Vincent Weir’s Post

“It very clearly shows we, as Europe, fail to support innovative deep tech companies through the growth phase. There is no such thing as a growth market in Europe". But the answer to that is not governments bailing out badly run VC backed companies who've failed to deliver numerous times. Simply being a deeptech company isn't reason enough to merit support. Also, it's not like Europe suddenly became a tough market for growth. Every VC that really knows European deeptech knows that most of the funding and most of the revenue will inevitably come from outside Europe. The VCs and board members for Lilium and Nortvolt just look naive. That's part of the growth curve of Europe not having a deep roster of investors with experience in deeptech. Live and learn. "Lilium could be easily comparable to Tesla." Nope. No. No, no, no. For sooo many reasons, no. A trillion dollar market cap company run by (like him or not) the most important entrepreneur of his generation versus a company that has failed to deliver on everything every damn time. "Lilium, until recently one of Europe’s top tech bets". Again, no, it was not. Northvolt though might be an even bigger shitshow than Lilium. Appropriate that this article talks about "disaster" as that's exactly how one of Northvolt's investors described the company to me over beers recently. 🍻 https://lnkd.in/eGCaN7RS

If one decides to allocate capital to venture and or growth stages of finance, the fertility and ecosystem for these companies is significantly tilted and more favorable in the USA versus all other places… why do you think this has been true for so long?

Just why has the most French of words “entrepreneur” died in Europe? Just why does German engineering appear not what it used to be? Just why is Italian creativity seemingly stifled? Perhaps the answer is the EC Commission? Are we Europeans being served with “value add” from Brussels? I think not. It’s akin to a European racing against an American, but having to wear 50kg weights on each ankle. I’m an American living in Europe, for nearly 30 years now. It’s profoundly sad to witness Europe manage its very own descent (in governance as well as mentality), whilst America (even with $36T in debt) is still witnessing exposive innovation & discovery. One simple example? The US is embracing #bitcoin whilst the EU still comtemplates banning it. Banning Bitcoin! I. Am. Without. Words.

Many conclusions or observations regarding investors, VCs, angles and EU environment surrounding startups. The only sane way is bootstrap which also limits the trajectory and level you can play on. Even inside EU startups, you always see the same thing happening: power play between co-founders, politics (geo, started without or with seasoned pro's or brought in later, ...), genz early or later. millenials early or later, genx early or later. Heven't seen an in depth analysis on these things ever.

Last week, I briefly discussed Northvolt, the Scandinavian battery manufacturer that had long been heralded as a cornerstone of Europe’s green tech ambitions. ⚡🌍 At the time, Northvolt’s story was emblematic of Europe’s struggles with innovation: promising startups often constrained by fragmented markets, regulatory hurdles, and insufficient funding. Fittingly—or perhaps ironically—within days of that discussion, Northvolt filed for bankruptcy 💥, and its CEO, Peter Carlsson, announced his resignation. 🪦 This isn’t just a coincidence; it feels almost scripted. 🎭 It’s as if the universe wanted to underscore the themes we explored last week: Europe’s innovation crisis, the fragility of bold ventures in capital-intensive industries, and the systemic obstacles that hinder their survival. The timing almost seems to follow what I’ve started calling the “Irony Law of the Universe”: the most ironic outcome often feels not just possible but inevitable. 🤷♂️ This unexpected turn of events opens the door to deeper reflections—not just on Europe’s challenges, but on how irony manifests in markets 📉, politics 🗳️, and even human behavior. In many ways, this “law” ties into broader market dynamics we’re observing this week, from unexpected fiscal policies to surprising corporate pivots. 🚀 Let’s explore…

There's a lot of conjecture on what went wrong at Northvolt and prognostication on if the west can compete given some of the alarming recent developments in the battery and automotive sectors I'll keep my focus on the path forward. The short answer is that the west can compete, but we need to be smart about it. Part one: Cell suppliers and startups. Companies, have two options: 1) Find a niche market to target that can afford your differentiated product – note, that if you don't have a truly differentiated product do not pass go. 2) Go big and achieve scale as rapidly as possible, while ensuring quality – if you can't achieve quality, the economics will never work as the world's biggest battery and EV companies have already beaten you to economies of scale. To be crystal clear, if you can't find an appropriate niche or have a clear path to scale quickly, your business is unlikely to succeed. That next-gen chemistry, unless it really is an easily integrated enhancement to current technology, is likely decades away from EV or ESS scale – maybe more, given that beyond the question of whether you can scale the technology lies the caution of OEMs and system integrators who will need to provide 8-30 year warranties on your innovation. There are important geopolitical and economic drivers for producing batteries at scale domestically, but you'll need to achieve scale and quality rapidly if you want to be cost competitive. We do have a bit of breathing room with tariffs and incentives that will help jump start things, but those rarely protect you long term. In case it wasn't clear already, we've entered the third phase of the battery industry. Companies can no longer afford legacy inefficienfies and lack of focus. They need to focus on making money (in either a targeted niche or at scale). This means putting in place the data infrastructure to allow their organization to learn fast — it's the only sustainable competitive advantage. Bring in the external solutions the that help you do it today. You can't afford to be penny wise and pound foolish. You need to go quickly and will have less people & capital to do it. The cost of inaction is massive organizational drag and continued losses that puts your entire organization at risk.

A little late with this one, but shared some thoughts with Sifted the other day on what effect recent news around Northvolt, Lilium and Graphcore might have on the European deeptech sector. Link in comments! A lot of the most heavily funded deeptech companies in Europe such as Stegra or Northvolt have been backed by strategic and public investors early on, something a lot less common for traditional software companies. For the state to step in in an attempt to save a company that has missed its targets is a discussion that should be very different from the state or the EU funding opportunities for Europe to increase and maintain resilience of its most important supply chains. Each of those cases is very different and has its own set of reasons to "fail", but one common factor we can takeaway is: Made in Europe does not justify a price premium, the best product wins. We are extremely bullish on all the incredible European deeptech talent working on solutions that compete on both dimensions, performance and price. And that hasn't changed.

⚡️ Northvolt filed for Chapter 11 and Peter Carlsson has gone, amongst others. "The fundamental problem that Northvolt had, was baked into their DNA from the beginning. A VC backed company, with a VC model that does not work for making a battery manufacturer". The reason why for these kind of large Capex #ventures a new breed of investors is needed, 🌱 Marvelous - Deeptech Fund and Catalyst for Climate Solutions not being the only one but also VCs like Extantia #venturecapital #venturebuilding #climatetech

The Northvolt bankruptcy filing sent shockwaves through Europe’s #greentech ecosystem. Northvolt’s collapse highlights critical lessons about growth, scaling, and risk in capital-intensive industries. Across Europe, governments are pressing for the industrialization of #DeepTech startups – lab to fab – to re-energize the continent’s manufacturing economy and protect economic sovereignty. For this industrialization effort to succeed, these companies must build Durable Growth Moats -- business models that demonstrate resilience and adaptability. These moats will be the key factor in determining private company valuations. Using D'Ornano + Co.'s Advanced Growth Intelligence methodology for Northvolt, we can dissect what went wrong, identify red flags in its business model, and evaluate how investors could have anticipated the pitfalls. Understanding the underlying weaknesses requires a holistic approach to analyzing the business. Bottom line: Northvolt’s business model contained numerous “Single Points of Failure” that left its moat vulnerable to unexpected shocks – particularly its constrained cash runway.   What Went Wrong? Northvolt’s downfall stems from a combination of strategic missteps, operational inefficiencies, and external market pressures. Let’s zoom in on the cash runway:  Financial Imbalance: Despite raising $15B in funding, Northvolt was unable to generate sustainable cash flow, reporting $1.2B in losses in 2023 against $128M in revenue. The mismatch created an unsustainable financial structure. Funding Gaps: Northvolt’s reliance on conditional government subsidies—of the €2.7B pledged, only €531M was disbursed—meant much of its capital was inaccessible when needed most. Heavy Debt Load: The company owes approximately $5.8 billion to creditors. Its reliance on large convertible loans and trade vendor credits added to its financial vulnerability. Customer Dependence: Its dependence on large automotive contracts, including a $14B deal with Volkswagen and a €2B contract with BMW, left the company vulnerable to customer pullbacks. High Fixed Costs: The Capital cost of building gigafactories put immense pressure on margins. The company had almost no room to adapt when revenues failed to meet projections.      Could investors have seen this crash coming? Certainly, there were troubling safety questions and delivery delays that should have been red flags. Any proper diligence should have included a financial stress test to gauge Northvolt's ability to balance capital-intensive expansion with revenue generation.    AGI emphasizes the need for predictive metrics, diversified strategies, and robust governance—tools that could have mitigated Northvolt’s collapse.   Let this be a lesson for climate-tech innovators and their backers. The road to a sustainable future must be paved with not just capital, but businesses that can construct and defend a Durable Growth Moat. 🌍⚡   #ClimateTech #Battery #Northvolt #SustainableGrowth

**Is Northvolt's Bankruptcy a Sign of Bigger Trouble for the EV Industry?** The recent news surrounding Northvolt’s bankruptcy has sent shockwaves through the electric vehicle (EV) landscape, leaving investors and industry insiders questioning who stands to lose the most from this unraveling situation. As one of Europe’s ambitious battery manufacturers, Northvolt attracted significant investments from global giants like Volkswagen and Goldman Sachs. But with these high-stakes players involved, how deep are their financial wounds likely to be? As we dive into the implications of this event, it's essential to consider the broader context surrounding renewable energy and EV production. The world is in a race towards sustainable energy solutions, making battery supply crucial for automotive manufacturers aiming to embrace electric models. With funding pouring in for companies like Northvolt—whose vision was once synonymous with innovation—the fallout raises pressing concerns about stability within both startups and established corporations. For Volkswagen, which has invested heavily in electrification efforts to transition its vehicle offerings away from fossil fuels, this bankruptcy poses challenges not just financially but reputationally as well. Such obstacles could hinder their extensive plans for sustainability targets globally. Goldman Sachs faces hurdles too; having backed initiatives that promise clean technology advancement only now reveals risks associated with funding ventures underscored by uncertainty as they navigate towards going public amidst other market fluctuations. Pension funds monitoring their commitments will also have heightened vigilance when assessing exposures following investments in what was poised as a groundbreaking player in green technology. The ramifications are complex—not solely impacting shareholders but potentially reverberating throughout markets intertwined with eco-conscious investment schemas worldwide. In light of these developments, it becomes increasingly clear that failure at one pivotal point could lead to cascading effects across interconnected sectors related directly and indirectly to business operations reliant on resources produced by stakeholders like Northvolt. So what does all this mean for future collaborations between startups and corporate entities? Are such ventures worth pursuing given escalating risks? Or can strategic partnerships provide safety nets during turbulent periods? Spin your thoughts into tangible conversations! Join us here as we explore ways innovation can help drive resilience even amidst uncertain outcomes. Connect with startups to drive your corporate innovation 🚀 Book a meeting! https://lnkd.in/dFYwmbHq #Northvolt #Bankruptcy #ElectricVehicles #Investors #CorporateInnovation #Sustainability #GoldmanSachs #Volkswagen #PensionFunds #GreenTechnology Read more: https://lnkd.in/dcrnaQWF