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Leadership / Digital Transformation

Tech unicorns on the rise as UK continues dominance over Europe

Europe’s technology sector is thriving, producing dozens of unicorns and sustained growth.

A further ten billion dollar valued tech companies, unicorns, have been produced in just the past year, bringing the total number in Europe up to 47, with 18 of these based in the UK.

Combined, these unicorns have a value of $130bn and 60% of them are considered to be profitable.

The UK again comes out on top in Europe when it comes to producing quality technology talent, as showed in the recent FinTech 50 where 31 of the top fintech companies across Europe came from the UK.

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Recent additions to the unicorn club are blippar, and Anaplan, while existing members such as Markit Group, Rightmove, and Zoopla, all proved to be profitable.

Manish Madhvani, Managing Partner, GP Bullhound, said: "There has never been a better time to operate within the European market. I firmly believe that the right ecosystem exists for one of the companies highlighted in this report to push forward and reach a $10bn valuation in the next few years, and over time a $100bn valuation."

Sweden produced the second highest number of billion dollar tech companies with seven, Germany third with six, and France and Israel tied on three each.

While European companies aren’t yet seeing the dizzying valuations of their American cousins, this can partly be attributed to the US on average valuing companies at 46x the size of revenue generated, compared to Europe where it is 18x higher.

According to the report by technology investment bank GP Bullhound, ‘European Unicorns 2016: Survival of the fittest’, this highlights the more cautious nature of European investment.

Madhvani, said: "Europe has yet to reach the dizzying heights of American giants such as Facebook and Google, but when you look at businesses in the $1bn to $3bn range, what we lack in quantity we more than make up for in terms of quality.

"All of the data points towards a stable, maturing market that has avoided the excesses of the US in favour of sustainable growth. We are seeing a remarkable resilience in European technology markets."

Across the 2014/15 period the main significant areas of success can in the field of fintech, but in the past 12 months the success has been mainly seen among software businesses. Of the new unicorns in the past 12 months 50% came from the field of software.

The report also highlights that it was a notable year for augmented and virtual reality firms, as two VR unicorns joined the list in 2016.

The research included technology companies headquartered in Europe, founded in 2000 or later, with an equity valuation over $1bn in the public or private markets.
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