Europe is a successful Unicorn ranch. The number of private technology companies valued north of $1bn – originally nicknamed after the mythical creature due to their supposed rareness – that are based in Europe has risen to 47, according to tech investment bank GP Bullhound.
The count is up by 10 in the past year, and the combined value of the companies on the list is now $130bn (£90bn).
More than a third of the Unicorns are based in Britain, including Asos, Transferwise and Zoopla, as well as new entrants on the list like augmented reality firm Blippar and business planning software makers Anaplan, founded in the UK but now based in San Francisco.
Spotify has overtaken Skype as the most valuable unicorn in Europe, with a valuation of $8.5bn, and leads Sweden into second place by number of unicorns. The country has seven billion-dollar tech firms, and Germany, France and Israel (which is included in Europe for the purposes of this study) follow with six, three and three respectively.
While 10 unicorns have joined the list since 2015, others have dropped off. Powa, for instance, was once valued at nearly $3bn, but it’s now in administration, unable to pay the costs of doing business.
High-profile failures are few and far between, perhaps in part due to the higher barrier to entry for European startups. Unicorns in Europe tend to have a higher average revenue than those in the US, suggesting that investors on the other side of the Atlantic are happier to pump money in to companies with low or non-existent income in the hope of a large payoff in the future. The average European unicorn has a revenue of $315m, according to GP Bullhead, and is valued at 18 times its revenue; in America, those figures are $129m and 46 times respectively.
But almost half of European unicorns are still unprofitable, including some of the biggest names on the list, such as Spotify, Funding Circle, and one of Finland’s two unicorns, Rovio, the developers of Angry Birds.
Finland’s other unicorn, Supercell, another mobile games developer, is faring better: GP Bullhound thinks it could be Europe’s first “decacorn”. That’s a technology firm worth $10bn, in case you aren’t keeping track. Supercell’s revenues have grown 173% year on year, and it’s already valued at over $5bn.
And tenuously extending the metaphor, the bank also named twelve “unicorn foals”: “European tech firms that GPH Bullhound believes could achieve a billion-dollar valuation in the coming months and years.” Restaurant delivery service Deliveroo, music streaming site Soundcloud, and Swedish payments service iZettle are all on that list.
Manish Madhvani, a managing partner and co-founder of GP Bullhound, said that the report showed that the European tech sector was strong. “There has never been a better time to operate within the European market. I firmly believe that the right ecosystem now exists for one of the companies highlighted in this report to push forward and reach a $10bn valuation in the next few years. With time, Europe could even produce its first $100bn tech company.”
“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.”