Finance

Customers exit an Abercrombie & Fitch store in San Francisco.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Citigroup — Citigroup shares fell nearly 3%. The bank announced plans to spin off its Mexico business Banamex through an initial public offering after its efforts to find a buyer for the unit failed.

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Palo Alto Networks — The cybersecurity company saw its shares jump nearly 8%. The action came a day after Palo Alto Networks posted a better-than-expected quarterly report and strong earnings guidance. The company reported adjusted earnings of $1.10 per share and revenue of $1.72 billion. Analysts polled by Refinitiv had estimated earnings of 93 cents per share and $1.71 billion in revenue.
Netflix — Shares rose 1.2%. On Tuesday, the company started notifying customers of its password-sharing rules in the U.S. Oppenheimer said the crackdown on account sharing should help the stock.
Analog Devices — Analog Devices dropped 8% in midday trading. The semiconductor manufacturing firm gave weaker-than-expected guidance for the fiscal third quarter, despite beating expectations on the top and bottom lines in its second quarter. Analog Devices expects adjusted earnings of about $2.52 per share in the third quarter, compared to analysts’ forecasts of $2.65 per share, according to FactSet. The company expects revenue of about $3.10 billion, less than the $3.16 billion estimate.
Tesla — Shares of Elon Musk’s electric vehicle maker dipped about 2% midday. Disappointing quarterly results from Chinese rival Xpeng sent EV stocks lower. Xpeng missed estimates on revenue and posted a wider loss than analysts expected, per Refinitiv. The company also forecast a decline in vehicle deliveries.
Energy stocks — Shares of oil companies rose Wednesday. The move came a day after Saudi Arabia’s energy minister indicated potential OPEC+ output reductions. The Energy Select Sector SPDR Fund (XLE) was up 0.3%. Marathon Oil and APA both gained roughly 1%.

Semiconductor stocks — Semiconductor shares declined Wednesday. A spokesperson for China’s Ministry of Commerce spoke out against Japan’s chip export restrictions to China a day earlier. Shares of Microchip Technology were down 6%. NXP Semiconductors fell 4%, while On Semiconductor shed 3%. Nvidia also declined 2% ahead of its earnings announcement after the bell. 
Moderna — The biotech company’s shares fell more than 4%. The drop marks a sharp reversal for the stock, which has popped in recent days amid news of the new XBB variant wave of Covid cases in China. Beijing officials reportedly estimate this could result in 65 million new weekly cases by the end of June.
Abercrombie & Fitch — Shares of the apparel retailer soared 26% after the company reported fiscal first-quarter earnings and revenue that beat analysts’ estimates, according to Refinitiv. The apparel retailer also issued strong guidance for the fiscal second quarter and full year.
Urban Outfitters — Shares of the retail company spiked about 16%. On Tuesday, Urban Outfitters issued a fiscal first-quarter report that beat expectations on the top and bottom lines. The company generated 56 cents in earnings per share on $1.11 billion of revenue. Analysts surveyed by Refinitiv had penciled in 35 cents of earnings per share on $1.09 billion of revenue. Barclays upgraded the stock to overweight from equal weight after the earnings report.
Accolade — Shares jumped nearly 7% following an upgrade to buy from neutral from Bank of America. The firm said the health benefits assistance company has a “steady growth engine.”
Stem — Stem shares climbed 5%. Evercore ISI initiated coverage of the stock with an outperform rating, saying the energy storage company is a leader in a rapidly growing market given the rise in clean energy technologies. The firm said in a Tuesday note Stem is “well-positioned to capture a significant market share,” and is a “growth story.”
Corning — Shares gained 2% a day after Corning announced it would hike prices for its display glass products 20%. The company said the price adjustment is intended to offset ongoing high energy and material costs. Corning said it expects demand to grow in the second half of 2023. 
Kohl’s — The retail giant got a 5% lift in its shares after it reported an unexpected first-quarter profit Wednesday and reaffirmed its full-year outlook. The company said its stores have improved productivity and noted sustained momentum at Sephora at Kohl’s.
Agilent Technologies — Shares of the laboratory technology company declined almost 8%. On Tuesday, Agilent posted guidance for earnings and revenue in the fiscal third quarter was lower than anticipated, according to Refinitiv. However, the company posted beats on the top and bottom lines for the previous quarter.
Intuit — The tax software company’s shares declined 7% a day after Intuit issued quarterly results. While Intuit’s fiscal third-quarter earnings came above analysts’ estimates, the company reported a revenue miss, according to Refinitiv data. The company’s earnings outlook for the current quarter also missed analysts’ expectations. 
— CNBC’s Samantha Subin, Alex Harring, Yun Li, Brian Evans, Jesse Pound and Tanaya Macheel contributed reporting. More

The celebrated tome “Capital in the Twentieth Century”, by Thomas Piketty, a French economist, runs to 204,000 words—longer even than Homer’s “Odyssey”. But the book’s central argument can be distilled to a single, three-character expression: r > g. As long as “r”, the real rate of return to capital, exceeds “g”, the real rate of economic growth—as Mr Piketty calculated it did over the course of the 20th century—then inequality will supposedly widen. The simplicity of the message won Mr Piketty widespread acclaim. It also spawned a resurgence in the popularity of economic expressions. An influential one, i > g, is a variation on the Piketty rule. It applies when nominal interest rates (or risk-free returns) exceed nominal growth. The troubling conclusion from this expression applies to debt. In an i > g world, growth in revenues, wages or tax receipts that a debtor earns will be slower than the interest accumulating on their borrowing, meaning debt levels have the potential to explode.An i > g world is unfamiliar to America and most of the West. Since the end of 2009 nominal growth has been higher than nominal rates (aside from the first half of 2020, when the covid-19 pandemic crashed the economy). Now America is about to cross the threshold. In the first quarter of 2023 robust annualised real economic growth, of 4.5%, and troublesomely high inflation meant that nominal gdp rose at an annualised rate of 8.3%, easily exceeding nominal interest rates of around 5%. A panel of economists surveyed by Bloomberg, a data firm, anticipate that in the second quarter of the year growth will slip to just 0.4% and inflation to 3.3%. Nominal growth is forecast to be just 3.7%—well below nominal rates of around 5.2%. “This is when the rubber really meets the road for the economic cycle,” notes Carl Riccadonna of bnp Paribas, a bank. “This is the point at which, if you’re a business, your revenues are now growing more slowly than your cost of financing.” Wage growth will lag debt growth. Governments’ interest bills will grow faster than tax receipts. A single quarter of this might be bearable. Unfortunately, economists expect the situation to last a year or more. The precise impact depends on the extent to which debt reprices as interest rates rise. The vast majority of American homeowners have 30-year fixed-rate mortgages. This generous financing will protect them against a pincer-like combo of slowing wage growth and rising interest expenses. Nevertheless, consumers carrying other kinds of debt—including revolving credit-card balances and private student loans—will feel the pinch. Many companies carry a mix of fixed and floating-rate debt, meaning they will also be somewhat insulated. But the maturities of their debts tend to be much shorter than those of mortgages. A large portion of corporate fixed-rate debt is due to roll over in 2024. Companies that are preparing to refinance are getting nervous. Raphael Bejarano of Jefferies, an investment bank, points out that many corporate treasurers have been spooked by just how difficult it has been to issue debt over the past year. “Many of them are looking at their big maturities in 2024 and trying to roll some of that debt a little earlier, even at higher rates,” he says. What they really fear is being unable to roll their debt over at all. The most-exposed companies include many that have been recently snapped up by private-equity barons. Private-credit loans taken on by their firms’ portfolio companies tend to have floating rates. During the last major credit cycle, in 2008, many private-equity firms were able to hang on to their overleveraged acquisitions by negotiating with lenders, which were mostly banks. This time around they will be going toe-to-toe with private-credit lenders, many of which also employ hefty private-equity teams and will be more than happy to take on overleveraged firms. In a sign of what may be to come, on May 16th kkr, a giant private-assets firm, allowed Envision Healthcare, a portfolio company in which it invested $3.5bn at a $10bn valuation in 2018, to fall into bankruptcy and be seized by its lenders. When surveying this scene, it is reassuring to note interest rates have been high for some time, the American economy has fared reasonably well and even bank failures seem to have represented a flesh wound rather than a fatal one. But all of this has happened in a different context. It is far easier to swallow a high cost of capital when it is matched by high returns on said capital. And that will not be the case for much longer. ■ More

Federal Reserve officials were divided at their last meeting over where to go with interest rates, with some members seeing the need for more increases while others expected a slowdown in growth to remove the need to tighten further, minutes released Wednesday showed.
Though the decision to increase the Fed’s benchmark rate by a quarter percentage point was unanimous, the meeting summary reflected disagreement over what the next move should be, with a tilt toward less aggressive policy.

At the end, the rate-setting Federal Open Market Committee voted to remove a key phrase from its post-meeting statement that had indicated “additional policy firming may be appropriate.”
The Fed appears now to be moving toward a more data-dependent approach in which myriad factors will determine if the rate-hiking cycle continues.
“Participants generally expressed uncertainty about how much more policy tightening may be appropriate,” the minutes said. “Many participants focused on the need to retain optionality after this meeting.”
Essentially, the debate came down to two scenarios.
One that was advocated by “some” members judged that progress in reducing inflation was “unacceptably slow” and would necessitate further hikes. The other, backed by “several” FOMC members, saw slowing economic growth in which “further policy firming after this meeting may not be necessary.”

The minutes do not identify individual members nor do they quantify “some” or “several” with specific numbers. However, in Fed parlance, “some” is thought to be more than “several.” The minutes noted that members concurred inflation is “substantially elevated” relative to the central bank’s goal.

‘Closely monitoring incoming information’

While the future expectations differed, there appeared to be strong agreement that a path in which the Fed has hiked rates 10 times for a total of 5 percentage points since March 2022 is no longer as certain.
“In light of the prominent risks to the Committee’s objectives with respect to both maximum employment and price stability, participants generally noted the importance of closely monitoring incoming information and its implications for the economic outlook,” the document said.
FOMC officials also spent some time discussing the problems in the banking industry that have seen multiple medium-sized institutions shuttered. The minutes noted that members are at the ready to use their tools to make sure the financial system has enough liquidity to cover its needs.
At the March meeting, Fed economists had noted that the expected credit contraction from the banking stresses likely would tip the economy into recession.
They repeated that assertion at the May meeting and said the contraction could start in the fourth quarter. They noted that if the credit tightness abated that would be an upside risk for economic growth. The minutes noted that the scenario for less impact from banking is “viewed as only a little less likely than the baseline.”
The minutes also reflect some discussion on the talks to raise the national debt ceiling.
“Many participants mentioned that it is essential that the debt limit be raised in a timely manner to avoid the risk of severely adverse dislocations in the financial system and the broader economy,” the summary stated.

Markets betting May was last hike

Release of the minutes comes amid disparate public statements from officials on where the Fed should go from here.
Markets expect that the May rate increase will be the last of this cycle, and that the Fed could reduce rates by about a quarter percentage point before the end of the year, according to futures market pricing. That expectation comes with the assumption that the economy will slow and perhaps tip into recession while inflation comes down closer to the Fed’s 2% target.
However, virtually all officials have expressed skepticism if not outright dismissiveness toward the likelihood of a cut this year.
Most recently, Governor Christopher Waller said in a speech Wednesday that while the data hasn’t presented a clear case for the June rate decision, he’s inclined to think that more hikes will be needed to bring down stubbornly high inflation.
“I do not expect the data coming in over the next couple of months will make it clear that we have reached the terminal rate,” Waller said, referring to the end point for hiking. “And I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2% objective. But whether we should hike or skip at the June meeting will depend on how the data come in over the next three weeks.”
Chair Jerome Powell weighed in last week, providing little indication he ‘s thinking about rate cuts though he said that the banking issues could negate the need for increases.
Economic reports have shown that inflation is tracking lower though it remains well above the central bank’s goals. Core inflation as measured by the Fed’s preferred personal consumption expenditures index excluding food and energy increased 4.6% on an annual basis in March, a level it has hovered around for months.
A bustling labor market has kept the pressure on prices, with a 3.4% unemployment rate that ties a low going back to the 1950s. Wages have been rising as well, up 4.4% from a year ago in April, and a research paper this week from former Fed Chairman Ben Bernanke said the trend represents the next phase in the inflation fight for his former colleagues.
As for the broader economy, purchasing managers’ indexes from S&P Global hit a 13-month high in May, indicating that while recession could be a story later in the year, there are few signs of a contraction now. The Atlanta Fed’s GDPNow tracker of economic data shows growth at a 2.9% annualized pace in the second quarter.
Correction: In Fed parlance, “some” is thought to be more than “several.” An earlier version misstated the difference. More

TSA PreCheck and Global Entry are federal “trusted traveler” programs that generally speed up wait times at airport security or customs lines.
The programs have received a record number of membership applications and enrollment wait times have increased in some cases, according to the U.S. Department of Homeland Security.
They make sense for frequent travelers, especially during busy periods, but aren’t for everyone, experts said.

Izusek | E+ | Getty Images

The 2023 summer travel season is expected to be a busy one, making federal programs like TSA PreCheck especially helpful for flyers, according to experts.
Such programs carry fees but generally save travelers time at the airport. However, relatively long processing times — as with recent passport applications — mean it may be difficult for some new applicants to take advantage before traveling this summer.

“You have so many people wanting to travel now, especially after the pandemic,” said Sofia Markovich, a travel advisor and founder of Sofia’s Travel. “It’s just like passport renewal, where there have been these huge delays.”
That said, programs like TSA PreCheck and Global Entry are “definitely worth it” for frequent flyers, she added.
More from Personal Finance:Travel costs fell in April. The dip may be short-livedMissing one $2 expense could derail a whole national park tripTravel to Europe is no longer a ‘ bargain-basement’ deal
“They make sense all year round, but especially when it’s the busy season,” Markovich said.
TSA PreCheck aims to cut down the screening time in airports. Travelers wait in a different — and often shorter — line from the standard security line. In April, 94% of PreCheck passengers waited less than five minutes at the security checkpoint, according to the Transportation Security Administration.

The agency aims for wait times of 10 minutes or less with PreCheck, and 30 minutes for typical lanes.
TSA PreCheck — available for departures from certain U.S. airports — costs $78 for new enrollees. A membership lasts five years, and renewals cost $70.

The upfront fee for new members amounts to $15.60 a year. Several credit cards cover the fee as a customer perk.
Aside from a potentially shorter security line, there’s also a convenience factor, experts said.
Since the application entails a passenger risk assessment — including fingerprinting for a background check — members don’t have to remove their shoes, belts or light jackets when going through airport security. They can also keep electronics and “3-1-1” compliant liquids in carry-on bags. (The 3-1-1 rule allows each passenger to carry one one-quart-sized bag’s worth of bottled liquids weighing no more than 3.4 ounces apiece in their hand luggage.)
“It’s pretty tough for most people to argue against that,” Sally French, a travel expert at NerdWallet, said of the fee. “It’ll alleviate so much stress down the road.”
PreCheck is one of a handful of “trusted traveler” programs offered by the U.S. Department of Homeland Security in partnership with other federal agencies.

Among the other programs is Global Entry, which offers expedited U.S. customs screening when returning from a trip abroad. A five-year membership carries a $100 nonrefundable fee and includes TSA PreCheck.

When the programs may not make sense

There are some instances in which the programs — and their fees — may not make sense for travelers, experts said.
The programs are most cost-effective for people who travel frequently, for example. The TSA recommends Global Entry for people who travel internationally four or more times a year.
TSA PreCheck also doesn’t guarantee that travelers will save time, experts said. The standard security line could be the shorter one, depending on the airport and departure time.
TSA PreCheck and Global Entry applications for first-timers may also be somewhat cumbersome, experts said. That’s largely due to the necessity of an in-person assessment. Appointments — especially those for Global Entry — aren’t always easy to get and may require an out-of-the-way visit (perhaps to an airport) to complete.

You have so many people wanting to travel now, especially after the pandemic.

Sofia Markovich
founder of Sofia’s Travel

Global Entry application processing times can also take four to six months, according to the DHS. In 2022, the average time to enroll for Global Entry was 93 days, the department said.
Longer wait times are due to a record number of applications for membership in the trusted traveler programs, according to the DHS. Google search traffic for “TSA Precheck” is around its highest level in five years.
Most TSA PreCheck applicants must complete an online application, and get approved within three to five days of their in-person enrollment appointment, on average. However, it can take 60 days or longer, the TSA said. (As of Feb. 1, U.S. Customs and Border Protection began releasing interview appointment slots for enrollment centers on the first Monday of every month by 9 a.m. local time, according to the DHS.)
TSA PreCheck also isn’t available at all airports or airlines. It’s currently available at more than 200 airports and via more than 85 participating airlines, according to the TSA.

If a traveler’s home airport doesn’t have it — most likely to happen at a small regional facility — it may not be worth the time and expense, French said.
Travelers have another program option called Clear if they’re worried about not getting approved for TSA PreCheck in time for a trip, French said.
Clear, run by a private company and not a government-affiliated program, expedites the identity verification portion of security screening by using a retina or fingerprint scan. (This differs from TSA PreCheck. Clear members must still remove shoes, belts, electronics during the physical screening process, unless they also have TSA PreCheck.)
A membership is more costly — $189 a year though discounts are available to certain travelers. Travelers can enroll at the airport, typically within a few minutes. More

Citigroup announced Wednesday it plans to pursue an initial public offering of its Mexico business, Banamex, making formal a long-telegraphed spinoff.
The bank expects to complete the separation in the second half of 2024, with a public offering likely to follow in 2025, it said.

Jane Fraser, chief executive officer of Citigroup Inc., during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations” at the Economic Club of Washington in Washington, DC, US, on Wednesday, March 22, 2023. 
Valerie Plesch | Bloomberg | Getty Images

Citigroup announced Wednesday it plans to pursue an initial public offering of its Mexico business, Banamex, making formal a long-telegraphed spinoff.
The bank expects to complete the separation in the second half of 2024, with a public offering likely to follow in 2025, it said. The company hasn’t yet decided on a listing destination, but a dual listing in Mexico and the U.S. could be possible, a source familiar with the plans told CNBC.

“After careful consideration, we concluded the optimal path to maximizing the value of Banamex for our shareholders and advancing our goal to simplify our firm is to pivot from our dual path approach to focus solely on an IPO of the business,” CEO Jane Fraser said in a press release.
Citigroup had been exploring a potential sale of the business. Media reports as recent as this month said a deal was close to being finalized at a valuation of roughly $7 billion.
Citigroup bought Banamex for $12.5 billion in 2001. The bank first said in 2022 that it would be exiting the business, which operates about 1,300 branches with more than 12 million retail clients and about 10 million pension fund customers. It counts approximately 38,000 employees.
The company also said Wednesday it would resume share buybacks this quarter. Shares of Citigroup fell nearly 2% in premarket trading Wednesday.
— CNBC’s Leslie Picker contributed to this report.
This is breaking news. Please check back for updates. More

People walk near a Kohl’s department store entranceway on June 07, 2022 in Doral, Florida.
Joe Raedle | Getty Images

Check out the companies making headlines in premarket trading Wednesday
Moderna — The biotech company added 2.4% amid renewed Covid-19 concern in China after an uptick in infections.

V.F. Corporation — Shares in the clothing and shoemaker added 3.3% on the back of better-than-expected fiscal fourth-quarter results. The company earned an adjusted 17 cents per share, topping a Refinitiv forecast of 14 cents per share. Revenue of $2.74 billion was also slightly above expectations.
XPeng — The electric vehicle maker slipped 4.7% after an earnings miss. XPeng also issued weaker-than-expected revenue guidance for the second quarter. Still, CEO He Xiaopeng said he is “confident in taking our Company into a virtuous cycle driving product sales growth, team morale, customer satisfaction and brand reputation over the next few quarters.”
Palantir Technologies — Shares were 2.2% lower in premarket trading, on pace for their first decline in three sessions. Cathie Wood’s Ark Invest recently bought more than $4 million worth of Palantir shares, the firm’s website showed.
Analog Devices — Analog Devices dropped 5.3% in premarket trading on the back of weaker-than-expected third-quarter guidance for the fiscal third quarter. Analog Devices expects adjusted earnings of about $2.52 per share in the third quarter, compared to forecasts for $2.65 per share, according to consensus estimates on FactSet. It expects revenue of around $3.10 billion, less than the $3.16 billion estimate. In a statement, CEO Vincent Roche said, “Looking to the second half, we expect revenue to moderate given the continued economic uncertainty and normalizing supply chains.”
First Horizon — The regional bank added 2.3% in premarket trading following an upgrade to buy from hold by Jefferies. The firm said the bank has top-tier capital strength and is at a discount to peers.

Palo Alto Networks — Shares of the cybersecurity rose nearly 5% in premarket trading after Palo Alto Networks reported a fiscal third quarter that topped analyst estimates. The company reported $1.10 in adjusted earnings per share on $1.72 billion of revenue. Analysts surveyed by Refinitiv had penciled in 93 cents of earnings per share on $1.71 billion of revenue. Palo Alto’s fourth-quarter earnings guidance was also higher than expected.
Kohl’s — The retailer popped more than 13% after reporting better-than-expected results and a surprise profit for the recent quarter. Kohl’s also reiterated previous guidance.
Intuit – The tax and accounting technology maker suffered a 5% drop after the company missed revenue expectations, according to Refinitiv, for its fiscal third quarter. That result was thanks in part to a decline in tax returns, Intuit reported.
— CNBC’s Jesse Pound, Samantha Subin, Alex Harring, Sarah Min and Tanaya Macheel contributed reporting More

Of Europe and Israel’s 353 venture-backed unicorns, 221 have spun out 1,171 new tech-enabled startup companies with employees at these firms leaving to start up their own ventures, according to a new report from VC firm Accel.
The biggest examples of companies whose former talent went on to establish new startups include Spotify, which spawned 32 new companies, Delivery Hero, which generated 32, and Criteo, from which 31 new startups were born.
The development mimics the trend of startup “mafias” in the United States, where companies like PayPal indirectly helped produce huge businesses like Tesla and Palantir.

The average time taken for a startup to hit unicorn status in Europe is now just seven years, according to Accel.
Maskot | Digitalvision | Getty Images

Europe and Israel mint an average of five tech startups for every venture-backed company with a valuation of $1 billion or more, according to a new report from the venture capital firm Accel.
Of the 353 “unicorn” companies in the region, 221 have spun out 1,171 new tech-enabled startup companies as employees at these firms left to start up their own ventures, Accel said, citing Dealroom data.

A similar report from the firm last year showed that, out of 344 VC-backed unicorns, 201 led to 1,018 new startups being created.
The biggest examples of companies whose former talent went on to establish new companies include Spotify, which spawned 32 new companies, Delivery Hero, which generated 32, and Criteo, from which 31 new startups were born.
Such companies are referred to in the startup world as “mafias” — and no, they’re not like the mobs of the Italian-American gangster films. Startup mafias have existed for decades. These “mafias,” which are firms started by employees of other tech firms, have historically led to the creation of some of the largest tech companies known today.
From U.S. fintech giant PayPal, Elon Musk went on to start electric-car maker Tesla and space exploration firm SpaceX, for example, while Peter Thiel co-founded the big data company Palantir and is now a renowned investor with his Valar Ventures and Founders Fund VC firms.
VC investors say that those entrepreneurs came from a culture of risk-taking in Silicon Valley that, for many years, hasn’t existed in the same way in Europe. It began to take shape with the advent of maturing internet platforms like Skype, from which Niklas Zennstrom started VC fund Atomico and Taavet Hinrikus co-founded fintech giant Wise.

“When I got started like 30 years ago back in the Valley, I did it in the West Coast, Palo Alto. Then I’d go back to the Netherlands and my friends and my parents would say, why would you do that? Why wouldn’t you go work for Shell or Unilever? That has held Europe back,” Harry Nelis, partner at Accel, told CNBC.
“Now, unless you came out of university and studied in exactly the same way that I did, and you go straight into a startup — not like a raw startup but an established one where you can learn a trade and then you have your career already — it’s that kind of new philosophy that will, I think, help Europe over time, and has been helping the ecosystem.”
Today, the likes of Spotify, Delivery Hero, Klarna and Wise have become founder factories in their own right.
The largest cohort of newly established startup mafias comes from fintech, with almost 20% of European startups spun out of unicorns operating in the sector.
Startup employees in Europe and Israel tend to favor their own cities for setting up their new businesses, with over half of new firms founded in the same city as the unicorn they exited, according to Accel.

Tel Aviv was the largest single hub for producing startup factories, with 127 new firms being spun out from 33 unicorns, Accel said. Within Europe, London hosted the most startup factories for a single city, with 27 unicorns and 185 startups, while Berlin was close behind with its 25 founder factories and 165 startup spinouts.
More than 59% of startups that came from so-called startup mafias have already managed to raise VC funding, with 45% attracting around $1 million to $10 million of investment, and 30% receiving more than $10 million.
The data also offers insight into the journey people take to becoming founders.
It takes second-generation founders an average of 28 months before founding their own startups, according to Accel, and the average age of these entrepreneurs is 33.
Three-quarters of second-generation founders received higher education, with 60% obtaining a master’s degree. 
More than 59% of startups that came from so-called startup mafias have already managed to raise VC funding, with 45% pulling in around $1 million to $10 million and 30% receiving more than $10 million.
The average time taken for a startup to hit unicorn status in Europe is now just seven years, Accel said.

Darkening outlook 

Nevertheless, the outlook for tech startups more broadly has darkened as interest rates have risen, putting pressure on valuations of late-stage companies in particular. The market value of firms such as Klarna has been slashed as investors reevaluate the tech sector.
Last year, more than $400 billion was wiped off the value of Europe’s tech industry, according to data from VC firm Atomico.
Layoffs have also plagued the industry. Music streaming platform Spotify laid off 6% of its headcount, “buy now, pay later” firm Klarna announced cuts of 10%, while money transfer unicorn Zepz recently let go 26% of employees.
An Accel spokesperson said that the impact of layoffs on new startup generation did not feature in its report.
But despite the darkening outlook for tech, Nelis said he is hopeful for the future. 
He said the numbers show that Europe’s tech industry has matured to a level where employees are able to muster the courage to up and leave to start new firms of their own.
A deep pool of talent has now emerged, with employees feeling they have the skills and experience to turn their own ideas into full-fledged businesses.
“While founders and their teams are navigating a tough macroeconomic environment, the European and Israeli tech ecosystem is in a much stronger position than during the 2008/9 financial crisis due to the compounding effect of repeat entrepreneurs,” Nelis told CNBC. 
“With over 350 venture-backed unicorns across the continent, there’s a strong foundation of talent and success that we firmly believe will be passed onto the next generation of ambitious entrepreneurs.”
WATCH: Can India help the UK become a tech superpower? More

Attendees of the Institute of International Finance conference in Brussels discussed the state of the European banking sector.
“We are in a very strong position in terms of capital, liquidity supervision, protection of our customers’ data. But we also need a bit more capacity to support growth so we can be more profitable,” said Ana Botín, executive chair of Spain’s Santander Group.
European banks are “safer, stronger, cheaper” than U.S. ones said Davide Serra, chief executive officer of Algebris Investments.

The Faro office building at the Banco Santander SA headquarters on Thursday, Feb. 2, 2023.
Bloomberg | Bloomberg | Getty Images

European banks are looking stronger and more attractive than their U.S. counterparts on many metrics, according to officials and analysts speaking at the Institute of International Finance conference in Brussels this week, who add that regulation and collaboration is still needed to boost growth in the region.
The biggest bank in the U.S. is worth what the top nine or 10 European banks are due to weaker growth and less profitability since the 2008 financial crisis, Ana Botín, executive chair of Spain’s Santander Group, told CNBC at the event on Tuesday.

However, the top European banks have better levels of credit default swaps, a form of insurance for a company’s bondholders against default, “which means that fixed income investors think the risk of our debt is lower than the best banks in the U.S.,” Botín added.
The recent volatility that led to the sale of Credit Suisse to UBS was not evidence of a systemic banking crisis, she said, but rather mismanagement and liquidity issues at specific banks.
“We are in a very strong position in terms of capital, liquidity supervision, protection of our customers’ data. But we also need a bit more capacity to support growth so we can be more profitable,” she said.
“What we need is a fundamental rethink of what do we want banks to be in the new economy in a world that needs growth. And finding that balance is really important between being prudent, we’re not saying that we should go back on that, but also being able to finance growth,” Botín continued, adding this would be a key theme at the IIF’s conference.
European banks are “safer, stronger, cheaper” than U.S. ones said Davide Serra, chief executive officer of Algebris Investments, who stressed the higher liquidity ratio of European banks — around 160% — versus 120% in the U.S.

“In a way, banks in the U.S. have been optimizing their deposit base more. And now with the Fed [Federal Reserve] keeping higher interest rates, people just want to get paid on their deposits. So they have options with money markets, or with moving cash around,” he said.

“At the same time in the U.S., people are being reminded that, you know, not all banks are born equal. And just because you have a sign called bank, you’re not as safe, as you know, JPMorgan, or Morgan Stanley.”
That will lead to further consolidation in the U.S., he said, following the series of regional bank collapses this year, with banks considered safe benefitting.
“Overall, I think the opportunity is clear. For the strong banks in Europe and in the U.S., with Europe much, much more attractive, there has been zero deposit outflow, zero issue … And hence, to be honest, after 10 years of restructuring, Europe I think is the place to be.”

Banking union delay

José Manuel Campa, chair of the European Banking Authority, noted low valuations of European banks, but said these had been improving amid wider sector turmoil and as higher interest rates boost their returns.
“I think that as interest rates rise, if [European banks] continue to show that their business model is sustainable, we should see enhancements over the medium term on those valuations as well,” he said.
For Campa, any further consolidation in European banking must be about creating better banks and “go along to fostering a more integrated single market in the European Union so we can have cross-border banking and more efficient services to European customers.”
The EU has a long-delayed plan to further develop its banking union, a set of laws introduced in 2014 to strengthen banks, to create a common system in deposit insurance and other areas. Talks are also ongoing over a Capital Markets Union.
Both Botín and Campa said pushing these tricky negotiations forward was important for the future of the sector, with Botín saying they could help boost European growth.

“There is one thing that we could do in Europe to have higher growth, which is securitization,” she said.
Creating new rules on securitization, the creation of tradeable securities from a group of assets — which remains a contested subject following the subprime mortgage crisis — is key to the EU’s proposed Capital Markets Union.
“The securitization market in Europe is 6% the size of the American market. Banks are no longer the best holders of credit,” Botín said.
“In many cases we can originate, we can help our customers raise that capital and then place it with other funds and other parties that are better holders. So there are a number of things around Capital Markets Union, for example, that could move faster and help higher growth,” Botín said. More