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Business Management

London Tech Week: Euro-Unicorns a different breed to US species

According to Forbes, there are 174 Unicorns – private companies with valuations of $1 billion or more. The majority – and the most recognisable – generally reside within Silicon Valley. But a growing number of increasingly valuable – and profitable – Unicorns are emerging out of Europe.

There are 47 Euro-Unicorns, according to a new report [PDF] from tech M&A specialists GP Bullhound. 10 entered the list including food HelloFresh, Blippar, Sitecore and IronSource. Three left the list; Powa from the UK as well as both Qiwi and Ulmart from Russia. Just last week Finland’s Supercell became Europe’s first “Decacorn”; a Unicorn valued at over $10 billion.

“Entrepreneurs in Europe have really stepped up to the challenge,” said Bullhound co-founder and Managing Partner Manish Madhvani. Where last year investment centred around Fintech, recently there has been a shift to Augmented Reality, Virtual Reality, and Computer Vision. The UK is home to the most billion-dollar companies, with 18. Switzerland, Denmark and Luxembourg all added their first Unicorns the list.

While European companies have proved they can scale, Madhvani questioned whether they have the “appetite for risk” in order to grow to the size of their US counterparts. When compared to the US, there are some marked differences in how the startups raise and make cash: US Unicorns on average raise twice as much money as European ones and have valuations around 46 times their revenue. European companies, however, boast higher average revenues, and valuations of just 18.1 times their revenue.

While in the US becoming a Unicorn “all of a sudden became a badge of honour” that caused bad practices to emerge, European startups generally take a slower, more sustainable approach to growth as they lack the desire to chase growth over revenue in the same way Silicon Valley companies operate.

Madhvani says that this slower growth “could be a good thing compared to the tsunami of cash” floating around in the US. Currently around 60% of European Unicorns are profitable, but a few of the younger ones are starting to take a more US style approach to growth.

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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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