Sign up with your email address to be the first to read new stories, exclusives, VIP offers, blog features & more.

Europe’s Unicorns Are In Rude Health And Their Numbers Are Growing, Says Research From GP BullHound

Europe is now home to 47 “Unicorn” tech businesses, according to research from GP Bullhound; 10 Unicorns have joined the club in the past year to April, with 3 departed.

11 of the 47 are enterprise focused, 36 consumer; 18 are based in the UK (total valuation $39.6bn), 7 in Sweden ($31.1), 6 in Germany ($20.8), and 3 in France ($7.2).

The unicorns range considerably in size, from the smallest, Fanduel, Transferwise, Shazam, FarFetch, Funding Circle, Ironsource, for example, who record a value of exactly $1.bn, to the biggest, Spotify, valued at $8.5bn. Skype is the next largest, also $8.5bn, followed by German based fashion platform Zalando ($8.5bn), Markit Group ($6.2bn), King Digital ($5.6bn), Rightmove ($5.6bn) and Supercell ($5.3bn).

“What began as a goal for only the most ambitious entrepreneurs has become an exclusive, but consistently expanding, collection of businesses…nowhere is the unicorn phenomenon seen more clearly than in Europe”, says Bullhound’s Manish Madhvani.

“The continent has proved it can consistently produce tech companies with significant valuations. Companies that can compete with the very best, anywhere in the world; we can send a clear message to the investment and digital community: European unicorns are here to stay”

Bullhound points out that, although US unicorns achieve higher average valuations, they trade, on average, at 46 times their revenue – in Europe the figure is 18x, which proves that investors in European unicorns’ demand to see clearer evidence and signs of success before they are prepared to get involved in projects.

The total value of Europe’s unicorns has risen from $122 billion in 2015 to $131 billion as at April this year – average valuation sizes were steady at $2.8 billion. The geographical diversity is also now greater, with three countries; Denmark, Luxembourg and Switzerland producing a first ever unicorn in the last year.

The average revenues of European unicorns is also greater in Europe – $315m versus $129m in the US, and perhaps surprisingly, given the recent backlash against unicorns and their overhyped valuations, two-thirds of European unicorns are profitable.

Bullhound names 4 companies that it believes have the potential to become a “decacorn” – achieve a valuation of $10 billion. Spotify, Zalando, Supercell, and Hello Fresh, the food delivery service founded in Berlin by Rocket Internet, currently valued at $2.9bn.

In addition to those who have made it, for better or for worse, past the magical $ billion mark, and into the unicorn club, there are plenty more start-up firms knocking at the door. Bullhound lists Swedish iZettle, Kreditech and Check24 from Germany, Denmark’s TrustPilot, Takeaway.com  in the Netherlands, Sigfox in France, and Deliveroo, The Hut and WorldRemit in the UK.

In terms of the fastest growing unicorns, Auto1 leads the way having driven 713% growth between 2013-14, then Transferwise (607%), HelloFresh (379%), VE Interactive (331%) and Anaplan (200%).

Another key trend is acquisition strategy. Successful unicorns, Bullhound’s report reveals, make a lot of acquisitions. Markit has made 33 to date, Just Eat 24, Delivery Hero 18, and Rocket Internet makes up the top four with 16. 50% of 47 unicorns made an acquisition prior to achieving the valuation; the average number of acquisitions was five.

Consumer focused unicorns tend to take 7 years from launch to achieve unicorn status, requiring on average $294m in funding, whilst enterprise companies take 9 years but take less funding on average, $155m. In the US, companies typically raise $558m before they achieve a billion-dollar valuation.

In terms of investors Index Ventures have been most active, making 11 investments into unicorn companies, followed by Baillie Gifford, Accel Partners and DST, who have all made 7, the Kinnevik and Holstbrinck Ventures, on 6. GP Bullhound made 3 investments of their own.

13% of all the unicorns are FinTech start-ups  – last year the figure was 18% – and of the 10 new unicorns, two are VR specialists. e-Commerce, however (particularly in Berlin) and FinTech (Berlin and London), marketplaces and software form the main composition of the list. alongside Software, whose share increased to 26% this year.

Europe’s newest unicorns include Anaplan in the UK, Auto1 (Germany), blippar (UK), Evolution Gaming (Sweden), Hello Fresh and Sitecore (Denamrk). Their average valuation is $1.3billion.

The report includes essay contributions from Dominik Richter, of HelloFresh, Frédéric Mazzella, of BlaBlaCar, and Bonamy Grimes of Skyscanner.

“You can never be complacent: from day one this is a hard industry to operate in. There are plenty of challenges, but European tech has the credentials to create world-beating businesses in every sector”, says Grimes in the report.

“We can be ambitious about our potential, but the expectation should be that this is tough: it makes for real businesses building valuable tech.”

 

No Comments Yet.

Leave a Reply

%d bloggers like this: