NAUTA’S INSIGHT ON THE INDUSTRIES & TECHNOLOGIES THAT WILL SHAPE EUROPE’S STARTUP ECOSYSTEM IN 2021.
We sat down with Nauta’s Venture Partner, Pratima Aiyagari, and Principals Borja Breña and Markus Düttmann to discuss their 2021 insights, and the technologies, verticals, and ecosystems they are most excited about.
What space are you most excited and bullish about in 2021?
Markus: “I’ve been doing a lot of research on commercial open-source. I see open-source as a business model disruption and love that it’s a positive-sum dynamic. People unlock value by working together and are motivated to contribute to a common project. This might be a completely different way of doing business – where there is no longer competition in a classical sense, but people working together to build stuff. This requires new ways of thinking, a new way of building and structuring a company, a new way of hiring and new ways of marketing, there’s a lot of stuff happening here.”
Pratima: “Deep tech is poised to have a breakout year, but how we bring the right amount of capital to these deep tech companies has traditionally been a challenge. In my opinion, there needs to be a convergence of deep tech VCs, public funding, and corporate VC for some of these companies to get off the ground. My focus is to start building the bridges between these various investor communities to support deep tech ventures at the earliest stages. I am also interested in how we use AI within the enterprise and what tools and capabilities are necessary to manage the entire lifecycle of ML projects. We are at the very beginning of this hugely transformative technology and from my vantage point the innovation in this segment is enormous, and changing rapidly with feedback from practitioners
Borja: “Similar to what happened in the 2010s with fintech, which has evolved very much since the 2008 financial crisis, the Covid-induced 2020 crisis has surfaced a clear need for digital progress in the health systems worldwide so this will spur investment in health technology by both private and public institutions. I think there will be a bull market in health tech not just in 2021 but for the whole decade.”
“We have to place ourselves squarely in the heart of where innovation happens, for most deep tech domains this is in the stellar academic institutions in the UK.”
How do you see the geographies you invest in (Germany/ UK/Spain) evolving?
Markus: “Although Germany may not have participated in the first wave of software companies in the same way as e.g., companies in the Silicon Valley, I think now it is well set up for things to come. The country is filled with good engineers and technical universities like TU Munich or KIT are doing a fantastic job at educating their students. At the same time risk appetite seems to be growing and more people with a technical background are starting a business. I think this might be a very interesting trend for Germany.”
Pratima: “We have to place ourselves squarely in the heart of where innovation happens, for most deep tech domains this is in the stellar academic institutions in the UK. I think it remains quite crucial for us to collaborate with these academic institutions. As a venture capital firm, we want to stand ready to be able to support scientists as they transition from their academic careers to building successful businesses. The UK and much of Europe are lagging behind their US counterparts in successful university spin-outs, and I remain optimistic about this relationship between academia and VC evolving to support deep tech businesses.”
Borja: “2020 was difficult for the Spanish VC ecosystem because lots of VC managers were still fundraising and many rounds were delayed because of the uncertainty. Fortunately, in 2021, we have almost a billion euros worth of newly created funds in Spain and Portugal and that means plenty of money to be deployed in the next 3-4 years, most of it into early-stage companies. Spain and Portugal have good, resilient talent and now they can have access to the money: we are very hopeful about the future.”
“In 2021 we will see the adoption and consolidation of digital solutions brought about the Covid-induced lockdowns and radical lifestyle shifts. Human connections and interactions are getting redefined, and this will create room for unthought-of value propositions to benefit users and customers.”
How do you see startups recovering or even gaining more strength with the backdrop of Covid?
Markus: “If anyone knows how to be flexible and how to deal well with stressful situations it is a startup. Still, founders should incorporate all the learnings they gathered in 2020 on how to do remote work, how to hire a remote team, how to fundraise remotely, and how to sell remotely into their standard toolbox. Even if things would go back to normal, some of these strategies have proven very powerful and should be continued.”
Pratima: “It’s very important for startups to keep an eye on their financial plan and see how far they can try to stretch the cash that they have available. I imagine that a lot of companies already cut back on costs last year. I think 2021 for most, would probably mean a similar lean-approach.”
Borja: “In 2021 we will see the adoption and consolidation of digital solutions brought about the Covid-induced lockdowns and radical lifestyle shifts. Human connections and interactions are getting redefined, and this will create room for unthought-of value propositions to benefit users and customers. Health tech, fintech and talent education and management are the key focus industries for the coming decade.”
Lastly, what was your FOMO deal of 2020?
Markus: “Jina is an open-source project focusing on search. Making use of deep learning, the team has built a neural search engine ready to deal with unstructured data like videos, texts, documents, etc. In a world too full of information, the importance of this cannot be underestimated! Advanced search tooling like Jina enables everyone to build search everywhere. And that’s a very, very promising idea.”
Pratima: “I don’t have a FOMO deal to call out in 2020, as such, but I have been really excited about both Messagebird and Graphcore in the past few years coming from the European ecosystem. We are looking for companies that have a global outlook from day one such as these two.”
Borja: “Capchase (though incorporated in the US it was co-founded by Europeans) as we love the team, which we knew as they previously worked at our portfolio company Geoblink, and it solves a significant pain that we see daily in our portfolio companies.”
With our newly announced fund, our investment teams will be busy finding, meeting, and investing in the next-gen of Nauta portfolio companies, so if you’re an ambitious founder fundraising, get in touch here or reach out to Pratima, Markus and Borja directly.
Nuevos informes y series de datos: El Capital riesgo Informal en España 2020 / Informe de Impacto Económico y Social del Capital Privado en las operaciones de Middle Market en España. 2018 (ASCRI) / Informe de Impacto Económico y Social de los préstamos otorgados por Enisa
Otros informes destacados: Madurez del Venture Capital en España. (English version)/ Financiación de startups de Energía en España / El tiempo de las desinversiones en Private Equity en España (English version)