2020 Predictions

As per edition #57, If I don’t get all of these predictions right by the end of next year, I’ll donate €1,000 to a charity of my choice. We’ll check them up together on December 31st, 2020.

European tech moves fast

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Europe will keep growing

2020 will be a great year for European tech. Money is pouring in from everywhere, and it won’t stop anytime soon.

Last year European funds raised €13 billion and a whopping 136 new funds were started, a record since Y & S been tracking it and, according to them, since the beginning of European venture times.

2020 was the first year that venture capital outperformed family. I already covered it before, so here’s a snippet from my Europe has Major Bragging Rights edition:

Suddenly, the data (and the general consensus) says that European tech is not a risky investment, but a “sure thing.” Local Private Equity, family offices and pension funds have woken up to the fact that European tech returns are actually quite good.

On top of all that, US regulation put extra stress to foreign money, who needs to find a new home. We’ll make it cozy here in Europe.

The “European tech” narrative is as strong as ever, and the world is catching up.

Quantifiable prediction #1: In 2020, European companies will raise at least $40 billion, and European funds will raise more than €15 billion.

VC-subsidized industries will consolidate

In 2019 I predicted that the Scooter Craze will go down, and we’d see some consolidation in the market. I was right back then. I believe that 2020 is the year that all the VC-subsidized fun (free delivery, cheap rides, free money) we consumers have been having will stop.

After the WeWork and Uber debacle, it’s time to go profitable. Profitable is why people love Bolt, and the reason Glovo raised €150 million.

The industries most affected by this will be the ones who rely heavily on incentives (perks, discounts and freebies) or artificially low prices to grow – think food delivery, mobility and fintech.

An unintended consequence of this is that it’ll be harder for new startups to fight the newly-minted incumbents (Glovo, Uber, etc.) because they won’t have the cash to put together the incentives that helped them grow in the first place - free stuff.

Quantifiable prediction #2: there will be at least five $50m+ acquisitions in the fintech, food delivery and mobility space.

Paris will emerge as the great winner

In spite of what the Yellow Vests told the world with their weekly protests, 2019 was arguably France’s year. The French startup ecosystem – led by Paris – grew at an unprecedented rate.

In 2019, French startups raised €4.7 billion, up from €3.3 billion in 2019. That’s a 42% increase in a single year. By comparison, Germany grew by less than 20%.

On top of that, Macron launched a €5 billion late-stage pledge to tackle late-stage capital, France’s Aquiles heel.

Finally, the French visa came into effect, making hiring foreign talent easier and faster than hiring French workers.

Having lived in Paris for more than a year, I’m sort of familiar with the Paris startup scene. And I’m long Paris.

Quantifiable prediction #3: Paris will raise at least €4 billion in capital in 2020, with 2 new unicorns.

Regulators will try to tame the public, to no avail

In the Revolt of the Public, Martin Gurri states:

“We are caught between an old world which is decreasingly able to sustain us intelectually and spiritually, maybe even materially, and a new world that has not yet been born… Each side has a standard-bearer: authority for the old industrial scheme that domainted globally for a century and a half, the public for the uncertain dispensation striving to become manifest.”

This battle between the old institutions and the new network is faught on an infinite array of battlefields – from journalism to democracy itself.

In Europe, one battlefield in which it’s been played for the past couple of years is regulation. I wrote about the dangers of Article 11 and Article 13, how the UK likes to play internet God, and how GDPR failed spectacularly.

At this point, you’d figure that regulators understand that they single-handedly can’t shape the world to their pleasure. I think that’s a no.

I predict that in 2020 we’ll see a wave of new regulation attemped to be passed with the goal of taming the public and the internet, and whatever passes, will fail spectacularly. Maybe 12 months isn’t enough time for regulation to, but we will see the beginnings of that failure.

Quantifiable prediction #4: we’ll see a regulatory body try to pass at least one law trying to significantly alter the Internet as we know it.