🚪Developer-First #133 - Europe IT Budgets' Gatekeepers

Hello friend,

Following Ian Hogarth’s essay in the Financial Times, there has been much chatter about what it would take for Europe to build its first trillion-dollar startup. While I agree that Europe needs more “audacious capital”, like in the US, we need to remove one major blocker: Service Integrators.

With European IT spending being almost on par with the U.S. ($1.2T vs. $1.4T), European tech startups focusing on the “home” market should be able to become as large as their American counterparts. But that’s not the case, and the primary reason I hear is the European market’s fragmentation.

With each country having its own buying practices, regulations, and networks, tech companies need to address the markets one after the other. I don’t think it’s why European enterprise SaaS companies don’t scale as fast as in the US.

The real bottleneck is how Service Integrators like Accenture and Capgemini dominate IT budgets in Europe. In France alone, €35B—half of the total IT budget—flows through Service Integrators.

These providers often prevent startups from accessing budgets, favouring established players like Microsoft, Salesforce, and SAP, with whom they have partnerships. Worse, on many occasions, MSPs prefer to “rebuild” a custom version of a startup’s product rather than push for an existing solution, which increases their invoices even more. For startups, this means less budget to target and an uphill battle against these gatekeepers.

So, how can we fix this? One approach could be for Service Integrators to promote startups over incumbents (unlikely). Alternatively, large enterprises could allocate recurring IT budgets for startups, moving beyond limited proof-of-concept projects. For this to happen, large enterprises’ CIOs would need to take more risks with new, yet well-funded providers rather than going for the easy incumbent solution.

Maybe this is where the “audacious capital” needs to come from. What do you think?

P.S.: if you're a CTO or tech leader, you can join the free Unicorn CTO Slack community. We're a small group of international CTOs and tech leaders, and we often meet for virtual (or not) coffees.

Now, let's dive into last week's developer-first transactions.

💰 Market Summary - Week of December 2nd, 2024

• 7 companies raised $843.7 million across 5 product categories in 4 countries.
• Europe-based companies attracted 1.7% of the total funding vs 98.3% for North America-based companies.
• Security is the category that attracted the highest funding.
• 3 companies provide or contribute to an open-source product.
• 2 companies were acquired this week.

🧩 Funding by Product Category

🌎 Funding by Region

🏢 Funding By Company

Tenstorrent, based in Toronto 🇨🇦, raised a $693 million Series D led by Samsung Securities and AFW Partners. Tenstorrent develops advanced computing systems tailored for AI applications, offering significant improvements in processing speed and efficiency for complex neural networks. (more)

Upwind, from San Francisco 🇺🇸, secured $100 million in Series B funding led by Craft Ventures. Upwind’s Cloud Security Platform enhances cloud security from build-time to runtime, optimising productivity across development, security, and DevOps teams. (more)

Aerospike, located in Mountain View 🇺🇸, received $30 million in growth financing from CIBC Innovation Banking. Aerospike provides a high-performance, scalable real-time database solution designed to manage vast amounts of data with minimal latency. (more)

Pathway, based in Paris 🇫🇷, raised $10 million in Seed funding led by TQ Ventures. Pathway is pioneering live AI systems that mimic real-time human cognitive processes, powered by a high-speed data processing engine. (more)

Pixeltable, from San Francisco 🇺🇸, secured $5.5 million in Seed funding led by The General Partnership. Pixeltable offers a Python library that simplifies handling multimodal data, featuring built-in versioning and lineage tracking to aid machine learning workflows. (more)

Netbird, based in Berlin 🇩🇪, garnered $4.2 million in Seed funding co-led by InReach Ventures and existing investor Nauta. Netbird provides an open-source VPN solution that simplifies secure network creation without the need for complex configuration. (more)

Cake, located in New York 🇺🇸, raised $1 million in Seed funding backed by Google’s AI-focused fund Gradient Ventures. Cake delivers a comprehensive AI project infrastructure that streamlines the adoption and management of AI/ML technologies for businesses. (more)

🤝 Mergers & Acquisitions

Numeral, based in Paris 🇫🇷, was acquired by Mambu. Numeral offers a cutting-edge payment technology solution that serves as a universal gateway for fintechs and banks, facilitating connections to banking partners and simplifying payment processing through a modern payments hub. This acquisition enhances Mambu’s portfolio by integrating advanced payment orchestration capabilities. (more)

QMetry, located in Santa Clara 🇺🇸, was acquired by SmartBear. QMetry specialises in agile testing and quality management, providing tools that enable Agile and DevOps teams to accelerate the delivery of high-quality software. This acquisition expands SmartBear’s testing solutions, reinforcing its position in agile development and test management. (more)

⭐️ Trending GitHub Repositories

LadybirdBrowser / ladybird (✩ 3,655 stars this week) - Truly independent web browser.

lobehub / lobe-chat (✩ 2,990 stars this week) - Lobe Chat - an open-source, modern-design AI chat framework.

aidenybai / react-scan (✩ 2,183 stars this week) - Scan for React performance issues and eliminate slow renders in your app.

👍 Trending Developer-First Products on ProductHunt

Coval (👍 1,064) - Simulation & evals to ship delightful voice & chat AI agents.

Oopsie (👍 908) - Debug Flutter & React Native apps with AI & Session Replays.

Supabase AI Assistant (👍 741) - Idea to Postgres database.

🎙️ Recent Talks

Last week, I was invited to speak at the Apidays Paris and Open Source Experience conferences about developer-first fundraising and M&A trends.

If you're interested to get access to my data and insights, you can access the slides here:

Thanks for reading this far! I'm excited to make this newsletter as helpful as possible and I would appreciate if you could share feedback or anything you want to find here.

Farewell,

Daniel