European Unicorns 2016 report published
GP Bullhound, the technology investment bank, has published its report European Unicorns 2016: Survival of the fittest.
The UK has maintained its dominance within Europe as the home of the billion-dollar tech company. Eighteen of Europe’s 47 Unicorns are based in the UK. New British entrants include Blippar and Anaplan.
Sweden is the country with the second highest number (seven), which includes Spotify. Germany is third with six and France and Israel follow with three each. Three countries have produced their first tech Unicorns during the last 12 months – Luxembourg, Switzerland and Finland.
“There has never been a better time to operate within the European market,” says Manish Madhvani, Managing Partner at GP Bullhound. “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.”
The report notes that Europe’s tech Unicorns are starting to outperform their American counterparts. American Unicorns raised nearly twice the amount of capital as their European counterparts, but the average revenue generation for a European Unicorn ($355.3m) was almost three times greater than in the US ($128.8m).
On average, valuations in the US were 46x the size of revenue generated, whilst in Europe they were only 18x higher. This demonstrates a more cautious investment arena in Europe, resulting in healthier valuations. At the same time, 60 per cent of European Unicorns were profitable.
“When you look at businesses in the $1bn to $3bn range, what Europe lacks in quantity is more than made up for in terms of quality,” says Madhvani. “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.”
The last 12 months have seen a rapid increase in software businesses, say GP Bullhound: 57 per cent of new Unicorns are software companies, of which 20 per cent are augmented or virtual reality models.