Sifted -  Offsites: Are they worth it?

Good morning there,

Startup life isn’t for the faint of heart. Either you’re scrambling to raise your next funding round, your CEO or employees are facing burnout (as we discussed yesterday), everyone is hustling to push out your next product or there’s noisy drama in your boardroom. How do you stay united and focused under that pressure? Enter the company offsite. 

Loads of startups and VC firms host offsite gatherings each year (and sometimes more frequently) to bring their teams together for parties, workshops, talks and other activities. But when times are tough in the market, is it worth splashing out? I dig into that question below. 

Elsewhere today, we bring you yet another update on Klarna’s Sequoia board saga, why VCs are eager to snap up secondary stakes in other VCs’ portfolios and German AI startup DeepL’s new US office. Plus, founders, we’d love to hear from you. Burnout was top of mind in startup land last year and we want to know, how are you actually doing? You can fill out our anonymous survey on founder mental health here.

— Anne Sraders, senior reporter

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 Is your team's offsite trip worth the expense? 

In a time when startups are being encouraged to buckle down, slash expenses, reduce headcount and extend their runway, one line item may seem like an obvious thing to axe: the company offsite. 

Team trips — be they skiing excursions or multi-day events with evening parties — can be a useful tool to foster bonding and align on strategy. But they can also set startups back a pretty penny. After reading Bain Capital Ventures’ head of marketing and comms' recent LinkedIn post — touting the benefits of offsites — I posed the question: In hard times, are they worth it? 

“If you have a very strong and healthy culture, this gathering will be one of the routines or interactions that you invest in, because people are your investment,” says Kate Mierzejewska, head of people and culture at HR Hints. The company works as an external HR department for seed-stage startups through to larger companies in Poland and globally. She says that “basically all of our startups have offsite or team gatherings in their plans” and budgets. While last year some of the startups she works with considered cutting the expense, none of them eliminated offsites from their budget. 

Others, like Alexander Talkanitsa, cofounder of Berlin-based fintech finmid, believe it’s a “no brainer” investment. “We try to be conscious about why do we want to do this? Because it's a time investment, it costs money,” he tells me. “We do think that face-to-face is still and will remain the best channel to build culture and to build relationships with people, especially in such a fast-paced environment.” Talkanitsa’s startup hosts a quarterly offsite in various locations like Mallorca and Serbia — they even went surfing in Portugal. Though he does tell me that finmid offsites will soon become less frequent as the company grows and they become more expensive.  

You may be thinking: surfing trips in Portugal…sounds like it could get expensive quickly. Mierzejewska says companies with more than 100 employees could spend around €100k-150k for a two-day offsite. Smaller startups, like deeptech software firm Celus, spend about €1,000 per employee (including travel, housing, food and entertainment), its HR head Esmira Alieva tells me. 

That expense is a concern for VCs too, especially at a time when LPs are far stingier with their cash. “Budget — and the market — is always of consideration when we plan team or ecosystem events,” says Catherine Treyz, head of communications and platform at Cherry Ventures. But coming out of the pandemic and Zoom meetings days, “the business case for offsites is clear: they help us focus together on our total work (not just the parts of it) and contribute to a sense of team unity,” she adds. 

But what should startups (or VCs) consider to get the most bang for their buck? 

Mierzejewska says these gatherings need to be moderated — not just free-for-all parties where cliques can hang out together and not interact with those outside their daily circles. They should also include goals, like getting to know each other or participating in workshops, she says. Talkanitsa recommends not packing the days too full and tiring out your employees – something they learned through trial and error (employees got sick the weekend after, he says). Alieva notes that Celus’ offsites have very high participation among employees and argues they’re a great retention strategy. 

But there can be a tendency for startups or VCs to splash out with crazy expensive parties. Alieva says that since they’re funded by VCs, they “don't want to just throw money into the air”. To save cash, she suggests startups scrap other team-building events like escape rooms or big dinners during the year in favour of an annual offsite. 

Startups can also save money if they have a nice office by hosting the “offsite” there. And finmid’s Talkanitsa tries to keep costs down by choosing locations where cheaper airlines like Ryanair fly. 

I’m curious to hear from you founders: How much do you typically budget for offsites per year? What feedback have you received from your employees about these events, and do you think they’re worth it when the budget is tight? Are your VCs encouraging you to dial back on the offsite spending? Send me a line. 

— Anne Sraders, senior reporter

🏠 Ukrainian startup HOMErs — which manufactures modular homes — has raised €500k from a group of angel investors to ramp up global sales and production from its new factory in Slovakia.

• The company was launched after founder Alexander Stepura struggled to find accommodation for his staff (some of whom had been displaced or seen their homes demolished) in the first few weeks of the Russian invasion of Ukraine.
• Unlike traditional modular homes, built with wood or plastic, HOMErs uses galvanised steel, which increases the life span of the homes.
• The modular Lego-like design also allows for fast assembly and disassembly and transportation in standard lorries (building takes a couple of weeks but the aim is to shorten it to three to four days). Modules can be added to extend or reconfigure the property according to users’ needs. 
• The startup has already built 80 modular homes, most of them around Kyiv, for displaced Ukrainians.

😮 Yet another update on the Klarna/Sequoia Capital board drama. It’s been reported by The Information that the US VC firm has chosen Andrew Reed to replace Matthew Miller in Sequoia’s seat on Klarna’s board. ICYMI: the firm recently launched an attempt to unseat longtime former Sequoia investor Michael Moritz — who independently sits on the BNPL giant’s board — but when that failed it backtracked and Miller stepped down instead. 

🇺🇸 German AI translation scaleup DeepL is opening an office in Austin, Texas — its first US office — following what the company describes as “soaring” adoption in the country, which is its third-largest market. 

• DeepL has succeeded in doing what many European startups are trying to do: find traction for an AI product that’s competing directly with Big Tech, in this case, Google Translate.
• The tool is powered by DeepL’s “advanced neural network technology”, and has prompted more than 100k businesses and governments globally to pay for its premium service. Its clients include Zendesk and Coursera.

Applications open for the Sifted 100: UK & Ireland

Sifted’s brand-new feature, Leaderboards, is launching on March 27, listing the top 100 fastest-growing startups by region — kicking off with the UK and Ireland. If your startup has experienced exceptional growth, submit your application by March 8.

✈️ Softbank, Airbus, Google and the race to build a stratospheric plane. The stratosphere — the zone above commercial airspace but below the area where satellites fly — has remained a little-explored area, but is fast becoming a new frontier in the commercial space race. 

• Companies building gliders for the stratosphere say sending craft up to it could make us better prepared for events like floods and forest fires.
• Aircraft that fly in the stratosphere could also have military applications, such as border and maritime surveillance, or be used to monitor a conflict zone. The Chinese spy balloon shot down by the US last year, for example, flew in the stratosphere. 

🔥 VCs are growing eager to buy portfolio stakes off of other firms — and the secondary market for such deals has been getting hotter in recent months. 

• Olav Ostin, managing partner at investment firm TempoCap, which invests in secondaries, tells Sifted, “Our dealflow has gone from 1x to 5x.” 

🪖 Will Europe ever get serious about defence? (The Kyiv Independent)

Does your VC firm have a head of platform? Data suggests that more and more firms do. Platform roles focus on three key areas — brand, co-investment opportunities and joining the dots between startups, investors, and the wider ecosystem — and as times get increasingly tough for portfolio companies, VCs are becoming more hands-on in their day-to-day running of them. 

• “We’ve seen a sustained increase in funds investing in platform roles over the last few years, adding capabilities and gathering their portfolios post-covid through founder and CEO retreats and events, in addition to the mainstay of fund platform roles, which is managing a network of external useful contacts,” says Hazel Mulhare, who runs the fund’s practice for executive search firm Erevena. 
• Konrad Kordowski, head of investor relations at Slush, says that ideal candidates for platform roles are former VPs of sales, product or talent. “VCs are supposed to not only offer capital but also smart money. This can be provided by an experienced operator with specific industry knowledge,” he tells Sifted. We dig into the trend more here.

Pisa, Italy-based Medical Microinstruments, which is developing robotics technology for soft tissue open surgery to treat complex medical conditions, raised $110m in Series C funding. Fidelity Investments led the round. 

Eindhoven, Netherlands-based Scinvivo, which enables optical biopsies for bladder cancer diagnostics, raised €4.7m in funding from Santec OIS Corporation, NLC Health and Netherlands Enterprise Agency.

Aarhus, Denmark-based Hakio, an AI-based demand forecasting tool for the fashion industry, raised €4m in seed funding. People Ventures and Dreamcraft Ventures led the round and were joined by Blazar Capital and Founderment.

Søborg, Denmark-based Kvasir Technologies, which develops sustainable biofuel, raised €3m in extended seed funding from the Footprint Firm and the Export and Investment Fund of Denmark (EIFO).

London-based Samphire Neuroscience, which is developing a brain-stimulating wearable device to help manage menstrual pain, raised €2.1m in pre-seed funding from investors including SOSV, FIRSTPICK, Afterwork, Seaside, Ayuh and CVX Ventures.

Vilnius-based Evergrowth, an AI-driven sales platform, raised €2m in pre-seed funding. Impellent Ventures and Practica Capital led the round.

Copenhagen-based Januar, which provides the financial infrastructure crypto businesses need to handle payments, raised €1.5m in extended seed funding from investors including CMT Digital, Third Prime and Skyfall Ventures.

Amsterdam-based Sparqle, an on-demand sustainable delivery service for e-commerce, retail, food and beverage goods, raised €1.2m in funding from investors including Graduate Entrepreneur Fund. 

If you’d like to submit a deal, get in touch. 

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