Europe’s technology ecosystem is increasingly rivalling the might of US and Asian tech with Spotify and Adyen on track to become Europe’s first $50bn tech businesses by 2021, according to a new report to be released next week by technology advisory and investment firm GP Bullhound.
The new report from GP Bullhound, ‘Titans of Tech: All Change at the Top’, analyses the growth of Europe’s leading tech businesses, and indicates that the European technology ecosystem is generating an unprecedented number of billon-dollar businesses – 21 new billion-dollar tech firms have emerged in the past year, with the total number almost tripling from 30 in 2014 to 84 today.
2018 marks the highest year of tech investment on record for European billion-dollar companies, with $28bn raised within Europe, almost ten times the $3bn raised five years ago*. The aggregate value of the booming tech billion-dollar ecosystem in Europe has grown 3.4 times, from $89bn in 2014 to $302bn today.
EUROPE’S TECH ECOSYSTEM GROWING AT A FASTER RATE THAN THE US
The cumulative value of Europe’s billion-dollar companies has increased by 28% in the past year, compared to only 20% in the US. The UK alone has 27 billion-dollar companies with a cumulative value of $80bn. It leads the European race, ahead of Germany with 11 tech billion-dollar companies and Sweden with eight. In the past year, the UK produced five new billion-dollar companies with a cumulative value of $10.3bn, including Monzo, BenevolentAI and Darktrace.
But the battle to be the first European tech Titan – valued over $50bn – is being fought between Sweden’s Spotify and The Netherlands’ Adyen, both of which are expected to hit Titan valuation in the next two years.
Manish Madhvani, Managing Partner at GP Bullhound, commented: “Europe has made incredible progress over the past year, and is seriously rivalling US and Asian tech. Our report shows that we have every reason to be optimistic about the strength of European tech, its talent, ambition and its potential to produce a Tech Titan by 2021. Access to capital has improved hugely in the past three years, and with continued ambition, a constant reinvention of the product and a willingness to embrace risk, the Spotifys, Farfetchs, and Adyens of Europe will soon rival the Ubers and Facebooks of Silicon Valley.”
The report identifies mega-rounds – rounds of $100m or more – as crucial in helping generate sufficient growth to reach billion-dollar valuations. The number of mega-rounds has increased by 50% and they are here to stay. 32 businesses secured mega-rounds this year, including Revolut and Tradeshift.
A growing proportion of this mega-round funding is being invested into Enterprise Software, which is the fastest-growing sector in Europe, producing more new unicorns than any other sector. A third (30%) of funding through mega-rounds in 2018 was invested in FinTech, with 28% invested in Enterprise Software.
Looking ahead, GP Bullhound has identified ten key European companies set to enter the billion- dollar tech ecosystem within the next two years, including Go Cardless, Glovo, Trustpilot and Worldremit.
The full report, ‘Titans of Tech: All Change at the Top’, contains analysis of Europe’s billion-dollar techcompanies, along with interviews with José Neves, Founder of Farfetch, Jacob de Geer, Founder and CEO of iZettle, Tom Stafford of DST, Philippe Vimard CTO Doctolib and Rafi Sweary, Co-founder of Walkme.