Scaleup Europe

SEP Monitor, June 2017


Europe is home to approximately 4,200 fast growing, high-tech companies that we refer to as “scaleups”. This distinction serves to separate this group from startups, i.e. to draw a line between early stage initiatives and real companies that are producing revenue and employment. If the count is restricted to only countries who are current members of the European Union, the number of scaleups goes down to 3,950 and the capital raised to $56B.
Our research confirms the absolute leading position of UK (34% scaleups come from the UK). This increases the concerns about the potential impact of Brexit on Scaleup Europe.
Everything happens for a reason. 0.71% of GDP has been invested in ICT scaleups in the UK and 0.64% in the Nordics, versus only 0.29% in the Central States and Benelux and 0.12% in Southern Europe.
Scaleup Europe is still far too venture capital driven. Only 2% of the European Scaleups go public and approximately 15% of the overall amount raised in Europe has been collected through IPOs (slightly less than half of which were completed in the U.S.). And it is not a coincidence that the top performing country in terms of scaleups (UK) has the highest percentage (19%) in terms of capital raised on the stock markets. Germany and France are below average.
Looking at the big scaleups (what we define as scalers those who have raised over $100M), we identified 86. They raised cumulatively $25B, 43% of the overall capital. Only 14 countries have been able thus far to produce scalers. More than a third are from (surprise) the UK. This is about 2 times more than Germany (15) and three times more than France (11).
4 scalers crossed the $1 billion bar in funding: Markit (UK), Delivery Hero and Zalando (Germany) and Spotify (Sweden). It’s worth noting that Germany has been able to produce two of these giants.
Still, when compared with the rest of the world, Scaleup Europe has a long way to go in producing the new giants. Of the 53 of these worldwide, Europe, with 4, ranks third, still far behind China (16) and the U.S. (25).
Scaleup Europe is relatively young and therefore there is a lot of potential for growth. Our data shows a remarkable increase in the number of scaleups in recent years. On average, about 67% of scaleups were established after 2010. Of these, 76% have been founded after 2013. Specifically, 2016 has been a turning point for Scaleup Europe. $12B in new capital has poured into European scaleups. That is approximately 20% of the total funding collected by scaleups in the 2010-2016 timeframe.
E-commerce, Fintech and Hospitality are driving the growth of scaleups in the European ecosystem. Fintech – no surprise – attracts the most investment in UK. Brexit could hurt this European specialization a lot. Gaming – even less of a surprise – is the leading vertical in the Nordics, while in Germany E-commerce and in Southern Europe Fashion and Mobile drive the growth.
We hope that the data included in this report can help provide useful insights for governments, and assist them in creating better policies, and for corporate executives who are developing effective innovation strategies.
More studies with in-depth country analysis will follow. We have just released a report on Portugal1, more to come. Stay tuned!

by Alberto Onetti