Germany's €12B startups boost, Zoom slashes compensation, and fundraising tips
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Hey Founder, here are the latest tech news and insights:
- Germany's €12B startup boost plan
- Telegram expands data sharing
- Google pays $2.7B to Noam Shazeer
- 5 fundraising tips from angel investor
- Netflix leads 2024, YouTube tops watch time
- New SaaS cost structure benchmark
- Zoom reduces stock compensation
Germany launches €12BN plan to boost startup ecosystem
The German government plans to mobilize €12 billion from both public and private investors by 2030 to support and accelerate the growth of startups in the country.
The initiative is designed to provide more growth opportunities for startups, especially at the later stage, and strengthen Germany's position in the global tech and innovation landscape.
According to Sifted, the later stage gap is not just a Germany problem: US VCs participate in many of Europe’s largest late stage deals (Series C-D). In the first half of this year, US VCs participated in a third of Europe’s growth rounds, worth €6.6bn.
Telegram announced data exchange with governments
Telegram has announced a significant change in its data-sharing policies. CEO Pavel Durov stated that the platform will now provide more user data to government authorities in response to valid legal requests. The updated terms of service allow Telegram to disclose IP addresses and phone numbers of suspected criminals to relevant judicial authorities. This marks a departure from Telegram's previous policy, which only permitted data disclosure for suspected terrorists upon court order.
Also, to combat misuse, Telegram is employing artificial intelligence and a team of moderators to hide inappropriate content from search results.
Google paid $2.7 billion Noam Shazeer
Google recently made headlines by paying $2.7 billion to Character.AI in order to bring back Noam Shazeer, a prominent AI researcher who had previously left the company. This significant investment highlights the intense competition in the AI industry and Google's determination to maintain its position at the forefront of AI development.
Noam Shazeer is a highly regarded AI expert and co-author of influential research papers in the field. After leaving Google, Shazeer co-founded Character.AI. However, when Character.AI began to struggle, Google saw an opportunity to bring Shazeer back into the fold.
Google's decision to pay such a substantial sum for Shazeer's return demonstrates the company's commitment to advancing its AI capabilities. The payment was officially made to Character.AI, effectively acquiring the startup and its technology along with Shazeer's expertise.
5 fundraising tips from angel investor
Katie Dunn is an angel investor and seasoned startup advisor, co-founding Power to Pitch to help founders secure funding from various sources.
On the Meet.Capital Startup Podcast, she shared five essential fundraising tips:
- Only reach out to investors who invest in your domain: To minimise rejections and ensure support, reach out only to investors whose interests align with your startup.
- Seek strategic investors: Seek investors who provide more than just funds; prioritise those with experience and connections to accelerate your growth in unfamiliar areas.
- Keep outreach short and direct: Keep outreach messages brief and clear, stating your request upfront for better engagement.
- Adopt a mindset of giving: Show investors the value you bring, whether through insights, opportunities, or industry knowledge.
- Focus on the people you need, not just money: Consider individuals who can help you solve company problems instead of just funding. Strong teams allow investors to add value beyond financial considerations.
Netflix leads 2024, but YouTube wins in watch time
Netflix has had a strong 2024, with its stock up 50%, a record 278 million subscribers, and a second-place finish in this year’s Emmy awards. It continues to beat rivals like Disney+, Prime Video, and Apple TV+ in terms of subscribers, revenue, and awards.
However, YouTube is ahead when it comes to the amount of time people spend watching. Over the last six months, YouTube accounted for 25% of all TV streaming in the U.S., while Netflix had 20%, according to Nielsen. Even though YouTube is mostly ad-supported, its revenue is almost as high as Netflix’s $33.7 billion, making it a strong competitor.
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SaaS business cost structure benchmark
Dirk Salmer (SaaS Group) posted a document on LinkedIn with benchmarks for SaaS companies' costs based on SaaS Capital research data.
1. What percentage of ARR is allocated to costs in 2023 and 2024? We mark the traffic lights to indicate a decrease in share (improvement).
▪️G&A: 15% (2023) => 🟢 11% (2024);
▪️R&D: 24% (2023) => 🟢 18% (2024);
▪️Marketing: 10% (2023) => 🟢 8% (2024);
▪️Sales: 15% (2023) => 🟢 10.5% (2024);
▪️Customer Success: 10% (2023) => 🟢 8.5% (2024);
▪️Other COGS: 2% (2023) => ⚪️ 2% (2024);
▪️Pro Services COGS: 4% (2023) => ⚪️ 4% (2024);
▪️DevOps: 4% (2023) => ⚪️ 4% (2024);
▪️Hosting: 5% (2023) => ⚪️ 5% (2024).
2. It turns out that not a single cost item increased as a percentage of ARR, and in general the share of costs as a percentage of ARR decreased from 89% to 🟢 71%.
3. How has the cost structure changed? The picture is a little different here. Let's examine the percentage of costs compared to the total costs. Again, if the share is decreasing, the traffic light will turn green.
▪️G&A: 17% (2023) => 🟢 15% (2024);
▪️R&D: 27% (2023) => 🟢 25% (2024);
▪️Marketing: 11% (2023) => ⚪️ 11% (2024);
▪️Sales: 17% (2023) => 🟢 15% (2024);
▪️Customer Success: 11% (2023) => 🟡 12% (2024);
▪️Other COGS: 2% (2023) => 🔴 3% (2024);
▪️Pro Services COGS: 4% (2023) => 🔴 6% (2024);
▪️DevOps: 4% (2023) => 🔴 6% (2024);
▪️Hosting: 5% (2023) => 🔴 7% (2024).
4. It has been observed that the proportion of related costs in the cost structure has increased significantly. Most likely, reducing infrastructure, hosting, and professional services proves challenging, whereas reducing sales costs (Sales) proves easier. But we managed to reduce key items, including G&A and R&D.
Zoom cuts stock compensation, citing dilution concerns
Zoom is adjusting its stock-based compensation policies, a move seen in response to concerns about stock dilution. This shift aligns with trends seen in other major tech companies like Salesforce and Workday, which have also scaled back stock-based compensation in recent years. Stock-based compensation, while might be attractive to employees, can lead to dilution of existing shares, affecting shareholder value. This trend suggests that companies are seeking to balance employee incentives with shareholder interests, particularly as stock prices fluctuate in the tech sector.
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