GP Bullhound: UK leads creation of European tech unicorns

The UK is leading the way in the creation of tech unicorns in Europe, according to research released by tech investment bank GP Bullhound.

According to the findings, the UK has seen the emergence of six billion dollar companies worth $12.4bn. The research also found that the UK had produced the highest number of billion-dollar companies in Europe over the past 18 years – contributing $64bn to the continent’s $240bn ecosystem.

New tech unicorns in the UK include Revolut and Blue Prism, a robotic process automation software company, which IPO’ed in March 2016.

GP Bullhound’s ‘Titans of Tech: European Tech Comes of Age’, report found that out of the 50 businesses expected to become Europe’s next tech unicorns, half were in the enterprise, SaaS, FinTech and Transportation industries. Almost two thirds of these were in the UK, France and Israel.

Manish Madhvani, managing partner at GP Bullhound, commented: “The UK’s tech ecosystem continues to present an attractive proposition to global investors, and British tech companies are driving up the ambition level and paving the way for the rest of Europe.

“The US and Asia may still dominate the market for billion-dollar tech businesses, but our report indicates a hugely optimistic outlook for the UK’s tech industry over the next decade.”

2017 marks the highest year of tech investment on record for European billion-dollar companies, with $20bn raised within Europe.

The report identified mega rounds – those of $200m or higher – as a key factor in powering the growth of Europe’s biggest tech businesses.

According to the findings, the number of mega rounds is on the rise in Europe, with nine tech companies closing a funding round of that magnitude in 2017 – including British companies Deliveroo, Transferwise, and Improbable – compared to just two in 2013.

The data also showed that a growing proportion of this funding comes from strategic rather than financial investors. Some 42% of funding through mega rounds last year and 75% to date this year has come from the likes of BBVA, Naspers and Softbank.

Interestingly, the research showed that Asian investors were most likely to invest, delivering 35% of mega round funding in 2017 and over half of all mega round funding to date this year.

Since 2014, five ‘decacorns’ – companies worth $10bn or more – have emerged in Europe’s tech ecosystem: Yandex, Zalando, Supercell, MobilEye and Spotify.

Spotify, the report says, has emerged as the frontrunner to reach the $50bn mark, with a valuation growth of 122% in the past 12 months, as a result of its recent IPO.

The European technology ecosystem is also producing an unprecedented number of billion-dollar businesses, with 14 emerging in the past year – the total number has more than doubled from 30 in 2014 to 69 today.

Looking ahead, GP Bullhound has identified 10 key European companies set to enter the billion-dollar tech ecosystem within the next year, including British firm Darktrace and Sweden’s iZettle (which have both since achieved a billion-dollar valuation), French big data company Algolia, and German tour and activities booking platform GetYourGuide.

Looking back

GP Bullhound’s ‘Titans of Tech: Europe’s Flagship Companies’ report, released in September last year, also found that the UK was the European country home to most tech unicorns. At the time, the data suggested that it had added four billion dollar businesses from September 2016.

To put this in context, at the time of the previous report, the UK industry boasted 22 billion dollar firms, cumulatively valued at $49.9bn.