Europe’s technology sector has produced a further ten Unicorns – billion-dollar valued tech companies – in the past year. This brings the total number of European Unicorns to 47. With a combined value of $130bn, Europe’s Unicorns have demonstrated resilience in the face of turbulent global markets and heightened scrutiny of fast-growth tech.
The report from GP Bullhound, the technology investment bank, European Unicorns 2016: Survival of the fittest, is released today and offers an unprecedented level of analysis into Europe’s most successful tech companies.
The UK has maintained its dominance within Europe as the home of the Unicorn. 18 of Europe’s 47 Unicorns are based in the UK, with new entries to the Unicorn Club such as Blippar and Anaplan consolidating this mantle.
Sweden is the country with the second highest number of billion-dollar tech companies (7), including Spotify, Europe’s most valuable Unicorn. Germany is third with six and France and Israel follow with three each.
Further demonstrating the increasing depth to the market, three countries have produced their first tech Unicorns in the last 12 months – Luxembourg, Switzerland and Finland.
Manish Madhvani, Managing Partner at GP Bullhound, commented: “There has never been a better time to operate within the European market. I believe that the ecosystem exists for one of our Unicorns to push forward and reach a $10bn or $100bn valuation in the next five years.”
After years spent in the shadow of Silicon Valley, Europe’s tech Unicorns are starting to outperform their American counterparts. Whilst American Unicorns still raised nearly twice the amount of capital as their European counterparts (2), the average revenue generation for a European Unicorn ($355.3m) was almost three times greater than in the US ($128.8m).
Crucially, valuations in the US were, on average, 46x the size of revenue generated, whilst in Europe they were only 18x higher. This demonstrates the more cautious European investment arena, resulting in healthier valuations. At the same time, 60 per cent of European Unicorns were profitable.
Manish Madhvani commented: “Europe has yet to reach the dizzying heights of American giants such as Facebook and Google, but when you look at businesses in the $1bn to $3bn range, what we lack in quantity we more than make up for in terms of quality. All the data points towards a stable, maturing market that has avoided the excesses of the US in favour of sustainable growth. We are seeing a remarkable resilience in European technology markets.”
Whilst 2014/15 was defined by the success of Fintech companies, the last 12 months have seen a rapid increase in software businesses. 57 per cent of new Unicorns are software companies, of which a fifth (20 per cent) are augmented or virtual reality models.