made in China

Home-quarantined Italians and Spaniards those days sing from the balconies. In Spain, we hear the anthem every night. In Italy, one hears also Volare or Il Canto della Verbena. People are doing this to maintain and strengthen linkeage and interconnections: only defense people have against their own fragility today. They feel, that to a large extent their state and its EU counterparts have failed their trust.

Few today point a finger at the asymmetric information how a new biological weapon was dumped in the heart of industrial Italy. Why this matters to investors? Because buy and sell times are around the corner. Russia did not wait a minute to dispatch support where China long ago bought up assets. Europeans do not trust Europe will work to bail us out this time. Weierstrass, a 19th century mathematician, has an approximation theory which says problems based on wrong assumption have no right answer.  EU is at risk that it will be bought, piecemeal, by players who have cash and are willing to shed it.

Ms. Merkel made the point last week to the Spanish and Italian prime ministers. The lack of consensus over the creation of new tools like the coronabonds left the European Stability Mechanism as one of the few options available to Italy, and possibly to Spain, down the line. ESM won’t kick start SMEs in either country. It is a mix of steps that will. Most entrepreneurs we know are dismissive of accepting state injections in exchange for equity and some states are trying to go down this route.

By 2014, several hundred Italian businesses were already owned by Chinese investors, not including the ones owned by Chinese living in Italy by then. China’s central bank held stakes in several Italian blue chips like Fiat, Telecom Italia, Generali, and Eni.

While the public 5 years ago was seeing  “do not buy “Made in China” items” signs, cheap imports from China were inferior knock-offs, from clothes to pasta. This changed over time and even an online portal—vendereaicinesi.it, which means “sell to the Chinese”. Human tragedy is not to mix with business examples but one must think long term before inviting the quickest investors who have cash. Reaching to existing partners is the best way out.

 

 

 

We are corona-proof economy

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Our very own Stephen Auth, a chief investment officer of a mega-fund and a friend with 40 years of practice on Wall Street, reached out yesterday. His advice was simple: don’t mess with it but don’t forget it is an animal-bred virus and it will go away. Well, it may have mutated into a human bug but factual evidence shows it is being contained.

More importantly,  Neo Ventures believes that we will avoid recession. Small enterprises are better prepared and the big ones are more prepared than in 2009. The economic fundamentals prior to the virus and the policy of the Fed are both solid feet. One more time, America-lead rebound will end the story. This time, America also has a silent partner: China.

The efforts of the Chinese government and people have been nothing short of astonishing and so has been the result. This is a superpower, re-asserting its role and influence, as it helps the rest of the world come out from a freeze. Our bet: by mid-2021.

In best shape, we believe companies enabling human safety and remote work stand to make a killing. We like Raytheon and Zoom. The Zoom example is below. We call them off-handers. Neo has access to off-handers proprietary deal flow including dealing with forest fires, human depression and digital artworks. All of these are both off-handers and resilient again tough cycles – and they are also a great response to the current situation as they provide real time solutions to needs we face.

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I am tempted to quote a certain German author from 1929: All Is Quiet on The Western Front. For those of you at home, the movie was ranked seventh-best American epic film. While not everything is yet so quiet, we can look ahead because the skies are clear.

 

 

Mini-corns are rising in the East

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The CEE region continues produce champions in the European tech startup scene.

So far, more than 10 unicorns have sprung out of the CEE region, with a combined value of €30 billion. Most came out Romania and Poland, with a promising batch of stars rising across the whole CEE region. Serbia, Bulgaria and Greece come next.

With a strong workforce, not influenced by migration and a positive attitude among professionals, Eastern Europe established itself as a powerful tech ecosystem in the last years. Eastern Europe is rising in the tech ecosystem and is no wonder UK startups are flocking to these countries. According to Wired, before early-stage startups would fight to be part of London’s buzz, they are now turning to Bulgaria, Estonia, Lithuania, Poland and Romania as cheaper, less risky locations to make their mark.

In the top 20 fastest-growing tech hubs in Europe by year-on-year growth of attendees to tech-related Meetup you will find a surprising number of cities from the East. Katowice (Poland) has a 101% year-on-year growth and ranks 4 in the overall top. It is closely followed by Sofia (Bulgaria) with a 77% growth and Lviv with a 57% rise.

Bulgaria is catching up with central Europe, where economies based on low-cost manufacturing and exports are shifting to innovative and creative industries. A generation of westernised engineers and programmers with a global outlook now underpins the country’s emergence as the technology capital of the Balkans.

Computer science and engineering graduates are no longer migrating in droves to the US and Germany. Local companies employ about 40,000 software engineers while the IT sector contributes more than 3 per cent of the country’s output, compared with less than 1 per cent four years ago.

Neo Ventures has made an investment in Bulgaria, following the experience of 20+ investments made there by Neo’s founders. It has never been easier to launch a satellite into space. But EnduroSat wants to make it even easier by making CubeSats more affordable thanks to a unique platform.

“Funding is still going to be a challenge for later-stage companies but international venture capital funds are showing more interest,” says Pavel Ezekiev, a partner at Neveq, quoted by the Financial Times,