Startup valuations and investments see rebalancing amid economic turmoil

Major international issues related to the Ukraine crisis, high inflation, growing interest rates, and a slowdown of major economies are all rattling the startup funding market, meaning that entrepreneurs might have a harder time securing necessary funds in the coming year. Faster routes to profitability are set to become a hot topic among startup founders and investors as sky-rocket valuations begin to lose steam.

By Ovidiu Posirca

If an entrepreneur is currently in the final stages of raising capital, the best move right now would be to speed up the talks and close a transaction

Globally, venture financing was down 2.9 percent to USD 148.8 billion in the first quarter compared to the same period of last year, according to a report by professional services firm KPMG. Across Europe, funding actually rose by 10 percent to USD 31.7 billion in Q1 versus the same period of 2021.

On this background, the outlook for startup valuations is unpredictable, with

The median post-money valuation for companies heading into a liquidity transaction declined slightly from USD 1.04 billion in Q1 of 2021 to USD 963 million in 2022.

Late-stage startup valuation took a significant hit this year, as did the entire tech sector on public markets, adds Cristian Munteanu, managing partner of Early Game Ventures (EGV).

He tells BR that “the shock wave will ing down from the international stock exchanges towards Series B and A, generated by an expected deep recession. On the other hand, there is still an abundance of capital,

especially for early-stage startups with more flexibility and adaptability. Bogdan tells BR that we are soon going to find out which of the two trends will be the stronger one.

some market commentators saying that we are entering correction territory.

Startup valuations are mainly affected by public market corrections, as company peer groups are usually selected from publicly listed companies, and we have seen major corrections on these stocks lately, suggests Marius Ghenea, managing partner at private equity and venture capital fund Catalyst Romania. For instance, shares of communications company Zoom fell 38.9 percent in the past six months, while streaming giant Netflix has seen its shares dropping by 66 percent.

“In my opinion, inflationary issues and the war in Ukraine are secondary factors— that indeed could slightly influence valuations—but they are not the most important ones,” Ghenea tells BR.

Data from Carta, a company that manages equity programmes, shows that compared to the first quarter of last year, Q1 2022 saw similar valuations among companies seeking liquidity. probably propagate upstream, and startups in the early stage will also see a decrease in valuation, albeit less punishing.”

Market research shows that the high inflation environment will have a downward impact on private equity valuations.

PE valuations have continued to increase over the past decade, due in part to low inflation and the zero-interestrate environment, but this trend has reversed and will be reflected by the data in the coming quarters, according to a report by PitchBook.

Alexandru Bogdan, CEO & GP at startup investment fund ROCA X, says that Central and Eastern Europe will see a battle between two trends. On the one hand, there is the downward pressure on valuations cascadWHAT CAN REPLACE ENTHUSI-

ASTIC VALUATIONS

Founders looking for financing in the current environment should have realistic expectations, fund managers suggest. “Recently, on our early-stage market, I have seen multiple inflated valuations for barely MVP-level startups with no revenues, and investors will certainly no longer be willing to accept unrealistic valuations anywhere,” says the CEO of ROCA X. This means that found-

ers must keep a sharp focus on efficiency and not lose sight of the profitability target going forward.

Munteanu of EGV adds that unrealistic optimism and high valuations that are not supported by traction will meet resistance from investors or get ignored altogether.

If an entrepreneur is currently in the final stages of raising capital, the best move right now would be to speed up the talks and close a transaction. Ghenea of Catalyst Romania points out that founders that have yet to start negotiations for a funding round need to make an internal cash runway analysis.

“Many such companies should actually consider preserving existing cash and, if possible, reach breakeven and a positive cashflow situation by optimising costs,” he explains.

Nevertheless, certain industries such as IT, renewable energy, and agriculture remain attractive in the eyes of investors despite the many challenges.

Estimating the value of a company is already a very complex process, but in short, it represents the present value of its future free cashflows. However, many investors often rely on valuation multiples as a proxy for determining what a company is worth.

“When you have that much volatility on public markets, you don't know what the price [of a company] will be a week from now. It is difficult to figure out,” said Tomasz Tunguz, managing director at Redpoint Ventures, as cited in a PitchBook piece. With the stocks of some of the biggest US-based public companies already falling by 60 percent, startup valuations could follow the same pattern.

TESTING THE RESILIENCE OF ROMANIA’S STARTUP INDUSTRY

The local startup sector is facing a series of challenges which are similar to those in other European markets, and funding is expected to slow down in the second half of this year. The inflation rate is estimated to reach 12.5 percent by the end of 2022, while the economic growth forecast was recently cut down to around 2 percent of GDP. In the meantime, the key interest rate was hiked to 3.75 percent and central bank officials have signalled that it could be lifted further in a bid to lower inflation. On the bank lending side, this will mean that costs will go up for borrowers; for startups, this could translate into greater scrutiny from the financiers’ side.

“For the very short term, as the end of the year is just around the corner, I do believe we will see a slowdown even as new players come to the scene, but in the medium and long run I am very confident that the

Romanian ecosystem will keep on growing and hopefully replicating the trajectory that the Israelian ecosystem has had over the past 10-15 years,” said the CEO of ROCA X.

So far this year, the biggest single financing round—worth USD 15 million—was closed by DRUID, a local startup developing virtual assistants that can be used by companies of

various sizes. Several smaller rounds of up to USD 1 million were also signed in the first half of 2022.

Marius Vasilescu, financial advisory director at professional services firm Deloitte

Romania, points out that the inflationary environment leads to an increase in financing costs for all companies, regardless of size.

“These rising costs mainly affect startups,

due to their low level of maturity, but it is still too early to estimate what the impact will be on the entire ecosystem. Stagnation is the word that could describe the outlook for the startup funding environment until the end of the year,” Vasilescu tells BR.

Meanwhile, EU funds could help the local startup industry maintain its development momentum despite the cost pressure on other funding sources.

Ghenea of Catalyst Romania says that the Recovery and Resilience Plan for Romania (PNRR) has already allocated significant amounts for financial instruments, to be managed by the European Investment Fund (EIF) and committed to the creation of other funds. Additionally, Regional Development Agencies are also launching similar programmes across the country, which will increase the availability of funds for startups.

“However, the availability of funds does not automatically mean that all these funds will be substantially invested, as investment decisions will largely depend on the market situation and investors’ confidence,” Ghenea notes.

Talking about market sentiment, the EGV managing partner adds that investors will be more prudent as the economy takes a downturn.

“There is still enough money on the market for promising startups. The not-sogood and the really bad ones will have problems raising, but this can simply be considered to be a return to normality,” Munteanu argues.

MASSIVE FUNDING ROUNDS IN EARLY 2022

Despite the Ukrainian conflict, VC investments in Europe proved robust in Q1, led by the USD 1 billion funding round closed by Checkout.com in the UK. Estonian mobility startup Bolt got USD 710 million, while Finnish supply chain automation and optimisation platform Relex raised USD 566 million. Five more startups in France, Turkey, and Italy secured new rounds of more than USD 500 million each. In Q2, the investment market was set to slow due to the Ukraine war combined with rising inflation and interest rates, said KPMG experts in a report. Fintech, healthtech, and alternative energy are the industries set to generate new funding deals

across Europe as we move into the second part of this year. The clean energy sector is of particular interest as the European Union has published a plan to limit imports of fossil fuels from Russia.

The KPMG report also points out that the mix of geopolitical uncertainty and climate change pressures could spur additional investment in climatetech as well as in startups focused on energy and carbon management.

A new survey conducted among 34 VC funds by Yann Ranchere, partner at fintech investor Anthemis Group, shows that investments in European startups have continued, but that they’ve been more selective.

Investors were asked whether valuations

were higher than last year, stable versus last year or lower versus last year. All respondents said that valuations were lower than last year at Series B+, and more than three quarters said the same of Series A, according

to the survey results published by Sifted.eu. However, valuations have not fallen as much at the earlier stages as these companies still have a long way to go before investors can make an exit.

Striving to improve quality of life in Romania

R&D and innovation are Servier Pharma’s main pillars of operational development, both in Romania and worldwide. BR sat down with Michel Eschenbrenner, the General Manager of Servier Pharma Romania, who talked about the company’s achievements since it entered the local market and its plans for the future.

By Anda Sebesi

What have 30 years of Servier Pharma Romania operations meant for local healthcare services?

Since we entered the Romanian market three decades ago, we’ve placed all our expertise and R&D experience in the service of local patients, in order to better meet their needs and find new treatments. Along the way, we’ve built long-term partnerships that have helped us properly understand and adapt to the Romanian medical context, but we’ve also given back because we believe in the power of togetherness and we are aware of how important strong collaboration is for the entire ecosystem.

We’ve brought innovative practices to the market, from which medical services benefit on daily basis. Our unique business model— we are a pharmaceutical company governed by a non-profit Foundation (Fondation Internationale de Recherche Servier – FIRS)— gives collaborators the confidence that we are a sustainable and stable organisation that can pursue therapeutic progress to serve our patients’ needs. We’ve continued investing in R&D and supporting both online and offline medical education, as well as awareness and prevention programmes, diagnostics campaigns, and scientific events.

So here we are today, 30 years later, and we have over 300 active partnerships on the Romanian market with different societies, scientific and medical associations, patient associations, NGOs, medical colleges, federations, medical universities and institutions, hospitals and clinics.

What have been Servier Pharma Romania’s top achievements during this period?

We treat around 2 million patients every month in Romania using Servier medicines, which means 12 percent of the adult population here. We hold the 3rd position in counting units and the 6th place in terms of value of the market share.

We provide support in areas such as cardiology, where we are market leaders, type II diabetes—where we rank second in the number of patients treated and treat about 20 percent of patients registered by the National Institute of Public Health Statistics—as well as psychiatry and, lately, oncology. In fact, it is the Group’s ambition to become a leader in oncology, too.

Besides our active involvement in local medical education and our multitude of partnerships, Servier is a true supporter of phase IV studies. In the last two years, two epidemiological studies—a national and an international one—have been carried out in Chronic Venous Disease, with the participation of more than 150 family doctors, dermatologists, and surgeons. These are valuable studies highlighting the impact of the pandemic on the management of patients with chronic venous disease.

Last but not least, I would like to mention Servier’s ambitious local approach in terms of social responsibility. We have been collaborating with over 25 associations and foundations since 2018 to provide access to education and medical services for disadvantaged groups, to prevent and reduce early school leaving, train medical and teaching staff, provide psychological support for patients and healthcare professionals, and so much more.

How does Servier Pharma Romania contribute to progress on the Romanian medical market?

We constantly launch our innovative products in Romania. In recent years, Servier has significantly accelerated its investment in hard-to-treat cancers with more than 50 percent of research and development dedicated to deliver significant advances in areas of high unmet need that may truly move the needle for our patients. For more than 3 years now, we have made oncological treatments available in Romania for colorectal, gastric, and pancreatic cancers, as well as for acute lymphoblastic leukemia. We go beyond the innovation brought by our products; by working with the medical community in Romania, we explore new programmes to support patients.

Combining traditional and virtual work to fuel business performance

Petronius Secareanu, General Manager at Canon Romania and Bulgaria, sat down with Business Review to talk about how the company helps its corporate clients become more productive and collaborate more efficiently, in a secure manner, in the hybrid work environment.

By Anda Sebesi

Hybrid work has become the new normal for many companies. What kind of solutions does Canon offer in this segment and what are their main benefits for users and companies?

Our comprehensive portfolio of solutions and services for managing documents and information is designed to streamline working processes in any organisation, while facilitating employee collaboration regardless of the place of work. Canon's expertise and experience guide businesses through their swift digital transformation and enable them to easily extend their working experience from the office to the hybrid workspace through automated business processes and document management solutions, making it all more cost-effective and efficient and providing high levels of data security and compliance.

How does Canon help companies become more productive in the context of hybrid work?

According to Gartner, 82 percent of company leaders intend to continue allowing remote working as employees return to the workplace, while IDC expects that 80 percent of enterprises will adopt mechanisms to shift to cloud-centric infrastructure and applications, at a pace that is twice quicker than before the pandemic, while Quocirca states that 96 percent of organisations expect an increase in demand for collaboration services. We support organisations in optimising their business processes, combining the traditional and the virtual to form a hybrid workspace where paper and digital documents coexist and are part of a new, harmonised way of working. Our leading and integrated ecosystem of hardware, software, and services is designed to support companies in their transformation journey, regardless of where their employees are working from. Whatever the situation and business landscape, we combine Managed Print Services and Workspace Collaboration solutions to help companies gain transparency and control over the entire document lifecycle and build a bespoke approach to support their digitalization journey.

What can you tell us about Canon’s integrated experience titled The Road Show and its added value for customers?

The Canon CEE Hybrid Working Roadshow featured a converted truck with a modern business environment divided into 4 different hubs: Office & Co-working hub (satellite offices or subsidiaries/branches), Home hub, Mobile hub (locations outside of the office and the home, e.g., working from a café or a hotel), and In-house print hub (a print room located within the organisation). Canon experts guided visitors through each hub corresponding to real-life hybrid working scenarios in different business departments like HR, Accounting, Finance, and print rooms and presented the best solutions for managing documents and information to work more efficiently, safely, and collaboratively.

What are Canon’s main business directions on the Romanian market?

Our focus on innovation increases productivity and quality for our customers while our expertise is driving technological advances across a range of industries that rely heavily on visual data. We are the only company in the world to have ranked in the top five for 36 years running, according to the latest ranking of preliminary patent results issued by IFI CLAIMS Patent Services, based on information issued by the United States Patent and Trademark Office. Keypoint Intelligence, the world’s leading independent provider of testing services and analytical information to the document imaging industry, awarded Canon with three coveted recognitions at Buyers Lab (BLI) 2022: the “A3 Line of the Year Award” and the “Most reliable A3 Brand” for the exceptional performance and reliability of the hardware technologies used in Canon A3 multifunctional printers; and for the fourth year in a row, uniFLOW Online, our secure cloud-based printing software solution that enables businesses to track and control print, scan, copy, and fax activity across their entire environment, even if it spans across several locations, won the “Outstanding Cloud Management Solution” award.

BAT aims to create a better tomorrow

With a 25-year presence on the Romanian market, BAT is one of the major international investors operating in the country. Fred Monteiro, Central European South Area Director at BAT, tells Business Review about the company’s development over the years, its positive impact on the local economy, and its involvement in local communities.

By Anda Sebesi

BAT is the largest taxpayer in Romania and a strategic foreign investor. What is the company’s footprint and where is Romania on BAT’s investment map?

BAT has been in Romania for 25 years now, since 1997, when production started at our factory in Ploiesti, and it has been one of the biggest international investors in Romania, a strategic employer, and a long-term partner of the Romanian economy. We are a strong organisation, with major accomplishments and a significant footprint on the local market: EUR 125 billion in direct, indirect, and induced contribution to the Romanian economy and EUR 24 billion paid directly to the state budget, mostly as excises and other taxes, but also as salaries and other local expenses* over 25 years.

We are also proud to be the leader of the local tobacco market with a market share of over 50 percent, as well as the biggest contributor to Romania’s state budget for two years in a row. In 2021, BAT had a total state budget contribution of RON 11 billion (EUR 2.2 billion) in taxes and excises, an increase of over 10 percent versus 2020. BAT also contributes positively to Romania’s trade balance, as a leading producer and exporter of agricultural products through its Ploiesti factory, the group’s second largest factory in Europe: over 60 percent of the volumes produced locally are exported to tens of other countries across the world.

Romania is an important market for BAT, and we are committed to continuing the development of our business and investments here. Romania was the first country in the European Union to produce tobacco consumables for glo, our innovative reduced risk product that heats tobacco, and our total investments in our Ploiesti factory have exceeded EUR 500 million.

In the past 25 years, BAT has been a strong partner of state authorities in combating illicit trade, a severe phenomenon with serious economic and social implications. Every year, we run national information campaigns through our Stop Contrabanda platform, and we support Romanian authorities in their efforts to reduce the smuggling volume. In Q1 2022, the cigarette black market in Romania remained below 8 percent.

BAT has also had a strong impact on the local workforce, both directly, through em-

ployees in BAT units, and indirectly, through our distribution and supply chain. BAT’s three economic entities employ over 3,000 people in Romania, and another 30,000 jobs are created through the company’s supply and distribution chain. We invest in our employees’ professional development and provide continuous training sessions, and we are happy that our efforts have results. We are proud to say that about 50 percent of our local colleagues have been with the company for at least 10 years.

The tobacco industry is changing globally, and BAT has a strong commitment for A Better TomorrowTM. What is the company’s vision for the near and mid-term future?

Innovation and tech are transforming all industries, products, and consumer behaviours worldwide, and the tobacco sector is no exception. Our industry is transforming, and BAT’s business strategy is all about sustainability and building A Better TomorrowTM for all stakeholders, which includes reducing the health impact of its business by offering adult consumers reduced risk alternatives** such as glo. BAT invests almost GBP 350 million a year in the research and development of its New Category products, and we now have a broad portfolio of non-combustible nicotine products which includes tobacco heating products, vapor products, and modern oral nicotine pouches.

In 2018, we launched glo in Romania, our most innovative tobacco heating product. Over the years, BAT has conducted more than 300 studies on glo, including some to help assess the reduced risk of using glo compared to smoking. BAT’s scientists also conducted the first controlled study in the UK, spanning one year, and the results showed significant reduction in indicators of potential harm over 6 months for smokers switching to exclusive use of glo compared with continuing to smoke cigarettes. For most of the measured biomarkers, the reductions seen in people using glo were similar to those in participants who stopped smoking completely.

BAT’s ambition is to have 50 million consumers of its non-combustible products by 2030 and to generate GBP 5 billion of New Categories revenue by 2025. The BAT of tomorrow is a high-growth consumer goods company: global, consumer-centric, multicategory, with sustainability at its core.

In recent years, ESG has become a strategic pillar in companies across sectors. What is BAT`s vision on sustainability and community impact?

In 2020 BAT has defined its sustainability agenda under the promising umbrella of delivering A Better TomorrowTM, an ambitious objective across all business lines. Sustainability is at the heart of our strategy and it is delivering consistent growth, encouraging more consumers to transition to reduced risk products** and reducing the health impact of our business. As part of our environment pillar, we continue to grow our internal efforts to reduce waste and operate responsibly across the value chain. We focus constantly on bringing our consumers along our sustainability journey and we undertake regular campaigns to inform them about the importance of simple gestures we can all do to protect the environment and our communities. In 2019, we launched the Choose responsibly for a Clean City campaign—the first national campaign that included street bins for cigarette stub collection to be used in energy recovery. This year, we marked June 5th—World Environment Day—with an awareness campaign in Bucharest showcasing cities as our second homes and the importance of treating them as such in terms of waste management, for the common good.

In 2021, we started the selective collection campaign for the previous versions of glo, our tobacco heating device, and so far over 11,000 devices have been collected for recycling. Another recent initiative consists of five solar trees installed in Bucharest to provide green energy which is used to charge electronic devices in both wireless and USB format while raising awareness on alternative sources of energy and inviting the community to enjoy a relaxing moment and free Wi-Fi.

We are also strong supporters of the Romanian culture and art communities and we invest over EUR 1 million annually in supporting cultural events and some of the biggest festivals in Romania, such as Electric Castle and SummerWell.

Furthermore, a responsible commercial behaviour in both our teams and our commercial partners, namely preventing minors’ access to nicotine products, is also an important pillar of our sustainable business in Romania. BAT is constantly investing in educational campaigns regarding the legal provisions and the reasons why minors should not have access to nicotine products. And we are happy that the National Consumer Protection Authority joined our campaign in 2019, underlining the importance of responsible commercial practices.

BAT is a strategic partner of the Romanian economy. How could a sustainable fiscal framework be created in Romania in the coming period and what types of measures would consolidate the local economy?

We are committed to continuing our investment and building A Better TomorrowTM in Romania. As Romania’s largest contributor to the state budget and one of the largest international investors on the local market, we consider stability and predictability to be the most important prerequisites for economic consolidation. In our view, a stable economic environment and a balanced and fair fiscal framework for all nicotine products are essential in driving predictability for solid business development in Romania.

* SOCIO-ECONOMIC FOOTPRINT ANALYSIS for BAT ROMANIA, Civitta, 2021 **Based on the weight of evidence and assuming a complete switch from cigarette smoking. These products are not risk free and are addictive.

Audio architecture changing spaces and lives

As offices reopen, businesses are leveraging the power of audio to design a more compelling employee experience, according to Marie Stafford of Wunderman Thompson. Arizona-based company Spatial has created a flexible, scalable technology platform that powers immersive three-dimensional virtual sound experiences for realworld spaces, which are a lot less expensive than traditional solutions.

By Romanita Oprea

Spatial’s Holodeck experience showcased the power of sound to reshape our sense of place and inspire feelings of comfort, belonging, and safety

At the SXSW festival in Austin, Spatial’s Holodeck experience showcased the power of sound to reshape our sense of place and inspire feelings of comfort, belonging, and safety. A live demonstration exposed visitors to the harsh sounds of a busy shopping mall, a hospital waiting room or a chaotic cityscape, then sonically whisked them to an idyllic tropical beach with lapping waves, a rainstorm in a lush forest or the gentle burbling of an underwater lagoon. The technology has compelling applications for the employee experience. Its presence continued during the most recent SXSW with some site-specific work that melded Meow Wolf's unique pop experimentalism with software firm Spatial's auditory architecture.

The evolution of the collaboration was organic, said Spatial CEO Calin Pacurariu, and it started off as a way for the company to get feedback on its software. Spatial had been planning a SXSW activation even before the 2020 cancellation, and with the return of the in-person festival, they looked to Meow Wolf. He compared what they do to “what great thematic designers did 30, 40 years ago when they built whole theme parks in three to four years

“The idea of a cumulative effect is deep in the philosophy of Meow Wolf's growth, much as each of their installations is part of a greater whole. Each table-sized container at the SXSW installation was unique but synchronistic, like each room at Santa Fe’s House of Eternal Return reflects the individual artist or subset of the collective, and how Santa Fe interlinks with their other sites in Denver, Las Vegas, and whatever lurks behind that countdown clock. Sandra Wang, senior creative director for Meow Wolf said. “We have this a macro-story that's happening with this show fits with the narratives that our happening with our other exhibits. One seeps into the other,” wrote the Austin Chronicle.

In 2021, Spatial announced the launch of its first Future of Work Soundscapes, in collaboration with sonic branding company Made Music Studio. Comprising a blend of music and biophilic sound, three soundscapes aim to create the ideal environment for different work modes. A welcome ambience for lobbies and reception spaces creates a sense of warmth and interconnectedness; a focus ambience reduces distraction and inspires relaxation; and an energising ambience for high-traffic or communal areas encourages optimism and motivation.

Sound has long been an afterthought in workplace design, yet according to research from Made Music, there is an 86 percent correlation between one’s reaction to sound and a subconscious desire to return to that space. Biophilic sound design has also been shown to improve employee engagement and productivity and could prove a surprising ally in delivering on employee wellness, which continues to push up the agenda. In their cases the tracks have a natural connection, with each of the ambiences having been inspired by nature’s four main elements of air, earth, water, and fire.

“As leading companies are rearchitecting the full lifecycle of work and rethinking the purpose of the modern campus with their employees, immersive work design is coming to the forefront,” Michael Plitkins, cofounder of Spatial, told Wunderman Thompson Intelligence. “We look forward to connecting with brands interested in enhancing the employee experience throughout the day. Hybrid work models inherently consider the unique strength of each workplace to maximise creativity, teamwork, and performance and our soundscapes deliver enhanced environments in an easily scalable and customisable manner on the real-time interactive Spatial platform.”

Spatial has also recently been working with the California Institute of Arts (CalArts) and Roger Holzberg, founder of Reimagine Well, a company that delivers immersive patient ex-

periences through screens and virtual reality gear. Both Holzberg and Shannon Scrofano, a professor at CalArts, teach a course at the school called Healthcare by Design. In the spring of 2021, the class partnered with Henry Mayo Newhall Hospital to deliver immersive experiences at their Santa Clarita Valley facility.

Furthermore, according to Inc.com, the soundscape is scalable once you fine-tune your workforce's preferences. A welcome ambience might incorporate wind-related sound along with synthesiser pads/arpeggios, which may be geared toward lobbies as they can spark warmth and feelings of connection. A more focus-oriented ambience, rather, may be heavy with acoustic instruments, while also tying in the sounds of running water, wind, and bird song, and humangenerated sounds. The focus ambience may boost productivity as it is built for use in quieter working spaces.

At the same time, according to Forbes, other emerging research is providing evidence that spatial audio applications can be effective for short-term stress reduction and even have the potential to supplement clinical music interventions. Spatial audio is one solution to help fill in those missing gaps in the 2D digital reproduction of music or voice that leave our brains a bit less satisfied, if not stressed, tired, and confused.

Addressing issues of low-resolution audio and spatial disorientation in video conferencing, Immersitech CEO Jim Poore says, “Spatial audio gives users the proximity orientation where your brain kind of knows that you hear it from the right, left, or centre. It’s such a simple thing, but when everything is monotonous, your brain has to deconstruct the different streams coming in from all the different people. That makes your brain work considerably harder and that’s one of the main reasons why you see a lot of the stuff on Zoom fatigue.”

The engineering team at VisiSonics is adding spatial audio technology to airline flight control systems to help pilots better manage the multiple audio-based navigation signals they have to monitor simultaneously, so they can reduce stress and stay more alert and focused during takeoff and landing. HEAR360 is helping the blind better navigate their way through the day using the head tracking features and Bose bone-conducting audio glasses.

IN ART

21_21 DESIGN SIGHT held the “Audio Architecture” exhibition in the summer of 2018, welcoming Yugo Nakamura as its director, whose unique forms of expression are highly regarded in web design, interface design, and film. Within the music familiar to our everyday life is a combination of elements: layers of tone, sonic range, and rhythm form

a densely designed structure—architecture. There are few opportunities, however, to be conscious of this particular structure.

Musician Keigo Oyamada (Cornelius) has written new music with a focus on its structure exclusively for this exhibition; it is interpreted from the varying perspectives of spirited creators into disparate video works. Participating in this exhibition are nine creators who challenge new modes of expression with original sensibilities, by traversing fields of film, animation, dance, graphic design, illustration, programming, and media design. Exhibition graphics are designed by Masakazu Kitayama (Help!). Moreover, the exhibition tries to construct a type of “audio architecture” by repeating the music paired to various films over and over, in the space dynamically designed by Masamichi Katayama (Wonderwall).

According to Sound of Life, Audio Architecture builds an imagery of sound that can also be seen and felt, presenting it across a 25-metre-long digital screen filled with undulating abstract shapes. 21_21 Design Sight isn’t just any other “design museum” either. Created by two industry heavyweights—architect Tadao Ando and fashion designer Issey Miyake—it is, according to Ando, “not only a museum that shows exhibits, but also a place for researching the potentiality of design as an element that enriches our daily life, a place that fosters the public’s interest in design by arousing in them different sights and perspectives on how we can view the world and its objects.” “When Audio Architecture opened in

Japan for the first time in 2018, audiences were mesmerised by the fresh perspective integrating sound, video, and space.

For a seamlessly inclusive experience, details such as the sequence and length of each artwork were also carefully thought out. This year, 21_21 Design Sight is set to take the exhibit beyond Japan.

Teaming up with exhibition experts

INCEPTION, Audio Architecture will be showcased in Taipei’s Huashan 1914

Cultural and Creative Park, a creative hub rebuilt from an abandoned sake factory.

On top of its original vision, ‘to see the world with design,’ the exhibition aims to allow visitors to ‘visualise sound,’ creating a fun connection of listening to music with your eyes,” Sound of Life wrote in 2020.

As Masakazu Kitayama says, “music cannot be perceived with the eyes; it can only be heard with the ears. It is something special and different, isolated from visual orientation and space.”

His intention is simple: to learn to appreciate the ordinary things in life from a design perspective. Music was one of the elements Masakazu Kitayama appreciated, but it was rare to set the core of an entire exhibition around the concept of sound or music, let alone associate it with architecture. For him, it became necessary for the audience to walk into a space built on the basis of sound, then be immersed in an environment that allowed them to acknowledge its transformation, visualised on-screen via a beautiful crossmedia collision.

Powerful Romanian-made regional and global ad campaigns

Ready-to-drink cold tea brand FUZETEA, part of the Coca-Cola Company portfolio, has launched its first-ever global brand campaign across 87 countries, with the big idea behind it coming from McCann Bucharest. The campaign required the effort of multiple teams—in Bucharest, New York, Buenos Aires—and production was carried out on three continents, under the Romanian team’s coordination.

By Romanita Oprea

TPS Engage launched in May the global campaign for Gap Yeezy Engineered by Balenciaga

The shoot for the “Made of Fusion” campaign took place in Italy and Uruguay, with a team of two directors and two photographers from Egypt, the Netherlands, Argentina, and the UK.

The campaign was developed around the concept of fusion and started from the idea that all the things that are special in the world—including people—are the result of a fusion of contrasts. “Made of Fusion” is an end-to-end global brand creative platform based on a general truth: all life experiences, even the most exciting ones, are, in fact, a fusion of dreams, fears, and adventures. The fusion of emotions reflects the very essence of the product, a contrasting trio of soft tea, cheerful fruits, and herbs. The platform highlights the fusion of contrasts, with an emphasis on active relaxation, and invites us to enjoy relaxing moments while staying active and full of energy.

“We want to celebrate human nature in all its complexity, as reflected by our product’s diversity and fusion of ingredients. FUZETEA is composed of elements as contrasting as the people who drink it and the world in which they live. What makes FUZETEA special are its three unique ingredientssaid George Wheen, senior director of brand strategy tea.

Over the next 3-5 years, the “Made of Fusion” platform will launch several campaigns that will take consumers on a journey of exploration. In the second and third years of the campaign, the platform will continue to develop new ways of interacting with “modern explorer” communities.

In Romania, the platform's communication campaign started and included a dedicated TV spot, online and social media promotion, OOH, and collaborations with influencers.

“We are made of a mixture of contrasts, and the perfect fusion of contrasts makes the FUSET unique. This product is special not because of a single ingredient, but because of the extraordinary fusion between tea, fruits, and herbs, which is meant to arouse the senses in moments of active relaxation. We are happy to offer ‘Made of Fusion’ to the modern explorers’ community in Romania,” said Iuliana Nedelcu, marketing director at Coca-Cola Romania.

The “Made of Fusion” creative platform was developed and launched by several agencies within the Interpublic Group, including McCann Bucharest, as lead agency, together with MRM Bucharest as lead digital agency. The McCann creative team collaborated with the Coca-Cola team along with Egyptian director Ali Ali and international photographer Ignacio Ricci. The campaign is produced by an international team of professionals from around the world.

“We wanted to give the FUZETEA brand a role in culture, a voice, and a point of view; to bring people a revelation about how they can relate to the world, to what is happening to them, and to what surrounds them. We humans are a fusion of contrasting experiences—both good and bad, barriers and ambitions to overcome them, achievements and failures, things we dream of, and things we fear. They all merge and make us unique, better. By revealing that we are ‘Made of Fusion,’ we wanted to inspire people to have a more optimistic attitude towards everything that happens in their lives,” added Catalin Dobre,

chief creative officer at McCann Worldgroup.

Moreover, according to Cristian Calinescu, regional business director at McCann Worldgroup, FUZETEA is a brand that is very close to the hearts of McCann’s Bucharest team. It’s young (3 years old, but already a global brand), energetic, and it has a very unique proposition in the Global RTD category.

“Having pitched both locally and regionally in the past, when the global repositioning pitch brief came in, we knew that it was our shot to help FUZETEA become the challenger brand we already knew it was. But this was not an easy brief; our client partners were looking for a long-term platform that would be both timely and timeless. To get this done, there was a huge IPG display of force (agencies from within the group and around the world, each uniquely qualified to bring specialised contributions to the work) and the weeks from briefing to presentation were the most intense (but also super gratifying) four weeks of my life,” Calinescu said.

The insight and the Big IDEA are both broad, but also very specific, and they can be effectively leveraged on markets where the brand is in its infancy and where product credentials need to be put front and centre, but also on markets where the brand has reached maturity and needs to differentiate itself with a clear philosophy and tackle a purpose proposition.

“All of this would not have been possible without the right team and the right client partner. I am grateful for all of it. We had people on both sides pushing boundaries and never settling. Getting a chance to work with and learn from so many amazing and super talented people for more than 9 months to deliver the global was so enriching and I would do that all over again. It’s only when the skillset matches the passion and the determination that amazing things happen,” Calinescu added.

“It's a great feeling when you're working on something that needs to feel global and very personal at the same time. And it's great to lead teams from all over the world from here, in Bucharest, a small town in a small country. I’ve had some experience on Coke, Fanta, and Sprite regionally, but it's a different feeling when you see your work in 87 countries! It was the other way around from the Coca-Cola bracelet festival, where the idea came up here and then a whole world took it over. This time, we had the chance to make it global from the get-go,” said Lia Bira, group creative director at McCann Bucharest, for IQads.

Another example of global success coming from a Romanian agency is TPS Engage, which in May launched the campaign for Gap Yeezy Engineered by Balenciaga, the new collection from Kanye West (Ye), via digital screens in 8 countries and 11 cities, including Bucharest. Since 2021, TPS Engage has been working with well-known artists and brands like Snoop Dogg, Kanye West, Chance the Rapper, Duolingo, TikTok, GoDaddy, Morning Brew, Picsart, India Times, Universal Music, HBO, and thousands of startups that are using marketing on digital screens in an innovative manner.

“Ye’s campaigns are a unique combination of minimalist and spectacular. We are happy to mark the second collaboration with the group behind the collection. The entertainment and fashion sectors have truly embraced programmatic DOOH advantages, especially the benefits of our platform when it comes to implementation speed and budget optimisation,” said Diana Sumanaru, global marketing manager at TPS Engage.

Among the most well-known initiatives from TPS Engage was the viral GameStop screen from February 2021, which at the moment is the most popular post in Reddit history. Founded in Romania in 2018, the company is now present in over 42 countries, with its main offices in Bucharest, New York, Dubai, and Seoul.

At the end of last year, authentic Italian olive oil brand Costa d’Oro aimed to inspire consumers to enjoy life in a genuine way, through an integrated campaign signed by Mercury360 and adapted in Bulgaria, the Czech Republic, and Poland.

“We won the pitch in 2020, the year in which many brands acknowledged the importance of courage in communication. We presented the client with a long-term strategic approach, which went beyond the specific campaign brief for the local market. The client resonated so well with our proposal, which was built on strong consumer insight, that they decided to develop the campaign in 3 other countries, which gave us even more confidence in approaching future briefs. We ended up using Teams and WhatsApp to coordinate a photoshoot in Italy, which featured authentic home-cooked meals that looked like the ones we all eat at home, which we might not post on Instagram but still remember for the perfect feeling they create, precisely because they are authentic,” said Mihaela Bourceanu, customer service &

strategy director at Mercury360. For the client’s part, Daniela Pontecorvo, chief growth officer at Costa d'Oro Italy, said: “We found a strategic partner in Romania who knew how to connect the world of the brand and the consumer in a natural way, looking beyond a specific need for communication, namely the launch of a new product image. Costa d’Oro is a story about authenticity that was born on the sunny hills in the heart of Italy and it is being passed on to future generations, with passion and skill, just as it was inherited. In an increasingly superficial world, the authentic taste of our product aims to whet the appetite for an authentic lifestyle, which makes you feel that you are tasting life to the fullest, through all of your actions—from the genuine taste of the ingredients you use in the kitchen to the point where you enjoy the meal and the things you choose to post on social media out of the whole experience.”

The road to recovery starts with a new mindset

To find out more about the European Directive for restructuring, which must be implemented by all 27 EU member states by July 2022 Business Review talked to CITR CEO Paul Dieter Cirlanaru and Head of Legal Alina Popa in an exclusive interview.

By Mihai Cristea

What is the current status of the Directive?

Paul-Dieter Cirlanaru: CITR was selected by the European Commission as the Consultant of the Romanian Justice Ministry. The core team of experts that drafted the law included seven professionals: syndic judges, academic professors, and insolvency practitioners. We carried out consultations with stakeholders involved in the restructuring and insolvency market, namely banks, businesses, authorities, syndic judges, and professionals (insolvency practitioners, lawyers, valuators, notaries, bailiffs). We had studied various legislative frameworks on pre-insolvency and insolvency in the EU to identify better solutions to build both debtors and creditors’ trust in pre-insolvency procedures. We understood that restructuring involves strategic compromise and a new mindset, consensus and negotiation, but also the development of an entrepreneurial profile to understand what the client is going through. After public debates across ministries and government, the law has now reached Parliament, and we are expecting it to be adopted by the end of this month.

How does Romania compare to other countries in terms of legislation?

the International Monetary Fund, Romania has been among the fastest-growing economies in Europe in recent years. Romanian insolvency legislation has improved significantly under the strict observation of the World Bank group on Insolvency. What our legal framework lacks are functional pre-insolvency proceedings, and that was our focus for the new proposed law. It will be a turning point for companies and for our economy.

How come judicial reorganisation in Romania has such a low success rate of 2-3 percent?

P.-D. C.: A World Bank report shows that most of the SMEs that open an insolvency procedure are more likely to end up in bankruptcy than undergo a successful judicial reorganisation. Why? Because entrepreneurs are facing the stigma of failure and tend to access the legal procedure very late. They often try to solve the problem by themselves, they lack the culture of partnership, of being stronger together than separately, of asking for help while is not too late. This is a change we want to bring into Romania’s entrepreneurial culture. We have modern legislation, but it’s in vain if it is not applied. We need to leave the stigma and fear of failure behind. And it is not going to be easy, because our early education didn’t teach us that failing is a part of progress. Just like in medicine, we can all agree that prevention is better than treatment. That is the kind of mentality that we are looking to develop in business, too.

How will the restructuring legislation work?

A.P.: We invite the parties—the company and its creditors—to a negotiation. After they reach an agreement with the support of an insolvency practitioner, they go to the syndic judge, who has a minimum involvement in the process as a guarantor of legality and integrity. The judge verifies whether the company is in difficulty, if the creditors’ vote is carried out properly, if creditors are correctly treated, and if the proposed restructuring measures are viable. Then, the plan created by the insolvency practitioner must be implemented by the company, under the practitioner’s supervision. P.-D. C.: We encourage entrepreneurs to be open to the new prevention and restructuring mechanisms because, at the end of the day, they bring a competitive advantage, helping them to get out of difficulty but also to improve business performance.

Considering everything that we’ve mentioned, it is still hard to identify the underlying condition is. Even though we benefit from the advantages of an emerging market and the solutions of modern legislation, we still need to understand what could motivate somebody to access these tools. In my opinion, we also need to look at the mindset of today’s entrepreneurs and at existing attitudes towards restructuring solutions. If we don’t learn that failure should be accepted and sometimes even encouraged in order to accelerate progress in our capitalist culture, we will remain unable to raise the level of expertise and practical solutions leading to real life success stories. Let’s turn distress into a chapter of a company‘s history rather than see it as its inevitable demise.

Key players in Romanian foodtech and lessons from other countries

Romania is far from being a rising star in foodtech innovation, but experience sharing between startups and corporations and the emergence of specialised investors could change this situation. The development of platforms that have finally joined strategic investors’ portfolios is the only notable recent gain in the foodtech sector.

By Claudiu Vrinceanu

Romanian hospitality entrepreneurs usually follow a vocational path

KEY INSIGHTS

Foodtech is an ecosystem of startups and entrepreneurs working to innovate in the following fields: supply chain, food research and services, delivery, and consumer tech. Good business ideas have included subscriptions to food and beverage services, access to cooking ingredients, and startups developing new digital platforms for entrepreneurs. Subscriptions for ingredient providers are based on users’ growing desire to cook at home, but with ingredients that have already been weighed and cut for their chosen recipe. Food and beverage subscription services rely on the fact that users lack the time to order food products.

TOP PLAYERS

One of the few initiatives focused on the foodtech sector in Romania, the F&B Business Accelerator, is a programme developed on 3 verticals: Products, Services, and IT products for the F&B industry. The first cohort targets entrepreneurs who create products for the F&B sector. There is also a programme dedicated to IT products for hospitality and retail, as well as a third cohort devoted to the concept of business as a service. According to the F&B Business Accelerator, Romanian hospitality entrepreneurs usually follow a vocational path, and they have the desire to improve their entrepreneurial training and provide quality services to their customers. However, periods of change such as the pandemic and economic crisis can change the modus operandi of companies in the hospitality industry. Change can also be observed among the new generations of entrepreneurs, who tend to build businesses with high scalability potential from the very beginning.

TECH STARTUPS

Seven of the most active and experienced Romanian foodtech startups and scaleups are LifeBox, Comarket, Manna Foods, Clever Eat, Bonapp, Yummydiet, and Peelhy. LifeBox, the healthy food delivery startup, started its international journey last year by launching its service in Hungary under the brand FrissBox. Meanwhile, the Comarket platform, a SaaS for centralised procurement and a B2B marketplace for the hospitality industry, aims to attract a new seed financing of EUR 750,000 to accelerate its development plans and technology investments.

The growth pattern is clear in terms of success stories: launch, grow, and exit to a strategic investor. Bringo, Gloria Food, and EuCeMananc are three examples of tech startups that have grown and eventually reached the portfolio of large retail or technology companies.

INVESTORS

There are no specialised foodtech funds in Romania; the largest transactions have been made by strategic investors. Globally, investment funds allocated more than USD 39.3 billion to foodtech companies across 1,358 deals in 2021, according to a PitchBook report. The funding accelerated because of the increased e-commerce and food delivery trends amid the COVID-19 pandemic, environmental concerns, and the drive toward automation to reduce labour costs. For example, Romanian startup Bonapp has announced a seed investment of EUR 800,000 from a group of investors led by Up (formerly Chèque-Déjeuner). The other investors are Romanian VCs RocaX and Early Game Ventures and Hungary-based Impact Ventures.

What can we learn from other countries? Romanian foodtech startups are still primarily relying on their founders' resources. If we look at Poland, we can see the involvement of corporations in the foodtech ecosystem. Carrefour has financed four Polish startups in this sector to help them invest in product development, marketing, sales, and attracting investors. Even though most foodtech unicorns are still consumer-oriented, specialists are noting a shift to B2B business models, a trend that should also be adopted in Romania.

Dentons hopeful for a bright future on the Romanian market

This year, Dentons is celebrating a quarter century of delivering legal advice to clients in Romania and the region. Perry V. Zizzi, Managing Partner of Dentons Romania, sat down with BR to discuss how the practice of law has changed and the long-term outlook of the Romanian market.

By Anda Sebesi

Dentons has been present in Romania for 25 years, and you have been working here for almost 20. What changes have you seen on the market during this time?

The Romanian market has evolved from being primarily state-centred to having a dynamic private sector. 25 years ago, the focus was on privatisations and public infrastructure; today, we advise clients on a wide of range of areas. The investor base has also shifted from primarily eastern Mediterranean to a mix that includes investors from Western Europe, North America, East Asia, India, and the Middle East. Romania’s accession in the first decade of the 2000s to both the European Union and NATO paved the way for a more diverse group of investors in a wider range of sectors. All these developments have shaped and consolidated both the Romanian business culture and the practice of law.

Technology has also transformed the way we work. Take due diligence for example. A quarter century ago, we used to send an army of lawyers to out-of-the-way places to read dust-covered documents, take notes, then summarise findings in a report, often without the ability to check the documents again. Fast-forward to the present: we almost always have virtual data rooms that are accessible from anywhere, day or night. We deploy software that uses AI to review large volumes of documents. This saves the client money and time and improves accuracy.

What have been the most memorable deals you’ve worked on? What are you most proud of?

So far this year, our Bucharest office attorneys have advised on matters worth well over EUR 18 billion, all of which are landmark transactions in their respective sectors. Among these was a USD 15 billion data centre acquisition and financing, which was managed by me and my team in Romania and involved over 150 Dentons attorneys in Europe, North America, South America, and Asia. Another very high profile matter this year was Romgaz’s USD 1 billion acquisition of ExxonMobil’s offshore assets, as well as the financing for it. At the beginning of this year, we assisted a consortium of four domestic and international banks on a EUR 125 million green loan facility for six commercial real estate assets developed by Prime Kapital, in what’s looking to be one of the most significant green real estate transactions of the year 2022. Other landmark transactions include the RON 555 million private placement of the Bucharest municipal bond issue and the EUR 153 million bridge to bond structure for Electrica. We are currently advising on the highly anticipated IPO of Hidroelectrica, a transaction expected to be the largest Romanian IPO in history.

Since taking over as Managing Partner in Romania, you’ve done a lot to shake up the office. What changes have you made so far, and what comes next?

Our legal team has grown by nearly 70 percent, and we recently occupied a second floor of the modern office building that we moved into in 2019. We have hired four new partners, including two women, one of whom leads the Banking and Finance practice and the other who leads the Capital Markets practice. In terms of revenues, we were one of the fastest growing European offices in our Firm from 2020 to 2021.

In terms of future plans, we continue to consolidate our market leading positions in Corporate, M&A, and Real Estate. We are also actively recruiting to create Tax and White Collar practices.

Looking five years into the future, what do you see for the Romanian market, and what do you see for Dentons?

As I stated four years ago when I was appointed Managing Partner of Dentons in Romania, we are committed to this market and are here to stay. After a quarter century, we are larger, stronger, and better positioned than ever before. Interestingly, I believe the same can be said about the Romanian market. I am hopeful for continued growth and achievement over the next five years.