Given that the UK is the home of over a third of Europe’s tech entrepreneurs, it’s hardly surprising that Britain’s startup community is consistently ranked as a leader in innovation. But while a new report has just demonstrated the country has more than twice as many tech unicorns than any other country on the continent, the gap is rapidly closing.
Having looked at how the startup landscape across the continent has developed over the past few years, GP Bullhound, the technology investment bank, revealed that the UK is now home of 22 startups valued at $1bn or more. Four of those businesses reached unicorn status over the last year: Deliveroo, the food-delivery startup; Improbable, the virtual-world developer; Mimecast, the cloud-based email company; and boohoo.com, the fashion retailer. However, both Sweden and Germany are hot on Britain’s heels, with each of them having seen seven unicorns reach maturity in their respective countries. GP Bullhound singled out Germany as having particularly fast growth with six of its new unicorns having been established since 2014. In total Europe now has a total of 57 tech unicorns across thirteen countries.
However, GP Bullhound believes that it won’t stop there and that Europe has the potential to soon see the rise of its first tech titan: a startup worth over $50bn. While only six scaleups fit that description across the world so far, the huge investment pouring into the continent could herald great things to come. In the past year alone, a number of landmark funds have been raised to unlock Europe’s potential, such as Softbank’s $100bn fund and Atomico’s substantial $765m fund. Still GP Bullhound pointed out that while Europe’s leading businesses have raised some serious money, investments would need to be several times bigger to fuel growth and increase valuations comparable to American and Asian competitors.
Interestingly, while Britain has the biggest number of unicorns in Europe, GP Bullhound expects that the continent’s first titan will be Swedish: Spotify, the music-streaming service. However, the startup deemed second most likely to reach a $50bn valuation was based in London: Farfetch, the fashion retail platform. This was followed by yet another Swedish startup: Klarna, the payment company, which acquired a banking license a few months ago.
Commenting on the research, Manish Madhvani, managing partner at GP Bullhound, said: “It has often been said that European tech entrepreneurs are focused only on exits, they are too quick to sell and they are therefore incapable of building serious technology and companies of genuine scale. We believe otherwise. Our research into Europe’s billion-dollar technology companies has shown that there is an army of ambitious entrepreneurs building businesses of serious scale across the continent.”
Clearly there are great things to come in the European tech scene.