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Startups Are Going Into Debt
Increase in venture debt, how Nooon raised 350k, and more...
SearchVentures
July 17, 2024
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EU startups are turning to venture debt
European startups are using debt to scale rather than giving up equity. Venture debt so far in 2024 has already surpassed last year’s total by 38% and is on track to break the 2022 record.
Why are European startups picking debt over equity?
This Week’s Trends
European startups are taking on debt
How this founder raised 350k
$2.3 billion AI startup fund and more
Read Time 4 minutes
The Startup Trend
Increase in European venture debt
Venture debt investments in Europe, 2014-2024 YTD
As of July, Venture debt in Europe has reached €17.8 billion this year, already surpassing last year’s total and on track to beat the 2022 record. Due to the recent downturn, VC funding has become inaccessible for startups, turning them to venture debt despite higher interest rates.
> With a fall in valuations due to the downturn, late-stage startups are opting for venture debt, causing it to go up while the deal count stays low.
> The collapse of Silicon Valley Bank left a gap in the venture debt market even in Europe, allowing new lenders to gain market share.
💡With interest rates across Europe now going down, venture debt will become cheaper for startups, likely leading to even more of an uptick later this year.
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Startup feature
How nooon raised 350k and got to revenue in 180 days
nooon is a software startup designed to simplify influencer marketing for hotels. By connecting hotels directly with influencers, nooon allows hotels to turn influencer campaigns into direct bookings, bypassing their reliance on platforms like Booking.com and Expedia.
“We built nooon to solve the inefficiencies and high costs hotels face with traditional booking platforms, allowing hotels to drive more direct bookings and create high-quality content through influencers”
One of the most common obstacles that early-stage founders will face is how they should pitch investors to turn an idea into reality.
The founder of nooon, Nooah, took a different approach by pitching his startup to 12 hotels during the first week of conceptualizing nooon. He then developed a simple MVP tailored to what the hotels needed.
“By actually talking to our customers since day 0 we have been able to build a platform and a business that delivers sales and real value even though we are only 452 days into building this business”
This is how nooon managed to convince investors
Nooah Riijärvi is a 23-year-old serial entrepreneur. After exiting his previous startup, he was looking for his next venture.
“After my exit with Surge, I lived in a hotel for two months. Conversations with the hotel’s GM about Booking.com and influencer marketing sparked the idea for nooon”
nooon raised €350k as an Angel round and did this by bringing on key investors early on by approaching them at VC events, garden parties and Instagram.
With a well-rehearsed pitch and a direct approach, he locked in a handful of notable investors in his Angel round that would allow Nooah to skip endless VC pitching or mass emailing.
By convincing these key investors to join the board for nooon as advisors he then leveraged their expertise and existing network to attract more investors.
“The first 10 Angel investors all have a reason and purpose why they invested and why I fought hard to get them to invest, some help us with b2b sales, some will help us structure our future investment rounds and some are there to just give advice when needed”
Winning 150k in a pitch competition
Getting his idea in front of both founders and investors regularly, Nooah also received 150k after winning the Arctic15 pitch competition - an added bonus to their funding round.
What is next for nooon?
“Our goal is to create the best workflow tool for hotels, much like a HubSpot for the hospitality industry,” says Nooah.
The team behind nooon is now planning to add features like content leasing and AI-powered campaign management, aiming to build a comprehensive workflow tool for hotels.
Headline News
This Week In Startups ✍️
Founders
> LegalFly, a Belgian startup which is building a generative AI copilot for lawyers, has raised a €15 million Series A.
> VARM, climate tech startup based in Berlin raises €5.7 million Seed to address skill gaps in building insulation.
> Cubbit, SaaS startup based in Bologna raises $12.5 million for a geo-distributed cloud storage solution.
Investors & VCs
> Alpine Space Ventures closes €170 million startup investment fund to support primarily European portfolio of space sectors.
> Accel raises $650 million fund for European early-stage startups. The US VC says it remains deeply committed to Europe despite the downturn.
> Index Ventures, VC behind Mistral, Revolut and Slack has raised $2.3 billion to capitalize on the recent surge of AI companies in Europe.
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Odin Lund & Hari Mohandas
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