Key Learnings from the Past Year

We’re excited to be kicking off 2022 with Moonfire’s first newsletter of the year. A very warm welcome to our many new readers who joined us in December!

As we look beyond Fund I, we would like to share some of our key learnings from 2021.

We’re also super excited to have built up our own in-house tech stack. Following our latest world class hires, Moonfire’s team of ML engineers and data scientists now outnumbers our investment team. We couldn’t be more thrilled to welcome these newest members to the Moonfire family. Stay tuned for intros in the coming weeks on our blog.

Learnings from 2021

The European tech ecosystem is bigger and better than ever before!

• Success breeds success and this is allowing Europe to continue the incredible flywheel of a new generation of founders creating game changing businesses across Europe. We’ve been blown away by the number of high quality European founders and companies across all our areas of focus. European tech has reached scale faster than expected and has become a powerful engine of growth for our economy. The pandemic has accelerated the transformation to a digital economy in an unprecedented manner
• This transformation occurred across Europe and talent is now widely distributed, driving a pan European ecosystem. We are building a custom sourcing engine to allow us to look beyond both our existing networks and the traditional hotbeds of startup talent. As this Crunchbase report shows, there’s more capital than ever chasing the best seed stage deals and our custom tech stack continues to prove a decisive edge for us

Hiring - it’s a battlefield!

• The war for talent is real and is a useful indicator of the ambition of tech. Ambitious and fast-growing startups are adjusting to this by increasing hiring velocity. You must move quickly and with conviction, and realise that your team is your most important asset
• Companies in our portfolio have benefitted from the following:
• Prioritising a Head of Talent as one of their first hires and investing in recruitment
• Using software like HiPeople to speed up and enhance the vital reference checking process
• Doubling down on company mission and seeking out mission-driven individuals as early employees
• To make sure our portfolio companies are well equipped for this war, Mike and his team have been assisting with technical interviews for new hires across the whole portfolio
• We have also experienced the war for talent first hand as we’ve built out our own engineering team. At Moonfire, we see ourselves as a tech company whose subject matter is venture capital. Therefore, we’re constantly building technical infrastructure to improve our processes and tooling, in order to become more effective investors and better support our portfolio
• Due to the intense competition for top engineers, we’ve really benefited from Mike’s structured hiring practices, laid out in a series of blog posts

European seed evolved faster than expected, but remains underappreciated

• We launched Fund I in May 2021 with the premise that European seed was overlooked and underdeveloped. This provided fertile ground for building a firm that takes advantage of that gap
• At the time, strong European seed rounds were typically $2-3million in size. Now we are seeing European companies raising $3-5million for their seed rounds, with web3 companies often raising a great deal more
• Founders are increasingly displaying a preference for a consortium of investors rather than a single fund taking the round. Deals are closing faster than ever

Crypto Corner - our monthly web3 thoughts

While crypto markets are shaky, we remain bullish about the technology

• Whilst there has recently been a pronounced downswing in the price and market cap of almost every major cryptocurrency, we remain bullish on the long-term prospects of crypto and its many varied use cases, due to the inherent power of decentralisation
• We believe that a lot of the price volatility has been driven by the fact that it is being traded like a commodity with accompanying supply and demand market forces that are causing price fluctuations
• Our team has been knee-deep in research over the last few months and are currently in the process of articulating and refining our investment theses for the field, which we hope to share with you soon. Watch this space!
• As well as building theses around crypto and web3, we are also getting our hands dirty experimenting with layer 1s and layer 2s and doing some actual building. Mike and his team have been spending a lot of time working with Solidity and on Solana
• For those wanting to do a deep dive into the future of crypto, we highly recommend Messari's in-depth report
• Now you’ve seen our past learnings, check out our predictions for the future here!

Portfolio News

Goals

• Following the successful creation of a vibrant Discord community, Goals has officially launched their website giving us a first look at the future of football gaming
• Goals embodies the transformative impact that blockchain technology will have on the gaming industry and is a perfect fit within our gaming and web3 theses. Founded by gaming legend Andreas Thorstensson, with an amazing team of gamers and web3 cognoscenti on board, Goals looks set to redefine the sports gaming landscape with a play to earn model centred around a flourishing community of gamers

LiveFlow

• We led the $3.5M Seed round in LiveFlow, as reported by TechCrunch. We are very excited to support Lasse and Anita, two extremely dynamic ex-Revolut employees, as they help companies take greater control over their financial and accounting data. Accompanying us in the round were Seedcamp and friends of Moonfire including Peakon founder Phil Chambers and former Google VP Product, Bradley Horowitz

PODCAST OF THE MONTH

Invest Like the Best with Patrick O'Shaughnessy:
Bill Gurley and Philip Rosedale - Back to the Future

If you are interested in what’s driving the metaverse, you should listen to Patrick dig into some fascinating philosophical and commercial questions with Second Life creator Philip Rosedale and Benchmark Capital’s Bill Gurley. We are entering a new phase where the intersection of social networks and gaming is leading to the evolution and creation of new environments.

Thanks for reading and keep an eye out for next month's edition.

Best,
Mattias
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