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News : Innovation Last Updated: Jun 15, 2015 - 3:35 PM


Europe produces 13 $1bn+ "unicorn" startups in one year; London is Europe's digital capital
By Michael Hennigan, Finfacts founder and editor
Jun 15, 2015 - 11:06 AM

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Research findings reported today 1) show that Europe produced 13 “unicorns” — technology startups that have reached a value of at least $1bn — in the year since April 2014. The US had 22 new unicorns in the same period. 2) coinciding with the start of London Technology Week, the British capital has been confirmed as the top digital hub in Europe.

Data compiled by GP Bullhound, the British investment bank and first reported in The Financial Times, show that Europe has produced about a three tech companies every year since 2000 that have either been sold, floated on the stock exchange or been valued by investors at $1bn or more.

The value of all European unicorns created since 2000 is about $120bn while Facebook's current value alone had a market capitalisation of $229bn at close of trading last Friday, and Uber's last funding round gave it a value of $40bn.

In 2014 tech firms in Europe completed 46 “large” fundraising rounds of $30m or more, with a combined value of $5.65bn, up from $2.9bn in 2013.

Last week Spotify, the Swedish music streaming service, raised $526m last week, giving it a valuation of $8.5bn while it and Skype which was sold to Microsoft in 2013 for the same value, have the highest ranking valuations achieved since 2000.

In the year since April 2014, there have been seven "exits" worth a value in excess of $1bn — Mojang, the Swedish maker of Minecraft, was sold to Microsoft for $2.5bn last year, and IPOs included German investment group Rocket Internet and UK companies Markit and Zoopla.

Dow Jones VentureSource reported last January that 40 global startups were given valuations of $1bn or more, through fund raising in the year doubling the number of such companies there were at the start of the year.

UK on top

17 of the 40 European tech companies that have achieved an IPO or have been valued at $1bn or more since 2000, were started in the UK, with fintech’s (financial technology) eight unicorns representing the biggest sector. Eight new companies of the 13 were added in the UK in the 12 months period, with the average valuation across all Europe at $3bn — 3 were added in Germany; 1 in France and 1 in Italy.

Sweden has the second-highest of the 40 total with six unicorns, followed by Germany and Russia with four each and France three. Finland has two, Israel, Italy, Netherlands and Ireland have one each — Fleetmatics of the US, which is headquartered in Ireland for tax purposes, is classified as an Irish startup.

The report says European unicorns require an average of $140m in funding over nine years to pass the $1bn mark while the average age of founders was 35.

Five years since the launch of the Tech City Initiative, other research further shows London has cemented its position as the most important tech hub in Europe and is forecast to boost its economy by £18bn in 2015. The research coincides with the launch of London Technology Week, a week-long celebration of the capital's tech sector.

London's digital technology sector is growing faster than both the London and wider UK economy and will continue to do so for the next decade according to research from London & Partners, the Mayor's promotional company for London.

The figures produced by Oxford Economics show that the number of companies in London's digital technology sector has grown by 46% since the launch of the Tech City programme. The sector now employs almost 200,000 people, 17% more than in 2010.

Other research from the professional services firm EY released to mark the start of London Technology Week shows London's dominance of tech across Europe, and the city's attractiveness as a tech hub. According to EY more than 1,000 international tech investment projects located in London between 2005-2014, significantly more than the next most attractive city, Paris (381) or the whole of France (853).

Boris Johnson MP, the Mayor of London, said: "With our unrivalled mix of investors, talent and creativity it is hardly surprising that tech businesses and entrepreneurs are clamouring to be part of the incredible London tech story. This sector has flourished beyond recognition in the last five years, creating thousands of jobs and outpacing the rest of the economy.  London Technology Week is rightly a celebration of that success. Now we need to continue our work to boost connectivity across the capital and arm the tech stars of the future with the skills they will need to drive forward this valuable industry for years to come."

Manish Madhvani, co-founder and managing partner of GP Bullhound, comments: "The UK has raced ahead as the undisputed home of unicorns in Europe, with London producing the vast majority of Britain'sbillion dollar tech companies. Growth is accelerating because we have created an environment capable of sustaining high levels of investment across a range of tech sectors."

London's tech sector is also one of the world's most diverse according to research from Wayra, Telefónica's digital start-up accelerator. It shows that in London women are three times more likely to be working in the startup community than in Silicon Valley.

The internet giant Google is leading a drive to create a more diverse and inclusive tech ecosystem by today launching a pilot programme for entrepreneurs over the age of 50. The 'foundersover50' programme, which will be run at Google Campus in London, follows on from the successful programme Google has run for new mums and will aim to support older entrepreneurs grow their ideas for new businesses.

Speaking at the launch of London Technology Week, Eileen Naughton, managing director Google UK & Ireland said: "Diversity has always been part of Google's mission. Since we opened Campus London in 2012, we've supported a growing community of 42,000 entrepreneurs and developers. But we strongly believe that online products will only get better and more useful if we invite all segments of society to influence and create technology."

Another giant of the tech world, Amazon, today announced that it has completed the move of its corporate HQ operations to London including moving more than 2,000 jobs to the capital.

"We now have in excess of 2,000 permanent employees based in London in addition to the thousands of permanent employees in our UK fulfilment and customer service centres across the UK," said Christopher North, managing director Amazon UK. "We're enabling tens of thousands of UK businesses to sell their products worldwide through Amazon Marketplace, powering British entrepreneurs and business start-ups through Amazon Web Services, and we have invested well over £1 billion in our UK infrastructure. The building of our new office in Shoreditch is a further illustration of the important role that London and the UK will play in our global operations."

Every FTSE 100 British business has women represented at board-level, but 23% of London's tech businesses lack any female board members.

OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties

Startups vs Scaleups: 4% of UK startups have 10+ employees 10 years later

UK and Irish business R&D heavily reliant on foreign-owned firms

Europe's top ICT Hubs in 2014: Munich, London, Paris in lead; Dublin with rank of 16

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