments
– Having more exits to encourage more investors
– Show more confidence.
Gary made a point here that ideally we would need more investors who are also entrepreneurs. Unfortunately there are too many investors who have no empathy for the entrepreneurs and make their life very difficult as opposed to facilitating them.
In Conclusion
Ensure you’re solving a problem, traction is everything, and have conviction in your vision. We are working hard to ensure London is able to attract key tech talent. With all of this we’re looking forward to a prosperous and competitive startup scene in London.

Based in London, Sophie Cohen is an Executive Search Partner focusing on the digital space. London is just one of our locations that also include Singapore, San Francisco, Sydney, Melbourne, Gold Coast and our latest addition, Austin. We’re mad about startups and talent the world over, and would love to chat about your next role, or growing your team. Contact us here.

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

Sophie Cohen

sophiec@mitchellake.com

EuroTrip // A journey through Europe’s Startup Scene: Portugal

Sophie on September 22, 2016

Let’s continue our European startups landscape tour with Portugal and Lisbon!! Bem vindo!

Portugal, and in particular Lisbon and Coimbra, has a rising name in the European startup community. Portugal comprises of 10.5mill inhabitants and its capital Lisbon, one of Europe’s oldest cities, is going to host the next Global Web Summit.

In terms of funding, in the past 12 months, the Portuguese startup community has been successful in raising approximately €32mill and at latest count has 300 technology startups and 40 scale-ups (who have raised above a million Euros). Looking further and you’ll find some investors such as Pathena, Vallis Capital Partners, Caixa Capital, Faber Ventures, Octopus, Atomico, Amazon Alexa Fund and Portugal Ventures. Over the last year, nine companies exited in an IPO.

Technology firms and organisations in Portugal employ just over 100.000 individuals.

So who are the Portuguese start-ups to watch?

Whilst Portugal has not produced a unicorn yet, there are certainly some interesting companies to watch.

DefinedCrowd is a next-generation data science company focused on building data refinery platforms for machine learning and artificial intelligence.
Unbabel is an artificial intelligence powered human translation platform.
GetSocial is a content analytics platform that helps publishers and marketers measure, feature and promote their best content.
attentive.us provides actionable alerts about commercial leads, competitors, partners or investors on any CRM used.
movvo.com who is a Behavioural Analytics and Location Based Marketing Company, with a focus on retail and Retail Real Estates.
WiseCrop acts as a centralised dashboard for your farm.

Here is our selection of co-working spaces in Portugal:

CoWork Lisboa
My Coworkspace
Village Underground Lisboa
Barrio CoWork

And here are some Accelerators/Incubators (there are around 70)

Startup Pirates
Lisbon Challenge
Invest Braga

Talent Pool

Lisbon has sometimes been called *the new Berlin*, and one of the reasons is due to its talented pool of developers. The government has supported the education system through the development of a technology training program and early indications look successful.

And what about the level of tax?

Corporate Tax: The average set rate for corporate tax is 25%. A local tax is usually charged at a rate of 1.5%, bringing the total to 26.5%.

What else does Portugal have?

Certainly a lot of sun, Porto, football, and a good quality of life!

Next time we will study Brexit… Why did not they called it Britain? … Anyway … see you next time!

Sources:
Startup Overseas
Teleport
Portuguese Chamber of Commerce in the UK 
Portgual Startup

Sophie Cohen runs our satellite office in London. If you’re in Europe (or elsewhere) get in touch with MitchelLake about creating your Unicorn, hiring your team, or finding your new role. Let’s chat!

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

SophieCohen

sophiec@mitchellake.com

EuroTrip // A journey through Europe’s Startup Scene: The Netherlands

Sophie on July 11, 2016

Let’s continue our European startups landscape tour with the Netherlands and Amsterdam!! Welkom.

Netherlands is a country of about 17 million inhabitants that have seen the creation of around a thousand startups. The country is indeed famous for its legendary canals, it bike-friendly attitudes and legalised cannabis, but let’s not forget Creativity, Community, Multilingualism, and Practicality.

At #19 on the Global Startup Ecosystem Ranking, and #4 in Europe behind London, Germany and France, Amsterdam is certainly seen as the rising star location for technology startups to set up and scale-up.

So who are the Dutch Unicorns / Established tech companies?

• Adyen (Unicorn), a payment technology company.
• Booking.com, an online booking, now part of The Priceline Group,
• TomTom, publicly listed.

Further to that there are amazing startups emerging such as …
Peerby who connects borrowers and lenders via a location-based app.
Treatwell, a “Just Eat” for hairdressers.
Catawiki, a site for comic-book enthusiasts and collectors.
SnappCar a mobile app that offers private car rentals.
Hubs, an online platform connecting designers and IP owners owners with local manufacturers. From rapid 3D protoyping to full-scale production.

Here is our selection of co-working spaces in Amsterdam
WeWork
The Startup Orgy
Hackers and Founders
Spaces Works
B.Amsterdam

Accelerators/Incubators
Rockstart – Rockstart gives startups rock-solid support in their first 1,000 days. They offer accelerator programs, pitching events and office/co-working space.
Startupbootcamp – A global network of industry focused startup accelerators.
ImpactHub – A launch pad and incubator for impact-makers.
Prodock – The linking pin between city and port.
ACE Venture Lab – A startup accelerator that actively supports researchers, scientists, students and entrepreneurs with disruptive tech-driven ideas.

Investors and Funds

In 2015, €300 million went into funding startups in the Netherlands, however, based on Tech.eu data, Amsterdam has had a sluggish start to 2016 with only €24 million raised to date. To put things in perspective, according to Tech.eu data, London-based startups raised €680 million in Q1 2016, Paris €273 million and Berlin €194 million. The key investors are Peak Capital, SanomaVentures and Holland Venture.

And what about the level of tax?

Income Tax
Personal income tax rates are progressive for salary income. The income tax rates are for Holland are 5.1%-52%:
• 5.1% on income between €1 and €19,645
• 10.85% on income between €19,645 and €33,363
• 42% on income between €33,363 and €56,351
• 52% on income over €56,531

Corporate Tax
25%

VAT
The standard VAT rate is 21%

Talent Pool
Talent is essential in today’s technology disruption, transformation and success. Amsterdam, like many other cities have launched numerous initiatives investing in talent. 2015 saw the launch of the Growth Tribe Academy, the first academic growth hacking programme and the B.Amsterdam Startup School, which offers five startup talent modules. Across all sectors in the Netherlands, an average of 13.6% of vacancies were unfilled each quarter in 2014, while 21.9% went unfilled in the Information and Communication industry, according to Central Bureau voor de Statistiek (CBS) data.

Next month, we will be travelling to Eastern Europe. See you next month.

Sources

iAmsterdam
Startup Overseas
Tech.EU

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

SophieCohen

sophiec@mitchellake.com

EuroTrip // A journey through Europe’s Startup Scene: Sweden

Sophie on May 5, 2016

Let’s continue our European startups landscape tour with Sweden and Stockholm! Välkomna

Not only does Sweden have some of the most reputable unicorn names, but they have also become a key FinTech hub, recognised globally. Sweden is actually the second most prolific tech hub in the world on a per-capita basis. According to a recent report published by investment firm Atomico, Sweden has 6.3 billion-dollar companies per million people, compared to Silicon Valley’s 6.9.

In terms of funding, Swedish startups received over a billion dollars in investment in 2015, of which more than a quarter was dedicated to the FinTech scene, accounting for 18% of the total USD 1.5 billion FinTech investment across Europe. These investors include some of the biggest names in the industry, such as Sequoia, Accel, and Greylock, but also US Corporations such as Intel Capital, Mastercard Worldwide and American Express Ventures, who have invested in the Stockholm FinTech industry.

Firms and organizations in Sweden employ 592,000 individuals in high-tech areas. Let me tell you here that Sweden has a population of approximately 9.6m people. The Stockholm region alone employs 197,000 individuals in high-tech, and they have about 600 startups.

So who are the Swedish Unicorns?

• Skype – who hasn’t heard of Skype yet? Maybe just my aunties Helene and Gisele. They are both 83-years old and do not have internet yet, bless them…
• Spotify – Same question!? Same answer: Helene and Gisele.
• King – again, tell me that you have never tried Candy Crush or been invited to play Candy Crush at least once? You see…
• Klarna – a Swedish eCommerce company that provides payment services for online storefronts.
• Mojang – a Swedish video game developer founded in May 2009 under the name Mojang Specifications by game programmer Markus Persson. It’s best known for creating the popular independent game Minecraft, a sandbox game. Mojang is now owned by Microsoft.

And now to be more specific regarding the FinTech

• Klarna – to name them again
• iZettle – a mobile payments company
• Trustly – a payment method that allows you to pay with your online bank
• Bima Mobile – a leading provider of mobile-delivered insurance and health services in emerging markets
• KnCMiner – a bitcoin mining hardware manufacturer who produces cutting-edge ASIC miners

Here is our selection of co-working spaces in Stockholm
• Entrepreneurs Church: Tech co-working space in a former chapel
• Impact Hub: Tech co-working space
• Knackeriet: Co-working space for web, design and business
• Coffice: Café and co-working space

Accelerators/Incubators
STING – Stockholm Innovation and Growth
SEED Nordic Accelerator
Bonnier Accelerator

So how can you justify such a big success for such a small country? When did Sweden kick off their digital disruption?

Well, the Swedish government was fantastically visionary and embraced the technology and digital transformation from a very early stage, as early as the 90s. For example, they invested heavily in high-speed internet infrastructure, and they gave citizens tax breaks to buy computers. In addition, they facilitated working visas for skilled software engineers and developers. It’s not a surprise that the free file-sharing websites The Pirate Bay, Kazaa and uTorrent, were also founded in Sweden.

In addition to that, substantial social benefits reduce the risks faced by entrepreneurs and costs for companies, thus encouraging startup and innovation. Education for children is free, including university, and child care is heavily subsidised.

And what about the level of tax?

Businesses in Sweden only pay a national corporate tax based on yearly income. There is neither a local corporate tax nor any business license tax to be paid. Sweden has a low corporate tax rate of 26.3%. Possibilities to defer taxation of profit – by delegating up to 25%

What else Sweden has?

Abba of course, Saab, Volvo and Ikea. I’m actually glad that the names they are giving to their startups are not as complicated as the names they are giving to their furniture.

And finally, the money is the Kronor, not the Euro.

Next month, we will be travelling to Amsterdam.
See you next then!

Sophie Cohen has performed Global Executive Search for MitchelLake clients in Europe, North America and the Asia Pacific region. Currently based in our London office, Sophie specialises in senior executive talent for startup, global growth, market entry and digital transformation for some of the worlds most disruptive and dynamic brands.

Sources:

Telegraph
HHS
Startup Overseas

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

SophieCohen

sophiec@mitchellake.com

EuroTrip // A journey through Europe’s Startup Scene: France

Sophie on March 31, 2016

I would like you to join me as I take you on a European Startup tour. As I am French, let’s start with France – more specifically Paris – with the aim to understand what is going on there; what the landscape looks like and most of all where would be the best place for a start up to be created, incubated, accelerated, funded and put on a sky rocket.

In future instalments we will continue the startup journey to Berlin, Copenhagen, London, Amsterdam, Madrid, Lisbon and Bucharest.

France
Number of Startups
Today, greater Paris is home to 12,000 startups; a number that actually exceeds London or Berlin as it happens. In addition, the largest incubator in the world – aiming for 1,000 startups – will open its doors at la Halle Freyssinet this year, thanks to Free’s CEO, Xavier Niel. Further afield you also have cities like Bordeaux, Montpellier, Lyon, where a significant number of startups have recently emerged.
Already, the digital industry accounts for 1.5mill jobs in France.

French Unicorns
BlaBlaCar connects car owners and co-travellers to share city-to-city journeys through the largest rideshare service in the world.
Criteo, performance marketing.
Sigfox, builds wireless networks to connect low-energy objects such as electricity meters.
Deezer, a web-based music streaming service.
Vente-Privee, fashion ecommerce platform.
The one to watch: Withings who designs internet-connected devices and describes its products as part of internet of things.

Funds?
France has over 100 VCs (Kima Ventures, Partech, Alven Capital, Serena Capital, Avolta Partners…) who last year invested EUR 1.2bn. It is the second largest fund investment in Europe just behind the UK. bpifrance – the public bank – is also injecting capital into French startups. In 2014, they helped 150 of them with a total of EUR 645m. In 2015, they injected EUR 200m.

Who are the biggest VCs?

Kima Ventures, the most active angel investor in the world, was founded in 2010 by Xavier Niel and Jérémie Berrebi with the goal to support and finance innovative companies with seed capital all over the world. Since founding, they have backed over 200 startups in 23 countries and on average continue to make two new investments every week.

ID invest With €4 billion under management, LD Invest Partners is a European leader in private equity specialised in the low and middle market segments. LD Invest is managed by Christophe Bavière and Benoist Grossmann.
Portfolio: Criteo, Sarenza, Talend, Viadeo

Elaia Partners Co founded by Philippe Gire and Xavier Lazarus in 2002, Elaia Partners is an independent private equity boutique focused on Digital Economy. Elaia Partners currently manages more than €125 million mainly through Elaia Ventures. In addition they created Elaia Alpha, focusing on seed stage startup with a total fund of €45m fund.
Portfolio: 1001 Menus, AllMyApps, Carnets de mode, Criteo, ScoopIt, Goomeo, Mirakl

Partech Ventures is an International Venture Capital firm with offices in San Francisco, Paris and Berlin. It was founded in 1982 and has since invested in companies both in consumer internet and information technology. For example, Partech Ventures has invested in Sigfox and Scoop.it

Isai is an entrepreneur’s fund for early stage internet startups. It was founded in 2008 by Pierre Kosciusko Morizet, Stephane Treppoz, Geoffroy Roux de Bezieux, Tariq Krim and Ouriel Ohayon.
ISAI’s portfolio includes Blablacar, Tinyclues and 360 Learning.

Newfund Founded in 2008 by Patrick Malka and François Veron, Newfund is a french Venture Capital firm investing in tech startups, especially in the medical & health sector.

Alven Capital is a venture capital specialised in internet, media & IT activities. It was founded in 2000 and invests now in its fourth generation fund. Companies like Mailjet, Novapost and Open Classrooms are part of Alven’s portfolio.

Education?
Apparently France is short by over 50,000 software developers. The government has announced the creation of a “digital school” to help supporting this industry. In the meantime schools like Simplon, Webacademy, Webforce3, School 42, are able to train developers within a few months.

School 42, founded by Xavier Niel is free for students and will be able to train between 800 to 1,000 students at a time.

Tax?

The tax schemes currently available in France also provide strong opportunities to reduce the corporate tax and the global effective tax rate. I won’t go into too much details as it would be zzz… however to summarise, for a foreign company, setting a business as an innovative and doing R&D gives you a lot of tax reduction and could be beneficial. Below is a list of the various tax advantages available in France. The downside of it is that France admin system is so damn complicated…

– Refundable tax credit for research and development
– Tax credit for encouraging competitiveness and employment
– Tax incentive on intellectual property
– Tax-exempt share savings plans
– Temporary business local tax exemptions
– Innovative startup status

In summary, pros and cons:
Pros

– France is one of the biggest business angels in the world.
– Great schools and qualified people for a lower cost than an engineer in the valley.
– Less turnover.
– Great infrastructure in terms of speed of internet connection (optic fibre).
– France is under the employment law of 35h a week and 25 days annual leave.
– France has Med Sea, Ocean, Ski resorts, Mickey, Paris, Champagne and wine, beautiful food, French CanCan.

Cons

– Paperwork and admin are endless and complicated; it can take away lots of energy in a startup…
– Regulations are different than other countries and it can be sometime difficult for foreign companies to adapt.
– Employment regulations are extremely heavy and non flexible and again it can put off lots of businesses hiring in France. The Employment Law book comprise of 3000 pages (…zzz…)
– Scaling up can be difficult, due to the lack of trust from the banks in terms of helping companies to grow…
– France has got strong Unions with demonstrations happening almost weekly.
– Sadly, recent past history of terrorist attacks…

What do you know about the European Startup scene? We’d love to hear from you on Twitter @MitchelLake.

Sources
Kreston
France Info
La French Tech
Economie
Capital

MitchelLake is the world’s leading executive search and talent acquisition firm for startup, scale up and digital transformation ventures. Established in 2001 we have established operations in North America, Asia, Europe and Oceania.

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

SophieCohen

sophiec@mitchellake.com

EuroTrip // A journey through Europe’s Startup Scene: Germany

Sophie on March 22, 2016

Let’s continue our European startups landscape tour with Germany!!
Willkommen.

Digital Transformation in Germany

At #9 on the Global Startup Ecosystem Ranking, and #2 in Europe behind London, Germany is in a good place for start-ups to grow. Germany has the largest population in the EU, currently standing at 81.63 million.
In Germany, the major hubs for start-ups, digital transformation, design and disruption are Berlin with just over 1.300 start-ups and that represent 31.1 % of all of the start-ups in Germany, Munich (11.5%), Hamburg (8.3%) and Stuttgart (7.9%).

In 2015, Berlin alone has raised a staggering EUR 1.97bn for start-ups, according to the industry service Dow Jones Venture Source. Just to name some of the most famous ones: Rocket Internet (who is now publicly listed), Zalando, Zanox, or Wooga, and others like Auctionata, Delivery Hero, Home24, Outfittery, SoundCloud or ResearchGate.

Next to Berlin, there are entrepreneurial activities in Hamburg and Munich. Both cities host innovative and commercially successful start-ups such as Bigpoint, Kreditech, WestWing, Windeln.de, Zooplus or Xing.
The digital industry turns out to be the most important area for German startups: more than half of them are associated with the categories software as a service (15.3%), ecommerce (10.1%), IT/Software-development (8.6%) or online related services and applications (combined 18.6%).

The local co-working spaces: The Factory, Betahaus, St. Oberholz.

German Unicorns – Online customers to the front!
Delivery Hero, an online food-ordering service operating in 34 countries
Hellofresh who delivers great recipes and fresh ingredients to their customer’s doorstep
Auto1 Group, a used car purchaser based in Berlin
Home24, Europe’s largest online only retailer for home furniture and living

Investment / Funds
Growth and later-stage investments are largely completed by investors with a strong financial background. Whereas there are a few German investors able to participate in growth and later stage investments such as Earlybird, Lakestar, Holtzbrinck Ventures or Rocket Internet, these financing rounds are dominated by foreign investors from the UK, the US and increasingly also from Asia.

Investors in the Top 30 German start-ups, according to the cumulated funding volume, include (amongst others) players like Kite Ventures, Phenomen Ventures, DN Capital, Insight Venture Partners, Blumberg Capital, Kreos Capital or Luxor Capital, contributing not only equity but also venture debt instruments. This is complemented by investment banks, such as Goldman Sachs and an increasing number of financial investors like KKR or Scottish Equity Partners.

In Germany, more and more Corporate companies are investing in start-ups, especially the media and automotive industry such as Axel Springer Digital Ventures • Bauer Venture Partner • BASF Ventures • Bertelsmann Digital Media Investment • BMW i Ventures • Deutsche Post Ventures • Deutsche Telekom Capital Partners • amongst many others.

Accelerators / Incubators
In addition to investing, some Corporate companies have established incubators and accelerators. They are similar in terms of financial support, providing workspace or business advice:
• Allianz Accelerator
• agile Accelerator (E.ON)
• Axa Innovation Campus
• Axel Springer Plug and Play Accelerator
• Bevation (Bertelsmann)
• BMW Start-up Garage
• CoLaborator (Bayer)
• CommerzVentures (Commerzbank)
…amongst many other.

Taxation in Germany
Taxation in Germany is not dissimilar to the structures in other western countries, such as the UK. You pay income tax throughout the year, deducted each time you receive a wage.
What follows is the current rate of tax (in Euros):
• 0% on income up to 8,004
• Progressive rates 15% – 42% on income between 8,005 and 52,881
• 42% on income between 52,882 and 250,000
• 45% on income of over 250,000

Corporate tax is set at 33.3%.
VAT / Sales Tax is 19.%. With a reduced rate of 7%.

Apparently this level of tax associated with the legal complexity of setting and developing a business in Germany place the country at the last place in the EU when it comes to legal and tax framework for venture capital. In particular, Germany is seen as not attractive as a location for funds, so they often headquarter in other European and non-European countries.

“Although Berlin’s lifestyle is very attractive to startups, its red tape and legislation can be hard for small businesses to overcome. Kevin McDonagh, CEO of Android consultancy startup Novoda, says: “Germany is renowned for its bureaucracy and process. The first few months were very difficult to get anything done, legal and day-to-day running. Doing it in a foreign language with foreign laws is difficult.”

Furthermore, an announcement was made in December 2015 that the draft 2016 annual economic report would include a tightening of antitrust law. The move is now official: the German government has announced a significant expansion in merger controls – a fatal decision for start-ups and investors in Germany.

Talent acquisition in Germany
In Germany as in most countries, there is a big lack of skilled developers. Salaries can be really high for Senior Developers and most of the time start-ups are struggling to compete on this element alone.

One way that German Start-ups have gone about his challenge is to attract young talent from Eastern Europe who are willing to relocate to German. It is being successful thanks to 3 main factors:
1. They adopted English as the main work language
2. They allow working remotely and flexibility
3. They allow unlimited vacation

Next month… Copenhagen

If you didn’t catch our tour of France’s startup landscape, click here.

Sources:
CBS
EY
StartUp Valley
Startup Overseas

Author

Sophie Cohen is Head of Research and Delivery for the MitchelLake Group. She has over 15 years experience in executive search across various industries including industrial, pharmaceutical, finance and digital.

Sophie is a trained Psychologist and has lived and worked in France, the UK, the US and Australia. She speaks French and English fluently.

SophieCohen

sophiec@mitchellake.com