On June 30th, the investment bank GP Bullhound released, in partnership with VivaTech, during a live webinar its latest research report: Titans of Tech 2020. In the context of the world’s race to becoming digital, accelerated by the COVID-19 pandemic, the report addresses the most resilient companies and sectors, those leading the cohort of billion-dollar businesses and the opportunities for growth. For VivaTech,“We decided to partner with GP Bullhound in order to shed light on the European startup ecosystem, we both think there is an acceleration in the European Tech ecosystem giving birth to many solutions that have the potential to become the next Unicorns and Titans” explains Julie Ranty, Managing Director of VivaTech.
The Titans of Tech report shows the strength of European tech ecosystem as the number of billion-dollar companies has almost quadrupled since 2014. With 32 new billion-dollar companies with a combined value of $50bn added since last year, reaching a total of 112 companies and $416bn in value in 2020, the cohort is now worth almost five times the valuation in 2014.
VivaTech truly believes in the European tech ecosystem’s capacity to scale and produce global digital champions. Europe is in a positive trend where it can begin to compete with China and the US, who both have over 200 unicorns each, as we now have 84 unicorns. There has been tremendous growth in Europe as we’ve seen the number of unicorns multiply by four in the last six years. Scaleups are not only trying to raise money and get the highest valuation but also seek profitability. This, is key for achieving digital sovereignty. The leading sectors represented by unicorns are software and fintech but Tech For Good is showing potential for creating tech giants such as:
- OpenClassrooms for free online courses
- Benevolent AI with drug discovery
- Backmaret and its online market for refurbished devices
- Vinted and its online marketplace for recycled clothes
- Olio for the reduction of food waste
Further measures and steps must be taken to create more opportunities for growth and competitive solutions in Europe, such as unifying the 27 markets to facilitate internationalisation of European startups and their entry into one big european market. Scaleups also require more access to large tickets over €50 million as these still remain scarce.
We also cannot ignore the impact of 2020 COVID-19 health crisis on the tech ecosystem. The crisis is having, of course, a short-term negative impact on the cash flow of many tech players. However, all hope must not be lost, as at the end of the 2009 financial crisis, it was the tech sector that revived the economy by becoming the largest contributor in terms of jobs in Europe. This crisis will perhaps push tech companies to seek to be profitable more quickly, and also to provide more meaningful solutions for society. Manish Madhvani, Managing Partner at GP Bullhound, commented: “2019 and 2020 year-to-date has been a pivotal period for tech as a whole, especially for the European ecosystem. The COVID-19 pandemic has magnified this. Without digital entertainment, online consumption and flexible workplaces, the feeling of isolation and the challenges under enforced lockdowns would have been more acute. The rates of tech adoption have been accelerated by five years 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”.
We’re seeing more and more unicorns but who will be the next European Titans, reaching a valuation of over $50 billion? Where is money being invested? What does it take to build a billion dollar company? The answers to these questions lie in the full report.