04 THE VIEW FROM GP BULLHOUND
06 CHAPTER 1 Momentum
20 EXPERT VIEW，Peter McKay, Snyk
26 CHAPTER 2 Sector insights
30 EXPERT VIEW，Serguei Beloussov, Acronis
34 EXPERT VIEW，Oscar Pierre, Glovo
36 CHAPTER 3 Europe’s next generation
42 EXPERT VIEW，Julie Ranty, VivaTech
44 CHAPTER 4 Late-stage funding
48 EXPERT VIEW，Des Traynor, Intercom
52 EXPERT VIEW，Dr Ali Parsa, Babylon
54 CHAPTER 5，On the path to Europe’s first Tech Titan
We believe 2019 and 2020 year-to-date has been a pivotal period for tech as a whole, in particular for the European ecosystem, and that the landscape is sufficiently robust for this growth to continue.
At GP Bullhound we are big believers in technology’s importance to mankind. The COVID-19 pandemic has significantly magnified this during the enforced lockdowns. Without Zoom, Google Classrooms, Amazon, Netflix, Fortnite (adopting the role of parenting millions of children), Ocado, etc., many would have experienced greater isolation and challenges.
This pandemic has also compressed innovation cycles. We believe the rates of tech adoption have been accelerated by five years in a matter of months and will leave the landscape ripe for more record innovation. This is a very exciting time for entrepreneurs founding new businesses, and scaling existing ones even faster.
For M&A, while many other sectors are struggling, tech companies are on a buying streak. Alphabet, Amazon, Apple, Facebook and Microsoft held $560bn in cash at the end of Q1 2020, and announced 19 deals this year, representing the fastest pace of acquisitions to date since 2015 In our view,tech is the sector most likely to avoid a deep recession.
In Europe, the proliferation of success stories across newer geographies continues and the list of countries creating their first unicorn continues to expand. The Baltics delivered year-on- year, with Lithuania now on the map thanks to Vinted. We also expect Turkey to join next year with Zynga’s $1.8bn acquisition of Peak Games, after the cut-off date for this year’s report.
There are big underlying shifts in the sectors where leaders are emerging; for example, in Enterprise Software, there has been a sharp increase in new entrants in the Storage and Cybersecurity subsectors. The value of Marketplace models has significantly outpaced E-commerce in the past five years and as the world races to shift to digital, we expect this to rapidly increase as the biggest consumer categories remain largely underdigitised.
European tech is now seen as a key hedge against some of the US ecosystem’s challenges. Europe has a broad and diverse supply of capital and investors remain confident, deploying large sums of money to European leaders. In 2019, late-stage funding increased by more than twofold for Europe’s tech leaders, and the funding environment remains robust with 2020 year-to-date transactions double that of 2018 and in line with 2019 (2).
This year we showcase eight Tech Titans – companies founded after 2000 and valued at $50bn or more, leading the way for global tech. The US and Asia remain hotspots on the Titan landscape, but we believe Europe is on the cusp of its first Titan.
Publicly listed Baidu has left the club, Asia marketplaces Pinduoduo and Meituan-Dianping have joined, whilst Tesla’s valuation is up 270% year-on-year to $149bn, valuing it more than the world’s biggest car maker by volume, Volkswagen (3).
Emerging European Titans include Spotify, Adyen, JustEat Takeaway.com, Zalando, and Delivery Hero. Spotify has led the group for some years in becoming Europe’s first Tech Titan, but this year Adyen has overtaken Spotify as the highest valued tech company in Europe.
Momentum：A MATERIAL STEP UP FOR EUROPEAN TECH THIS YEAR
The number of billion-dollar companies has almost quadrupled since 2014 The ecosystem is now worth $416bn, almost five times the valuation in 2014 32 companies with a combined value of $50bn added since last year
How many companies still are private?
EUROPE’S LEADING TECH COMPANIES BY STATUS
Successful tech companies in Europe now have multiple options, including staying private for longer Public markets and strategic exits continue to play their part in the growth of the ecosystem
Europe’s leading private tech companies
PRIVATE BILLION-DOLLAR COMPANIES BY VALUATION
This page ranks all 72 privately-held companies in Europe’s tech ecosystem by valuation Valuations are correct as of 14 May 2020
The UK is still leading the way, being #1 by number and value of unicorns
Germany adds $31bn in value to its ecosystem, driven by performance of public cohort, the successful IPO of Teamviewer and four new additions crossing the $1bn valuation mark Israel is growing fast, adding $17bn in value and 11 companies in 2020
Europe’s tech factories
NEW BILLION-DOLLAR COMPANIES
Israel has generated the most billion-dollar companies in the last year, adding 11 to its collection of 20 Wide distribution of new additions, with unicorns from new countries such as Vinted in Lithuania
The rise of customer-centric marketplaces
EXPANSION OF VERTICALS AND ONLINE ADOPTION
DRIVES SECTOR GROWTH
Most of the value in the sector was historically concentrated in classifieds, restaurant and travel marketplaces; however, recently, there has been huge growth in vertically integrated marketplaces 2.0 (fashion, restaurants, etc.) and services (mobility, healthcare, and leisure)
Classifieds have materially declined as a proportion of value, as they monetise less of the transaction and offer a less compelling customer experience, driven by consumer demand for specialisation of search, with marketplaces offering a more complete set of specialised products