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  • Originals
  • 14 January 2022
  • 8 min read
  • Words: Northzone

(Happy New) Year in Motion: In 2022, Winners Will Take It All, and the Latest News from Northzone

Sunset view from Northzone's Stockholm office, Dominik Esen

2021 was a whirlwind, to say the least – especially after 2020. Since the pandemic shook the economy to its core, founders have had to roll up their sleeves and leave it all on the table. After two relentless years, it sounds like this holiday break was one of the first to allow some disconnection and unwinding for everyone. The good news is, the startup ecosystem is now booming and there’s no reason to believe 2022 will bring a slowdown. In Europe alone, investments in 2021 hit more than $120 billion — that’s nearly three times what was raised last year. In the U.S., this number skyrocketed, with startups raising about $311 billion, i.e. about half of the world’s funding total. All in all, the global venture market nearly doubled in 2021, according to the research firm Crunchbase, with $643 billion going into startups worldwide.

2021 was a remarkable year for Northzone, too: we added 7 unicorns to our active portfolio of 64 companies, bringing the total number of unicorns to 13. That’s by far the fastest pace we’ve ever witnessed as investors in 25 years of backing entrepreneurs. Some of these companies reached other milestones since reaching their $1bn mark: Trustpilot, which was introduced on the London Stock Exchange for $1bn, has seen its stock value steadily grow to $3bn. Other companies like Tier and Personio announced equity commitments towards fighting climate change, as more companies start to take their social responsibility seriously. To support all this growth, we strengthened our team with several promotions and hires — see below for the full scoop. 

More broadly in the portfolio, dozens of companies reached category-defining statuses. Hopin became the leader in virtual events, creating new usages as the global workforce went remote; TrueLayer continued to make open banking seamless and reached unicorn status; Klarna built a completely new shopping experience; and Forto solved giant supply chain pain points — a welcome solution as we experienced the biggest shipping crisis in history… Einride was featured as one of Time magazine’s ‘Best Inventions of 2021’ for its cleaner, driverless trucking, and Flink was named the #1 fastest-growing company in 2021 on Sifted (2020’s fastest-growing company was our very own Hopin, wink!). It would take too long to write out all of Northzone family’s achievements, so consider these just a few highlights. 

A market custom-made for (winning) founders

2022 will be another prime year for founders. The competition between angels, seed investors, and early-stage funds is bigger than ever and we believe this puts even more power in the hands of founders. With such an increase of liquidity events in the market in 2021, serial entrepreneurs will reinvest their money and their expertise into the ecosystem. Some of our entrepreneurs have already begun: Daniel Ek, who’s leading Spotify’s audio expansion into the world, launched Prima Materia, a fund that invests in “moonshots.” Founders with winning teams will secure internal rounds even faster given how hot the market is, giving them more time to build revenue books and slick products. 

 

The remake of healthcare processes 

We believe that innovation in the healthcare industry is just getting started. Not only is the market a $5tn industry across Europe and the US, but it has also undergone massive change already, addressed by top entrepreneurs. Historically, the healthcare market has been driven by specific treatments rather than holistic processes, which has created inefficiencies. Companies like Spring Health and Thirty Madison are leading the way and expanding globally. Both were propelled to unicorn status in 2021 and experienced exponential growth in user adoption.

 

The rise of Web 3.0 

Web 3.0 is not a fad — that’s why we’ve been investing in it since 2015. Furthermore, it has ripple effects on numerous industries and creates new opportunities for creators, investors, and entrepreneurs alike. In the year(s) to come, the technology behind Web 3.0 will be integral to the next stage of content rights, due to increased competition at the distribution layer; we’ve seen this with companies like Livepeer, Magic Link, Gro Protocol. More recently, Homa Games, a platform studio for mobile gaming creators, partnered with crypto giant’s Sorare to bring NFTs into games. We’ve seen several early innovations in this space in the last few months, from NFTs to DAOs, which empower creators through decentralisation. 

 

The symbiotic collision of fintech and e-commerce

Speaking of innovation, we expect to see much of it at the intersection of fintech and e-commerce. In a few years, we will look back at our current definition of ‘fintech’ and notice a distinct shift in the digitisation of finance. In fact, what we are witnessing now is a realignment of value flow across businesses. The acceleration of e-commerce — with its credit solutions and new forms of payment — has already brought about significant changes, giving startups a better chance to compete with incumbents. It’s another nod towards the decentralisation of business and value flow, which we’re experiencing in real-time. The way SMBs have succeeded by targeting niche audiences and building community and brand loyalty is also instructive on how this will play out. Companies like TrueLayer, Zopa, Klarna, and Anyfin are building new financial layers that directly compete with banking giants. 

 

Sustainability and diversity — priorities that actually support growth 

Sustainability and economic growth can — and do — go hand in hand. If you break it down, being sustainable means looking ahead, taking into account the health of our planet, the quality of our social interactions, and the necessity of our survival. Companies which don’t put in the effort to protect the planet or create a more diverse society are simply not future-proofed. They will neither generate profits nor attract talent. We foresee a rise in moral responsibility from founders and, more generally speaking, organisations tackling these problems at scale to force companies to do better. Part of that evolution has led us to double down on important initiatives such as ESG. This remains a big priority for us and we have invested in a number of related actions: we completed Diversity VC’s Level 2 certification last year; we invested in Personio’s foundation, which tackles climate change and access to education; and we backed several charities. We have more announcements coming up in this space.

 

Our founders’ top priorities in 2022 

Like any thoughtful company, we run a survey every year to improve our offering. Our latest one revealed that the #1 priority for founders is hiring. We aim to help them hire their first CMO, Product Lead, and so on through our Talent team and strategic introductions from our operator network. This curated community of experts is a great source of knowledge and mentorship for our founders, with many sitting on boards, angel investing, advising and more. Our founders’ second priority is around marketing and communications, which is recognised as a crucial asset to amplify their mission, vision, and values. Finally, client introductions sit at #3, and we do our best to connect the dots between corporations, startups, and customers.

Team news from the Northzone shores

Top left to right: Markus Gleim, Deepka Rana, Aaron Liu, Maxine Rior, Dominik Esen, Harriet Hamblin. Bottom left to right: Michelle Nacouzi, Pascual Cortes-Monroy, Rachael Rickwood, William Jilltoft, Sarah Nöckel

To vigorously kick off the year, we’re excited to announce the promotion of several Vice Presidents, who join Markus Gleim, Sarah Nöckel and Deepka Rana.

William Jilltoft, who has been with us for the past four years and who worked as PJ’s Chief of Staff before taking a broader investment role, will focus on the wider Web 3.0 movement including gaming, fintech, DeFi and data. In her new role, Maxine Rior looks forward to diving further into the future of social and commerce, digital health, and food — industries she’s already focused on for two years as an investor on our team. Michelle Nacouzi, based in New York, focuses on healthcare, fintech/insurtech, enterprise productivity, community-driven consumer apps, and sustainability, and is generally excited to meet thoughtful, maverick entrepreneurs in the ecosystem. Harriet Hamblin joined our team in 2019 and will look after early-stage companies across B2B SaaS, fintech, and healthcare, as well as broader UK coverage. 

We are also very pleased to announce several recent Associate hires who will bolster our team and expand our offering. Pascual Cortes-Monroy joins us from Lemu, an applied AI climate tech startup, and will be based in London, Aaron Liu is our newest Associate in NYC, previously working for startup Cloudkitchens, and Dominik Esen will invest in the Nordics from our Stockholm office, joining from Bain & Company. On the Operations team, Rachael Rickwood was promoted to Finance Controller. Please join us in congratulating everyone!

With a strengthened, recharged team determined to put our entrepreneurs first while always leading by example, we’re ready to tackle the exciting changes we predict for 2022 and beyond.