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Noah Berlin: where the future of European innovation is written

Giuseppe Donvito, Partner of P101 Ventures | June 21st, 2019

They write Noah Berlin, we read “the future of innovation”. It’s one of the main European early-stage and late-stage VC conferences: it took place in mid-June, gathering 5,000 participants, 1,500 start-ups and 700 investors. It’s where the future scenarios of European venture capital are designed  and where meeting opportunities for investors and innovators are created, in order to enable the digital transformation of the Old Continent. P101 was there and in this post we’ll tell you what we have seen.

European VC: €23 billion and 61 unicorns, but investors come from the USA and Asia

What strikes first is a number. The European venture capital market has an enormous potential for growth: in 2014 it was worth €5 billion, today it has reached  value of €23 billion and has 61 unicorns. But, if we have a look at the larger funding rounds, we can notice that most of the money comes from the US and Asia.

This means that, in this part of the globe, entrepreneurs have good ideas and the ability to turn them into attractive businesses for large global investors, but local investors don’t have enough money to feed them yet. We need to push ahead with local funding: a first step, which was also clear in the quality of the attendees at Noah, could be the ever-increasing collaboration between Private Equity and investment banks, which partially overlap with venture capital, with the aim of creating a solid ecosystem.

A unique place in the world where high value-added niches grow

Europe is made up of many diversified niches where excellent companies can increase their value like nowhere else in the world. As for the most promising sectors, Noah confirmed that they are the same ones on which P101 is focusing: Mobility & travel, Proptech, Fintech / Insurtech, Digital health, Industrial digitalization, Cognitive computing.

Fintech and Insurtech: the new frontiers of finance

On the Fintech front, in particular, it emerged that in the next 5 years banks that are lagging behind on the road to digitization could have serious competition problems with the main Fintech start-ups. It is therefore likely that, in order to defend themselves against disruption, banks will increasingly choose to incorporate innovation by investing in Fintech start-ups. According to a recent PwC study entitled “Small Fintech companies grow with Intelligence”, 84% of Italian financial companies stated that they will increase partnerships with Fintechs, though they deem necessary that “the correct models of cooperation” are chosen. One method, indicated by PwC itself, could be the integration of the platform models on which lay most of the Fintech start-ups that were born in competition with the traditional financial system.

Simplicity, transparency and digitalisation are the guidelines of the current development of the insurance world as well, a world which is close to an unprecedented holistic change.

Increasingly smart cities and transportation

Innovation spreads in the transportation industry too, which is worth a trillion dollars. Today, more than half of the global population lives in cities and this percentage will rise up to 70% by 2050: overpopulation requires an optimal management of spaces, resources and transport, through the use of smart technologies. Also in the businesses of self-driving and electric cars (today in the hands of giants like Tesla and StMicroelectronics), start-ups can make a difference by solving bottlenecks, such as that of not yet completely efficient batteries.

The Proptech advance

Even the real estate and construction businesses are called to a momentous metamorphosis: increasingly vertical, energy-efficient, intelligent buildings will populate our living spaces. And in this context Proptech, which has been defined as the new Fintech, gathers all the actions that can enable the digital transformation of real estate. AirBnB, Nest, WeWork, Zoopla are just some examples: from the sharing economy of short-term rentals, to connected homes, to the research and management of coworking and co-living spaces.

We’ll take care of our health digitally

Connected to these phenomena is the rise of HealthTech. Western population is aging and the convergence between a personalized healthcare system and the use of medical devices to carry out diagnostics and treatments, where possible, at home, will be one of the major health trends. The Digital Innovation Observatory by Politecnico University of Milan estimates that the Italian digital healthcare market is worth €1.3 billion and it will allow saving €5 billion per year.

Artificial intelligence, industry’s game changer

At the Noah conference, the importance of artificial intelligence (also as a fundamental tool of digital industrialization) and cognitive computing was underlined. For instance, intelligent machines are able to recognize and eliminate a defective piece on a production line, but they can also archive and catalogue documents according to criteria that are functional to the customer. They can make remote diagnoses, as well as design precise and personalized marketing strategies.

Start-ups will collaborate with big corps to create open innovation

Last, but not least, Noah is a place where the collaboration between start-ups and corporate companies is nourished. A place where corps are an active part of the system and can take on the role of potential buyers. In any case, they are attentive observers and know that in order to accelerate their innovation engines, they need to create relationships with start-ups.