European tech sector doubles in value during pandemic

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GP Bullhound, the technology advisory and investment firm, has today released its annual Titans of Tech report, charting the growth trends of Europe’s tech ecosystem.

The 2021 Titans of Tech report has revealed a record year of value creation for European tech, as the sector is now valued at over $800bn – of which almost half was generated in the past year alone, matching what had taken 20 years to previously achieve.

There are now 166 companies valued over $1bn in Europe, with 31% (52) reaching Unicorn status in the past year – a 1.5x uptick versus 2020 – at a combined value of $94bn.

The latest cohort of billion-dollar companies included the likes of Cazoo, Gousto, Hopin, Starling Bank and Trustpilot.

Key data insights from this year’s report include:

  • Pandemic boosts tech sector growth – the sector has outperformed other industries during the pandemic, generating 52 new Unicorns and more than $380bn of value in just one year. Since GP Bullhound’s first Titans report in 2014, Europe’s tech ecosystem has increased 9x in value.
  • Record activity across sectors – Enterprise Software (21) & Fintech (13) continue to lead the way in the number of new billion-dollar businesses, followed by Marketplaces (7) and E-commerce (6).
  • UK loses pole position in Unicorn value creation for the first time, to Sweden. Sweden has overtaken the UK this year thanks to significant valuation uplifts for core companies being Klarna, Spotify and Evolution Gaming which, combined, represent 74% of cumulative value in 2021. The UK remains top of the list in number of Unicorn companies (37), followed by Israel (32), Germany (23) and Sweden (13). New geographies also reached Unicorn status, including Croatia and Austria.
  • A boom in funding mega-rounds – $14.9bn has been raised in 2021 Q1 alone, adding up to almost a year’s worth of activity, nearly matching the $16.8bn total in 2020.
  • SPACs making their way into Europe – SPACs are one of the hottest tech trends in the US and Asia, accounting for nearly $230bn raised globally in new listings over the past year. Following strong activity in the US, an increasing number of SPACs are being listed in Europe, as a way to keep European leaders in Europe.
  • Doubling of $50bn companies globally – There are now 26 Tech Titans globally, with Europe building its first Titan: Adyen ($61.5bn). Spotify, a step behind, broke into the $50bn group earlier this year, currently with a valuation up 51% YoY to $43bn.

Sector growth

While Fintech and Enterprise Software have led the way amongst the number of billion-dollar firms, Marketplaces and E-commerce have seen significant growth in the past year.

Consumer demand during the pandemic led to a record 13 new unicorns for these two sectors, bolstered by on-demand start-ups with food delivery dominating this space.

The past year has also seen noteworthy investments in the crypto sector, pushing the combined value of the European billion-dollar cohort to $23bn. The sector is maturing fast, with category leaders showing a path towards mainstream adoption.

The Contenders

GP Bullhound has also outlined the list of start-ups contending for Unicorn status that are predicted to reach a billion-dollar valuation in the next two years.

The top 50 list of European contenders was curated through analysis of more than 700 start-ups. These are companies demonstrating the greatest ambition and taking the largest risks.

The list includes the likes of GoCardless, WorldRemit, Quantexa and Marshmallow with the majority of businesses coming from the Fintech and Enterprise Software space.

Manish Madhvani, Co-founder and Managing Partner at GP Bullhound, said: “It’s become increasingly obvious that the European tech ecosystem is a force to be reckoned with, and the pandemic has only further solidified its status as a maturing sector competing on the global stage. The record value creation, the growing amounts of mega-rounds and the consistently high rates of Unicorn businesses speak for themselves, and we can be really proud of the ecosystem we’ve built.

“The sector has grown 9x in value since we first published the Titans report in 2014, and with technology now being so fundamental to our lives – from food delivery, to edtech, fintech and entertainment software – we can only expect the growth to continue along the same trajectory. The missing piece of the puzzle are public markets, but with the arrival of SPACs we can expect even more activity in the IPO market, and the overall maturing of the European tech ecosystem.”

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