TheChek News Flow

The Week’s 10 Biggest Funding Rounds: Nirvana Insurance, Nucleus RadioPharma Lead Week With No Big Rounds

There is only one way to describe this week — incredibly slow. For the first time in a while, there wasn’t a round that hit nine figures. In fact, the top round didn’t even hit $60 million. After a strong close to the summer, the fall has brought a chilling effect to big funding rounds.

1. Nirvana Insurance, $57M, insurance: What do you get when you combine insurance and AI? Apparently a pretty good-sized round. Nirvana Insurance closed a $57 million Series B led by Lightspeed Venture Partners this week at a reported valuation of more than $350 million post-money — double its last valuation. The San Francisco-based insurance startup gathers data from the sensors many commercial fleet trucks now have and feeds it through an AI platform it’s built. Nirvana can then provide estimates and handle claims quicker, while also costing less, according to the startup. Founded in 2021, the company has now raised $82 million, per Crunchbase.

2. Nucleus RadioPharma, $56M, pharmaceuticals: Rochester, Minnesota-based company Nucleus RadioPharma locked up a $56 million Series A led by Eclipse and GE Healthcare as it looks to grow its ability to manufacture and help develop radiopharmaceuticals that help fight cancer. The startup offers an array of services to those in the field, from formulation and development to regulatory documentation and manufacturing. The company plans to use the new cash to develop multiple new manufacturing facilities around the country. Founded in 2022, the company has raised $62 million, per Crunchbase.

3. (tied) Bond Vet, $50M, veterinary: Urgent and primary pet care provider Bond Vet raised a $50 million equity round from existing investors — including Warburg Pincus and Talisman Capital Partners — to help keep pets happy and healthy. The New York-based company opened its first clinic four years ago and now has more than 40 across the country. The new cash will be used for further expansion. Founded in 2019, the company has raised $245 million, per Crunchbase.

3. (tied) HqO, $50M, real estate: It’s been a bumpy time for commercial real estate as many companies have reduced their office space. Workplace startup HqO locked up a $50 million Series D to help landlords and building operators retain some of that occupancy. The Boston-based company has created what it calls the Real Estate Experience Platform that lets owners and managers gauge and understand how their tenants use their facilities. The tools allow building managers to measure tenant preferences and satisfaction with an eye toward better retention and efficiency concerning operating costs. The new round was led by Koch Industries subsidiary Koch Real Estate Investments. Founded in 2018, the new capital brings the company’s total funding to more than $200 million.

5. Nova Credit, $45M, fintech: New York-based Nova Credit, which offers cross-border and alternative data credit products, raised a $45 million Series C funding led by Canapi Ventures. The company tries to ease the complexities of moving to a different country without having to start over in your financial life. It is able to access data through credit bureaus in several countries and get approval for certain banking products, like credit cards. Founded in 2016, the company has raised $124 million, per Crunchbase.

6. (tied) Debut, $40M, beauty: San Diego-based Debut, a synthetic biology company in the fragrance industry, closed a $40 million Series B funding led by BOLD, the venture capital fund of L’Oréal. Founded in 2019, the company has raised more than $100 million, per Crunchbase.

6. (tied) Petfolk, $40M, veterinary: Charlotte, North Carolina-based Petfolk, a veterinary care company, locked up a $40 million Series B led by Movendo Capital. Founded in 2020, the company has raised $115 million, per Crunchbase.

6. (tied) Prove Identity, $40M, identity: New York-based digital identity solutions provider Prove Identity raised a $40 million round led by MassMutual Ventures and Capital One Ventures. It was reported the new funding was at a valuation of more than $1 billion. Founded in 2008, the company has raised more than $240 million, per Crunchbase.

6. (tied) Transfix, $40M, logistics: New York-based freight startup raised a $40 million Series F led by New Enterprise Associates and G Squared. Founded in 2013, the company has raised $169 million, per Crunchbase.

6. (tied) VedaBio, $40M, biotech: San Diego-based VedaBio, a biotech company focused on molecular detection, launched with more than $40 million in funding led by OMX Ventures.

While things were slow in the U.S., there were big global deals, including one involving an OpenAI competitor.

The sneaker company faces stiffer competition in the running and lifestyle categories; ‘We need to raise our game’

Nike NKE -0.37%decrease; red down pointing triangle made a swift comeback earlier this month in the super-shoe fight when marathon runner Kelvin Kiptum set a world record while wearing a new iteration of the company’s Alphafly 3. But the sneaker maker is losing steam in other races.

Competitors such as Hoka and On are gaining a foothold among runners and with people who are looking for something comfortable to wear to work or school. Adidas and New Balance are also making headway in the market for streetwear by bringing back old models in dozens of colorways, moves similar to those from Nike’s own playbook.

Nike said sales of footwear in North America—its largest market—fell 2% in the latest quarter. Higher prices for Nike shoes weren’t enough to offset a 10% decline in sales volume, the first decline in more than a year.

Nike and other consumer-goods companies have been hurt by rising prices that are causing consumers to rethink their spending plans. Nike remains the world’s largest seller of athletic footwear and apparel, generating $48.7 billion in revenue from its namesake brand in the year ended May 31.

Still, Nike executives have said they are working to improve product marketing and assortments and also drive more meaningful connections with everyday runners.

“We are focused and mobilized to address areas where we need to raise our game,” said Chief Executive John Donahoe in late September during an earnings call with analysts.

Del Shaffer, a Realtor in Charleston, S.C., used Nike running shoes for decades but last year traded his Free RN Flyknit for a pair of Hoka Mach 4 because he wanted something softer, with more cushioning. The 44-year-old runs every day after dropping his children off at school and said he felt a huge change once he switched to Hoka because of the shoe’s materials.

“They give me that cushion, and I’m kind of looking forward to not having knee surgery when I’m older,” Shaffer said.

Sales of the Deckers Outdoor-owned Hoka reached $1.4 billion in the year ended March 31, up from $223 million in 2019, when the company first reported sales of the brand. In 2021, the company moved away from saying the shoes were made only for “ultra runners and athletes” and included “world champions” and “tastemakers.”

On Holding, owner of the On brand, reported sales of about $1.3 billion for the year ended Dec. 31, a 69% increase from a year earlier. The Swiss maker of the Cloudmonster and the Cloudflow said it plans to generate $1.9 billion in revenue for 2023 and expects to double that number by 2026.

“They are all taking share from Nike,” said footwear industry analyst Matt Powell. “If you can capture the fashion side of the business, that is really where the money is.”

Nike in a statement said that it has an innovation pipeline that spans more than 50 years and that its products “will bring the innovation, performance, style and comfort consumers will be excited about for years to come.”

Innovation slog

Some consumers and industry analysts say the pace of innovation coming from Oregon-based Nike is slowing. The company in 2017 introduced the lightweight Vaporfly sneaker, which became a lightning rod in elite running competitions amid concerns it granted wearers an unfair advantage. Its first Alphafly sneaker launched in 2020. The sneakers were perceived as groundbreaking years ago, analysts said, but they are also made for runners willing to spend more than $200 and not necessarily for people just looking for something comfortable to wear.

Nike, during the Covid-19 pandemic, also leaned into delivering new color and design variations for some of its most popular franchises, the Air Force 1, Air Jordan 1 and Dunk. Those releases have delighted some fans, but annoyed others, including sneakerheads who built businesses on hawking products with limited availability.

“Nike is really, really good at innovating but they keep innovating the wrong things,” said James Hesse, who has dedicated a chunk of his decade-old YouTube sneaker channel to finding the most comfortable casual running shoe.

From design concept to store shelves, footwear development at Nike can take about 18 months. The pandemic, and subsequent supply-chain snarls, messed with Nike’s production pipeline.

Nike is also working through inventory problems that resulted from the pandemic—initially not having enough goods to sell but later carrying too many. To help boost sales, the company has opted to return to some retail partners it had dropped just over a year ago.

Investors haven’t lost faith in the company. Shares are up 16% over the past year, compared with a roughly 13% gain in the S&P 500.

Shifting priorities

Nike boss Donahoe said last month that the company was giving priority to the everyday runner looking for something new—and reaching that customer whether at a Nike store or not.

The company released the $80 Nike Interact Run last month as a more affordable performance shoe. It is launching a new technology for running shoes that is expected to be ready for the 2024 Summer Olympics.

Still, Nike executives have said they are working to improve product marketing and assortments and also drive more meaningful connections with everyday runners.

Moving further into the mass market is a shift from the company’s reliance on limited-edition products to drive sales—and customer hype. In 2020 and 2021, new releases on Nike’s SNKRS app often would sell out quickly, but now some models remain available for weeks. The average transactions of sneaker resale platforms, such as StockX and GOAT, have declined since April 2022, according to data from Earnest Analytics.

Younger shoppers want new and unique products in order to stand out, and Nike needs to move away from doing different colors of the same sneaker if it wants their attention, said footwear analyst Powell. Nike was recognized as the top apparel and footwear brand for teens, according to a recent survey from investment bank Piper Sandler.

Some sneakerheads and resellers think Nike needs to come up with something like a new collaboration that parallels the Jordan brand’s successful run with rapper Travis Scott. A golf shoe from this collaboration released last week is already fetching $1,000 in the resale market, or about six times its retail price.

Even that can prove uncertain. The company released a new sneaker in collaboration with hip-hop superstar Drake about a month ago and those are still in stock. Resellers said that the release “bricked,” meaning that there is no profit to be made in the resale market. At the moment, a pair can be bought on StockX for less than what Nike is charging on its website.

Depuis le début de l'offensive le 7 octobre, le financement du Hamas est passé au microscope par les Etats qui octroient une aide à la population de la bande de Gaza. Le mouvement terroriste palestinien, qui bénéficie de 30 millions de dollars mensuels du Qatar, reçoit aussi une aide de la part de l'Iran et utilise les cryptomonnaies ou les taxes pour se financer.

Placée sous sanctions par les États-Unis et l’Union européenne (UE), l’organisation terroriste palestinienne a, depuis sa création en 1987, constamment jonglé avec différentes sources de financements. Son principal bailleur est actuellement le Qatar qui lui livre 30 millions de dollars mensuels depuis 2018. Une manne qui sert principalement à payer les salaires du Hamas et des fonctionnaires de Gaza.

"L’émirat, où vivent le chef de la branche politique du Hamas (Ismaïl Haniyeh) et l’ex-patron de l’organisation (Khaled Mechaal) parraine le mouvement, observe Bertrand Besancenot, ancien ambassadeur français à Doha. Mais ce soutien économique se fait en accord avec Israël et les États-Unis, l’objectif étant notamment de limiter l’influence de l’Iran sur le Hamas."

Si les liens avec Téhéran se sont distendus au début de la guerre civile syrienne en 2011, ils se sont depuis très fortement raffermis. Selon le Département d’État américain, en plus de fournir des armes à la milice terroriste, le pays dirigé par Ali Khamenei verserait environ 100 millions de dollars par an au Hamas et au Djihad islamique, autre acteur palestinien qui a participé à l’opération "Déluge d’Al-Aqsa". Les deux mouvements ont également eu recours à un procédé innovant en récoltant, entre avril 2021 et juin 2023, 136 millions de dollars en cryptomonnaies. Un stratagème éventé par Israël et les États-Unis qui ont gelé plusieurs dizaines de leurs portefeuilles "cryptos" depuis l’été.

A ces bailleurs traditionnels que sont le Qatar et l’Iran, il convient de mentionner la Turquie que Washington a pointé du doigt pour avoir alloué des fonds au Hamas via l’agence turque dédiée au développement. En revanche, s’agissant de l’aide de l’UE à la Palestine (1,2 milliard de dollars sur trois ans), aucun élément ne permet à ce stade d’accréditer la thèse, avancée par certains élus, notamment à droite, que cet argent ait été détourné par le Hamas.

Autre source de revenus pour le mouvement: les taxes sur les produits égyptiens importés à Gaza qui lui rapporteraient 12 millions de dollars par mois. "Pendant des années après le début du blocus, le Hamas a collecté des revenus en taxant les marchandises circulant dans un réseau sophistiqué de tunnels qui contournaient le passage égyptien vers Gaza, écrit la chercheuse Kali Robinson, auteure d'une étude sur le Hamas publiée par le très sérieux Council on Foreign Relations. Cela a apporté sur le territoire des produits de première nécessité tels que de la nourriture, des médicaments et du gaz bon marché pour la production d'électricité, ainsi que des matériaux de construction, de l'argent et des armes."

Après l’arrivée au pouvoir du président égyptien Abdel Fatah al-Sissi en 2013, l'Égypte a durci le ton envers le Hamas, émanation de son ennemi numéro un: les Frères musulmans. Puis les relations se sont légèrement détendues en 2018 puisque Le Caire a autorisé l'entrée de certaines marchandises commerciales à Gaza via son poste frontière de Salah al-Din.

LONDON — Back in June 2007, the same year I started writing BoF, I met an enthusiastic and passionate Portuguese entrepreneur named José Neves. We had been introduced to each other by mutual friends and began exchanging ideas on how the fashion industry could transform itself into a modern, digitally savvy sector by embracing the new technologies that were changing the way we all lived, worked and, yes, shopped. I was really impressed with José's vision. He seemed to be able to see things that most industry players would not: that the same technologies that were transforming other consumer sectors would inevitably come for fashion too.

A couple of years later, as José's vision for his new company Farfetch continued to crystallise, I sat down with him for an in-depth interview where he laid out his plan to “create a world class infrastructure supported by a top-notch team, and then put all that to the service of the world’s most interesting retailers and their web sites.”

It was a simple, powerful idea that instantly made sense to me. Some of the best fashion boutiques around the world, despite having a powerful eye for curation, were not able to fund, set up and manage their own e-commerce operations to scale their businesses beyond their local markets — and Farfetch could help with that.

This, combined with the fact that Farfetch did not take on the risk of owning inventory made it a compelling business model that attracted the interest of venture capitalists who over the years pushed Farfetch to expand and grow to realise the vision of becoming the Amazon of the fashion industry, a platform upon which the whole industry could operate its e-commerce businesses. According to Crunchbase, Farfetch went on to raise more than $1.6 billion, including an IPO in 2015 which raised $885 million.

But this week, as we waited for a ruling from the European Commission on the company’s plan to acquire a 47.5 percent stake in its rival, Yoox Net-a-Porter Group, many analysts noted that Farfetch shares have lost 97 percent of their value in the last two years, a spectacular drop. Its market capitalisation has plummeted from a pandemic high of $26 billion in February 2021 to just over $600 million today.

In August, Farfetch announced that its revenue dropped 1 percent in the second quarter of 2023 from a year earlier to $572 million and downgraded its sales outlook for the full year by $500 million, to $4.4 billion.

I’ve been thinking about how things went so wrong at Farfetch, and my thoughts kept coming back to this: the fashion industry and the financial markets no longer understand the company’s increasingly complex vision and have little faith that the company, which has never consistently made a profit, can get back on track.

In 2015, the company began a spree of acquisitions, starting with Browns (meaning that Farfetch would now be taking on inventory and operating physical stores), the intellectual property from Condé Nast’s failed e-commerce venture Style.com (a brand that the company has never used), sneaker reseller Stadium Goods in 2018 (which moved Farfetch into the resale business and further into physical retail), New Guards Group in August 2019 (meaning that Farfetch now operated brands like Off-White and Palm Angels, including design, manufacturing and even more physical retail), and in 2022, Violet Grey. (The company was Farfetch’s first move into beauty and, according to a source who spoke to The Business of Beauty, is now up for sale).

In addition to these acquisitions, Farfetch now also operates white-label platform solutions for a variety of brands and retailers, including Neiman Marcus (into which it invested $200 million as part of an unusual deal), a business in China in partnership with Richemont and Alibaba and its original business which now works more than 1400 sellers in 50 countries.

The cautionary tale here for any entrepreneur taking on huge amounts of funding is the importance of maintaining focus. Over the years, as Farfetch went on its acquisition spree, it drifted further and further away from its original vision of being a technology platform for the fashion industry. As tempting as it may be to raise more money and acquire scale (and, sometimes profitability, as was the case with New Guards Group) through acquisitions, when you start stitching together so many disparate pieces you end up with a patchwork quilt that nobody understands.

The 2024 race for the White House reignites debate over EVs

The EV transition is running head on into polarizing politics.

Already this year, pricier electric vehicles got even more expensive for many potential buyers thanks to higher interest rates, which affect loan costs.

Now, anti-“woke” backlash and high-profile politics are increasingly making the suggestion of owning an EV a political cudgel. Or, as Ford Motor Chief Executive Officer Jim Farley recently lamented: “They have become a political football.”

President Biden’s support of the transition, through subsidizing manufacturing, extending tax credits for EVs and giving money for charging stations, has come under attack from Republican rivals seeking to challenge him for the White House next year.

As the Democrat talks about trying to protect automotive jobs and help the environment with green technology, they raise concerns about losing work and question whether the governments should subsidize them or mandate future zero-emission vehicle sales, as California has done.

Intensifying the debate is a continuing labor strike against the Detroit car companies by auto workers worried about whether they will have jobs in the new EV world.

The tensions have risen as Ford and other global automakers have spent billions of dollars designing and building EVs, a move that looked especially smart a year ago when they were caught off guard by the strong demand for their new offerings.

Now, they are pulling back those plans in the midst of a slowing pace of growth in demand.

This past week, General Motors said it would delay opening a large EV truck factory in Michigan by a year, citing a need “to better manage capital investments while aligning with evolving EV demand.”

The move followed an earlier announcement by Ford pushing back to late 2024 a target of building 600,000 EVs annually. The company has also temporarily cut one of the production shifts for its electric pickup and paused construction of a $3.5 billion battery plant in Michigan.

Even Elon Musk sounded worried Wednesday when he suggested that Tesla TSLA -3.69%decrease; red down pointing triangle was slowing work on a new factory in Mexico. It was a rare moment of caution from the CEO, an entrepreneur who is targeting the sale of 20 million electric vehicles by 2030 and has cheered on other automakers to follow his path to a renewable-fuel future.

“Tesla is an incredibly capable ship, but we need to make sure, like if the macroeconomic conditions are stormy, even the best ship is still going to have tough times,” Musk said. “The weaker ships will sink.”

The demographics of car ownership show the political wedge.

In the U.S., for every five Democrats owning an EV there are two Republicans, said Alexander Edwards, president of Strategic Vision, which surveys new-vehicle buyers.

His data finds that Democrats give priority to “environmentally friendly” when buying their cars while Republicans have other things they are looking for, such as performance and prestige.

A key part of Tesla’s success as an electric vehicle maker was focusing on marketing its cars beyond just those appealing to environmentally conscious consumers. Musk often said he wanted the Model S sedan to be the best car on the market that just happened to be electric and has heavily emphasized his vehicles’ performance and styling over the years. Others have tried to follow suit.

On the campaign trail, however, EVs don’t always sound so cool. The GOP presidential hopeful Vivek Ramaswamy, who is against subsidies, has drawn laughs as he suggests that EV buyers are motivated by “a psychological insecurity,” while former Vice President Mike Pence said during the second Republican presidential primary debate that Biden’s efforts “are driving American gasoline, automotive manufacturing, into the graveyard.”

Former President Donald Trump, the GOP front-runner, has fanned the flames against the transition, whether it is tapping into consumers’ concerns about the mile range of EVs or auto workers’ worries about losing their jobs because of the new technology.

In the battleground state of Michigan, which Trump carried in 2016 but lost in 2020, Biden is narrowly leading in a potential rematch, according to the research firm EPIC MRA’s August statewide survey of voters. Among the state’s United Auto Workers union members, Trump leads 46% to 43%. Bernie Porn, the pollster, said the slippage among union members was likely because of Biden’s support of EVs.

So, it wasn’t surprising that Trump and Biden showed up last month in the Detroit area shortly after the UAW began striking.

“I don’t get why Ford and GM, why these carmakers, aren’t fighting…to make cars that are going to sell, to make cars that are going to be able to go on long distances,” Trump said at a rally during which he predicted the EV policies would lead to “hundreds of thousands of American jobs” being lost.

Biden visited the UAW picket line, one of several trips he has taken to the region, including to last year’s Detroit auto show, where he touted his work to help EVs.

“The real question is whether we’ll lead or we’ll fall behind in the race to the future; or whether we’ll build these vehicles and the batteries that go in them here in the United States or rely on other countries,” Biden said while visiting a Ford factory early in his administration.

Underpinning the politics of EVs is an economic divide, made more stark by the rise of interest rates. Most EVs are more expensive than the average new vehicle—which sold for about $46,000 in September.

As new cars and trucks become more costly, the practical effect on buyers shows up in Strategic Vision’s survey: The median family household income of new-car buyers has risen to $122,000. That is a significant increase from around $90,000, where it had been at for a couple of decades until just recently. EV buyers are even better off, with a median household income of $186,000.

In some ways, the green car tensions are a return to the 2012 political season, when GM’s Chevrolet Volt became the embodiment of the Obama administration’s rescue of the Detroit auto industry in 2009 and efforts to promote electrified vehicles.

Former House Speaker Newt Gingrich, who unsuccessfully sought the Republican presidential nomination, said the problem with the “Obama car” was that one couldn’t put a gun rack in the plug-in hybrid vehicle.

Sales of the Volt disappointed, and Dan Akerson, then CEO of GM, was left fuming that the company hadn’t designed the sedan to become “a political punching bag.”

Shanghai raid comes as China takes an increasingly tough stance on foreign businesses

Chinese police have raided the Shanghai offices of GroupM, a media-investment group and unit of London-based WPP WPP -2.22%decrease; red down pointing triangle, and detained an advertising executive, said a person familiar with the matter.

Police questioned other local executives during the raid, including GroupM’s Chief Executive in China Patrick Xu, the person said.

Xu couldn’t be reached immediately for comment. Shanghai police didn’t respond to a comment request.

Media outlets including the Financial Times reported earlier on the raid and detention.

China has been taking an increasingly tough stance on foreign businesses, even as its leaders also call for more foreign investment to support a slowing economy.

This year, Chinese authorities have raided the offices of due-diligence firm Mintz Group, questioned the staff of U.S. consulting firm Bain & Co. and implemented strict new data rules. Police also raided the offices of expert-network consulting firm Capvision, which worked closely with foreign consulting firms in China.

Chinese authorities have barred some executives working for foreign firms from leaving the mainland. This week, Tokyo said that China formally arrested an executive from Japanese pharmaceutical firm Astellas Pharma, who had been detained since March.

Driving much of that is Chinese leader Xi Jinping and Beijing’s growing emphasis on national security. In July, China started enforcing an updated anti-espionage law that gives the state greater control over a range of digital activities.

These moves have damaged American businesses’ confidence in China, which is at its lowest level in decades. While many foreign companies continue business activities in the country, executives have also cited growing concerns over China’s opaque law and business environment.

It couldn’t immediately be learned why GroupM was raided and its executive detained, and whether the investigation has any links to national-security issues.

GroupM parent WPP is the world’s largest ad holding company, whose agencies include Ogilvy, Wunderman Thompson and VMLY&R. China is WPP’s fourth-biggest market according to the company’s 2022 annual report. WPP recently announced it would combine VMLY&R and Wunderman Thompson.

Gains for precious metal break its long-term correlation with US Treasuries

Gold prices have rallied sharply since the Hamas-Israel conflict broke out, further highlighting the divergence in its long-term relationship with US Treasuries as investors flee to the haven asset.

Prices of the precious metal have surged as much as 10 per cent to $1,996 per troy ounce, hitting a five-month high, after Hamas launched attacks on Israel a fortnight ago.

With the region at risk of tipping into wider conflict, investors have bought gold, which is regarded as a store of value during times of geopolitical and market uncertainty.

“It’s the geopolitical risk premium that has come in for gold,” said Nicky Shiels, metals strategist at MKS Pamp, a Swiss precious metals refiner and trader.

However, gold’s rise has also put further stress on its typical correlation with real yields — US bond yields adjusted for inflation — that has largely held since the 2008 financial crisis. Normally, higher yields on Treasuries push the price of gold lower by making the zero-yielding metal less attractive by comparison.

That relationship has broken during the huge rise in real yields over the past year, with gold having been supported by record central bank buying, as some countries aimed to reduce their reliance on the dollar after Washington weaponised its currency in sanctions against Russia.

Analysts said that gold was also likely to have benefited from the uncertainty in the Middle East because it added to the Federal Reserve’s caution on the future direction of US interest rates. On Thursday, Fed chair Jay Powell said the geopolitical tensions sparked by the Israel-Hamas war “pose important risks to global economic activity”.

The violence in the Middle East has reversed gold’s recent slide, as rising bond yields pushed the yellow metal to $1,820 per troy ounce.

Others argue that the speed of the bond market repricing is actually pushing investors into gold.

“The other part of the story is having yields increase so much. That has probably frightened people on the fragility of the markets,” said Ryan McIntyre, managing partner at Sprott Inc, a precious metals investor with more than $25bn in assets under management.

Marcus Garvey, head of commodities strategy at Macquarie, said that gold’s rally was also in part down to traders who had bet on the metal’s decline being forced to exit their positions. “A key aspect is that the starting point was that the market was quite short,” he said.

Global prices have also been buoyed by strong demand in China, reflected by the price in Shanghai trading at a notable premium to its equivalent in London. In September, it reached a record difference after China’s central bank imposed temporary curbs on gold imports in a bid to defend the renminbi.

However, some analysts are wondering whether support for gold prices is wider than an investor rush for safe places to park their cash.

“The surge in real yields this week really should have pulled the rug under gold,” said Adrian Ash, director of research at BullionVault, a precious metals marketplace. “The big question at the moment is who is holding up the price . . . I think it’s the central banks.”

A new government will have its work cut out to roll back the rightwing nationalist capture of the state

After Sunday’s Polish parliamentary elections, the victorious opposition leader Donald Tusk proclaimed: “This is the end of bad times . . . Poland won, democracy won.”

You could almost hear the sighs of relief across European capitals (apart from Budapest) when the Polish result came in. Still, the job is anything but complete. Will a Tusk-led government be able to reverse the capture of state institutions by the rightwing nationalist Law and Justice (PiS) party over the past eight years? And what are the implications for Europe?

I’m dividing this newsletter into four parts: the election campaign, voting patterns and result; the difficulties that will face the incoming government; the Polish economy; and the impact on Europe, including the outlook for hard-right and populist parties.

Worms and an unfair playing field

In the words of Timothy Garton Ash, a British historian and expert on central Europe, the opposition’s triumph showed that “even an unfair election can be won against the odds”.

As Jarosław Kuisz, author of the recently published The New Politics of Poland, wrote for the FT, Poland was awash in PiS propaganda during the election campaign. “The deluge exceeded all limits of decency,” he observed.

Among numerous examples I could cite from the PiS-controlled state media, let me give just one. In March, the public broadcaster TVP aired a news conference given by Bartosz Kownacki, a PiS legislator. It was accompanied by a news ticker that read: “The opposition’s proposals for Poles: worms instead of meat.”

This referred to the ludicrous, false allegation that Tusk’s Civic Platform party planned to limit meat consumption and make the famously pork-loving Poles eat insects.

In recent elections in Hungary and Turkey, the playing field was also far from level, and the countries’ illiberal and strongman rulers carried the day. But not in Poland — why?

Garton Ash writes:

This is undoubtedly true. But there was also a risk that many voters would see Tusk, 66, as a figure from a bygone era.

Tusk’s career dates to the glory days of the independent Solidarity trade union, which challenged communism, in the end successfully, in the 1980s. He served as Poland’s prime minister from 2007 to 2014, and then had a stint as president of the European Council, the body that groups heads of EU governments.

Tusk deserves credit for leading the opposition to victory in the face of slanderous accusations from PiS that he was a German stooge or agent.

Still, the fact remains that millions of Poles voted neither for Kaczyński’s PiS nor for Civic Coalition, the four-party electoral force led by Tusk’s Civic Platform.

Marta Prochwicz-Jazowska, writing for the German Marshall Fund of the US, puts it like this:

“The strong showing of smaller parties indicates a desire among Polish voters for genuinely new leadership.”

In this excellent summary for the Fondation Robert Schuman in Brussels, Corinne Deloy explains that in the elections for the Sejm, or lower house of parliament, Civic Coalition won just over 6.6mn votes. The two other opposition groups — the centrist Third Way alliance and the leftist Lewica party — won a combined vote of almost 5mn.

On the pro-government and rightwing side, Kaczyński’s electoral coalition won 7.6mn votes — but the extreme-right Confederation took just over 1.5mn.

In other words, more than 30 per cent of voters shunned the parties of both Kaczyński and Tusk. It is this split in the overall vote that explains why Tusk — assuming he becomes prime minister — will have to govern with what might prove to be an unwieldy coalition of Civic Coalition, the Third Way and Lewica.

As in past Polish elections, the opposition vote was concentrated in western zones of the country and in the major cities.

The PiS vote was highest in the less developed, more traditionally Catholic east and south-east, particularly in smaller towns and rural areas. Alicja Ptak provides a good overview, with charts, on the Notes From Poland site.

So, what lies ahead?

The first thing to keep in mind is that PiS must co-operate in an orderly, peaceful transfer of power to the opposition. Will that happen? Maciej Kisilowski of the Vienna-based Central European University outlines the reasons for concern.

Should PiS put up resistance, I imagine that the reaction from large parts of Polish society, not to mention the country’s allies abroad, would be one of unqualified disapproval, even outrage.

Let’s assume that the opposition will take office, though it may take until December. The main difficulty — set out in this piece by Raphael Minder, the FT’s Warsaw correspondent — will be that PiS appointees will still control large parts of the state apparatus.

These include the central bank, the upper levels of the judiciary, the state media, public administration and state-controlled segments of the economy.

Moreover, Andrzej Duda, the elected head of state, is a PiS-aligned politician. Up to the end of his second term in 2025, Duda will have the power to block legislation put forward by the new government, because it will lack sufficient votes in parliament to overturn any presidential vetoes.

Finally, although the new coalition will have a strong interest in avoiding internal disputes, one can expect friction to emerge over time among the ruling parties on economic policy, the welfare state, the role of the Catholic church and abortion.

Such differences are likely to come to the fore as Poland gears up for next year’s European parliament elections, as well as a round of local elections that the PiS government controversially delayed from this year.

All that said, the outlook is brighter on other fronts. The EU, with which PiS clashed over the rule of law, will surely look with favour on the new government’s efforts to restore judicial independence.

Because of Duda’s role, and because PiS packed the courts with its supporters, the process won’t be straightforward. But in principle a change of government ought to unlock tens of billions of euros for Poland from the EU’s post-pandemic recovery funds and from the regular EU budget, as Leszek Kąsek and Rafał Benecki write for ING bank.

Moreover, the positive market reaction to the election result suggests that international investors will look more kindly on Poland.

It won’t all be plain sailing. A core element of PiS’s electoral appeal was its generous welfare programmes, especially expanded child benefit support. But some economists think these measures were to the detriment of useful long-term investment.

Hanna Cichy, head of economic research at Polityka Insight, says:

As regards the international scene, I expect Poland under a new government to return to its stance of strong wartime support for Ukraine, which PiS diluted in recent months, doubtless for electoral reasons.

In terms of Ukraine’s EU membership bid, however, it may prove hard for the new government to execute a complete retreat from the position, mapped out by PiS, of fierce defence of the interests of Polish farmers.

Under a new government, Poland may also not fall wholly in line with the EU on issues such as migration and asylum reform.

On the whole, though, the opposition’s electoral victory leaves Hungary under its illiberal premier Viktor Orbán more isolated in the EU in its quarrels with Brussels and western European governments over Ukraine, the rule of law and other matters.

Orbán can count on some sympathy from Robert Fico, Slovakia’s newly elected prime minister — but I’m not convinced Fico will rock the boat with the EU as much as Orbán may be hoping.

Lastly, we should think twice before concluding that the Polish election result marks a turning of the tide for hard-right and populist parties in Europe.

Each country moves to its own political rhythms and in accordance with its own electoral cycles. To take just one example, the hard right is still setting the pace in Austria, benefiting from being in opposition, and is well placed to come top in next year’s elections there.

In Europe, the struggle between moderate parties and more extreme and unconventional forces goes on.