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New York: The New Center of Gravity of European Tech

While it’s certainly possible to build a tech giant solely in Europe, the path to building a global, category-dominating company will, for most European tech startups, require building a strong presence in the US. As a result, sooner rather than later, European startups will start thinking through their US expansion strategy.  One deceptively simple question … Continue reading New York: The New Center of Gravity of European Tech

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While it’s certainly possible to build a tech giant solely in Europe, the path to building a global, category-dominating company will, for most European tech startups, require building a strong presence in the US.

As a result, sooner rather than later, European startups will start thinking through their US expansion strategy.  One deceptively simple question of that strategy is “where should we build our US headquarter”?

Up until a few years ago, there wasn’t much of a debate: Silicon Valley, despite the distance and time difference with Europe, was the obvious choice. There was essentially nowhere else to go, except perhaps Boston for life sciences.

However, the stellar rise of New York as a tech hub over the last few years has changed things dramatically.  

Back in 2014, I put together a presentation that highlighted the merits of New York as a great place for European startups to build their US headquarters: NYC: A Natural Home for European Entrepreneurs

At the time, however, the trend was just starting.  

Fast forward six years to today, and it feels like the “Europe to New York Corridor” has truly emerged.  

A couple of  days ago, I tweeted this: 

Twitter lends itself to statements that sound very definitive, and perhaps provocative, with few nuances. So let me add a few caveats:

  • It’s entirely possible to build great startups in Europe only, without being active in the US (Deliveroo, Doctolib, Vinted, etc.), as mentioned above
  • London, Berlin and Paris are the clear leaders of European tech. Many other places are incredibly active (Nordics, Netherlands, Spain, Portugal), and several hubs are emerging in Eastern Europe.
  • There are several other choices worth considering on the East Coast – various European startups have chosen Boston, Washington DC or Atlanta (see OutSystems, out of Portugal)
  • San Francisco remains the clear center of the tech universe

Caveats aside, I believe that New York truly has emerged as a new center of gravity for European startups.

The sheer number and density of European startups moving to New York is very obvious to anyone spending time in the ecosystem.  It truly went from a trickle to a full-on flood. There are also countless European entrepreneurs starting US companies out of New York (a la Datadog). 

According to La French Tech, there are over 200 French startups currently active in New York – and that’s just one European country!

This is also a particularly high quality group, that includes many fast-growing companies.

Off the top of my head, here a few European unicorns (and more) that have a US HQ in New York, or have re-headquartered entirely in New York: 

  • Spotify (Sweden, B2C)
  • UiPath (Romania, B2B)
  • Collibra (Belgium, B2B)
  • Dataiku (France, B2B)
  • Celonis (Germany, B2B)
  • Letgo (Spain, B2C)
  • N26 (Germany, B2C)
  • Others?

What are the key drivers behind the acceleration of the trend?

What *has not* changed over the 5-6 years:

  • The fundamental geographical advantage of the East Coast over the West Coast (seen from a European perspective), namely the time difference and distance, has obviously always been there
  • New York has always had a unique density of potential customers, as many Fortune 1000 companies are either headquartered in New York, or have a very large office there – particularly important for B2B companies
  • New York has always been culturally closer to Europe.

What *has* changed over the last 5-6 years:

  • There’s now plenty of tech talent in New York.  You no longer need to “pull from finance”. Many people have worked at one, two or three startups back to back during their careers.  This will only accelerate.
  • There’s also plenty of capital in New York, from seed to growth. The two most active US investors in European companies (Insight and General Atlantic) are both based in New York.
  • New York is now a fully mature ecosystem. Once known for commerce, media and ad tech, has become a great place to build any type of company.  It’s telling that, out of the three largest tech successes in New York, two are core enterprise infrastructure companies: Datadog and MongoDB.
  • New York has deep connectivity to the West Coast. Google has gigantic offices in New York. Facebook (which just leased 1.5M sq feet at Hudson Yards, here), Amazon (even without HQ2), Salesforce (which has its own tower in NYC as well), Apple, Stripe, etc. – everyone is here, in a major way. All major Silicon Valley VC firms heavily invest in companies based in New York.

The world, also, has changed:

  • Europe has considerably stepped up its game. There’s simply a lot more European startups that have global ambitions.  This in turn has increased the number of companies looking for a US home, with many of them landing in New York, which has helped create a network effect of sorts.
  • San Francisco has experienced its own issues – saturation, costs, regulatory issues – and a growing number of people have been moving to other parts of the US.
  • With Brexit, London has become a less obvious choice, if you’re a non-British company thinking about your first international office.
  • The world of work has changed. Technologies and processes around distributed offices and remote work have drastically improved over the last few years. Many less people these days question whether you can truly build a successful startup with a foot on each side of the Atlantic: leadership, sales and marketing in the US, and product and technology in Europe. The model just works.

In summary:  now that New York is a large and fully mature tech ecosystem, where you can find plenty of talent and capital, why endure the borderline unworkable time difference with San Francisco?

An ever increasing number of European startups have come to this conclusion, turning New York into a new center of gravity for many of the most ambitious companies and entrepreneurs coming out of Europe.

Source: http://mattturck.com/nycgravity/

Private Equity

Boston startups expand region’s venture capital footprint

This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth […]

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This year has shaken up venture capital, turning a hot early start to 2020 into a glacial period permeated with fear during the early days of COVID-19. That ice quickly melted as venture capitalists discovered that demand for software and other services that startups provide was accelerating, pushing many young tech companies back into growth mode, and investors back into the check-writing arena.

Boston has been an exemplar of the trend, with early pandemic caution dissolving into rapid-fire dealmaking as summer rolled into fall.

We collated new data that underscores the trend, showing that Boston’s third quarter looks very solid compared to its peer groups, and leads greater New England’s share of American venture capital higher during the three-month period.

For our October look at Boston and its startup scene, let’s get into the data and then understand how a new cohort of founders is cropping up among the city’s educational network.

A strong Q3, a strong 2020

Boston’s third quarter was strong, effectively matching the capital raised in New York City during the three-month period. As we head into the fourth quarter, it appears that the silver medal in American startup ecosystems is up for grabs based on what happens in Q4.

Boston could start 2021 as the number-two place to raise venture capital in the country. Or New York City could pip it at the finish line. Let’s check the numbers.

According to PitchBook data shared with TechCrunch, the metro Boston area raised $4.34 billion in venture capital during the third quarter. New York City and its metro area managed $4.45 billion during the same time period, an effective tie. Los Angeles and its own metro area managed just $3.90 billion.

In 2020 the numbers tilt in Boston’s favor, with the city and surrounding area collecting $12.83 billion in venture capital. New York City came in second through Q3, with $12.30 billion in venture capital. Los Angeles was a distant third at $8.66 billion for the year through Q3.

Source: https://techcrunch.com/2020/10/23/boston-startups-expand-regions-venture-capital-footprint/

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Private Equity

Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election.

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Alternative Investments/Real Estate: Housing Market Demand Is “Insane”

https://platodata.net/wp-content/uploads/2020/10/alternative-investments-real-estate-housing-market-demand-is-insane.jpg

Redfin CEO Glenn Kelman says the boom could last into next year.

Speaking to CNBC on Power Lunch, Glenn Kelman, CEO of real estate brokerage Redfin (NASDAQ: RDFN), said he expected the current boom conditions in the housing market to last well into next year. He attributed the high demand to affluent professionals looking for remote homes as well as low interest rates. Also, he thinks some sellers will put their properties on the market only after the presidential election. (CNBC)

Kelman: Too good to last forever

“This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Kelman said.

Recent data from the National Association of Realtors shows up the strength in the housing market.

Existing home sales shot up 9.4% in September beating expectations. Even though the median purchase price of a home rose approximately 15% year over year, there is just a 2.7-month supply of for-sale homes, showing tight market inventory conditions.

The 30-year fixed-rate mortgage averaged 2.80% for the week ending Oct. 22, down from 2.81% in the previous week and 3.75% a year ago, according to the Freddie Mac Primary Mortgage Market Survey. Therefore, mortgage rates crept even lower in the latest week.

However, “there’s no way it can last forever,” Kelman warned of the bullish conditions.

Canada: Off the charts

Meanwhile, at the northern neighbor, home sales activity in September is described as “off-the-charts.”

Housing data released by the Canadian Real Estate Association (CREA) last week showed a nationwide year-over-year increase in sales of 45.6%.

This was a new all-time monthly record for the third month in a row.

“This is starting to sound like a broken record (about records being broken), but Canadian home sales and prices set records once again in September … as they did in July and August,” said Shaun Cathcart, senior economist at CREA, in a statement.

Real Estate ETFs in the U.S.

The year-to-date performance of some real estate ETFs is shown below:

iShares U.S. Home Construction ETF (ITB)              +24.61%

SPDR S&P Homebuilders ETF (XHB)                          +20.83%

Vanguard Real Estate Index Fund ETF                      -13.91%

It may be noted that despite the boom conditions in housing, real estate ETFs and stocks have declined in recent days.

According to Barron’s, this may be due to yields on the 10-year and 30-year Treasuries moving higher in recent weeks.

Other reasons could be fears of inflation ticking up in the future amidst an improving economic situation.

Nevertheless, the view is that interest rates are likely to remain low for longer. So demand may remain strong.

“Part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free, so, of course, they’re going to use that money to buy homes,” said Redfin’s Kelman.

Related Story:   Mortgage Rates Set Another Record Low; Real Estate ETFs Could Benefit

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Source: https://dailyalts.com/alternative-investments-real-estate-housing-market-demand-is-insane/

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Private Equity

Asda’s new owner EG Group seeks new leadership ahead of IPO – report

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month

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UK grocer Asda Group’s new owner EG Group is looking for a new chairman and independent directors as it prepares for a £10bn initial public offering, The Timesreports.

EG Group is owned by the billionaire Issa brothers and the private equity firm TDR Capital, who teamed up for a £6.8 billion takeover of Asda last month.

The move comes after Deloitte resigned last week as the company’s auditor because of concerns over the group’s governance and lack of internal controls, according to the publication.

A decision on candidates will be taken before the end of this year, although roles haven’t been finalised yet as the company is in the process of deciding whether to float in the UK or the US, The Times reports.

Write to Barcelona editors at barcelonaeditors@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/asdas-new-owner-eg-group-seeks-new-leadership-ahead-of-ipo-reports-20201023

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