Scaleup Europe: a 4000+ fast growing ecosystem

Europe is home to approximately 4,200 fast growing, ICT scaleups in 45 countries, collectively raising about $58B in funding. A relatively young ecosystem with a lot of potential for growth that confirms the absolute leading position of UK in terms of number of scaleups (1,412, 34% of total) and capital raised (35% of the total available to scaleups in Europe), followed by Germany, France and Sweden at a distance.

This is what emerged from the latest SEP Monitor on Scaleup Europe presented today by Mind the Bridge and SEP – Startup Europe Partnership on the occasion of the celebration of StartUp Europe Awards (SEUA) final ceremony in Brussels at the presence of the President of the European Parliament, Antonio Tajani, President of the Committee of the Regions, Markku Markkula, and Commissioner Carlos Moedas.

“Scaleup Europe is still young but it is doing well, I see a lot of potential for growth” – commented Andrus Ansip, European Commission Vice President for Digital Single Market – “Startup Europe Partnership data shows a remarkable increase in the number of scaleups in recent years. 2016 has been a turning point for Scaleup Europe as $12B of fresh capital poured into European scaleups. I am very pleased to see European startups on a firm scaleup path.”

The new Report is the most comprehensive analysis regarding the status of European innovative startups and shows a remarkable increase in the number of scaleups in recent years (on average, 67% of scaleups were established after 2010).

“Our research clearly shows the leading position of UK in the European Scaleup market for so long now – added Alberto Onetti, Chairman Mind the Bridge and Startup Europe Partnership (SEP) Coordinator, who presented the Report – In fact, if we consider this scenario without the UK, in a potential post-Brexit situation, the number of European scaleups shrinks from 4,000 to 2,540 and capital raised from $56M to $35B. In short, Brexit will reduce Scaleup Europe by 36% and could consistently hurt the European Fintech industry”. Germany comes in at a distant second after UK, with 442 scaleups (11% of the total) that raised $10.1B (17%). In terms of the number of scaleups, Germany is slightly less than one third of UK with approximately half of the capital raised. France has a larger number of 513 scaleups (12%, about 1.2 times more than Germany), but a lower amount of capital raised ($6.6M, 11% of the total funding). Sweden ranks number four with 279 scaleups (7% of total) able to raise $5.3B (9%). To be noted that, out of the $5.3B, $2.1B come from Spotify only. If we exclude the amount collected by Spotify, Sweden’s figures are closer to Spain, who immediately follows it ($2.8B raised by 207 scaleups). The Netherlands lead the Benelux pack with 178 scaleups (4%). Driven by the giant Adyen, they collectively raised $2.2B (slightly less than 4%). A group of five countries follow with a number of scaleups in the 100-150 range (2-3% of the total). It includes Denmark ($1.7B in capital raised), Ireland ($1.5B), Finland ($1.4), Switzerland ($1.3B), and Italy ($1B). Belgium (93 scaleups, $0.6B) and Norway (67 scaleups, $0.8B) precede a group of emerging ecosystems – including Portugal (68 scaleups, $0.4B), Poland (46 scaleups, $0.4B), Austria (38 scaleups, $0.2B), Luxembourg (22 scaleups but $0.8B raised) and, further off, Estonia and Lithuania – both of whom are showing a thriving attitude.

The Gap to be bridged: the Stock Markets

Scaleups and stock markets are not (yet) a good fit in Europe. Only 2% of the European Scaleups go public and approximately 15% of the overall amount raised in Europe has been collected through IPOs. To be noted that 45% of the IPOs over $100M are completed in the U.S. and that the scaleups that decide to go public in the U.S. raise about 6 times more capital than the ones that IPO in Europe.

It is not a coincidence that the top performing country in terms of scaleups (UK) shows also the highest percentage (19%) in terms of capital raised on the stock markets. Germany and France are below average (10% of capital raised via IPO).

Scaleup Europe is still far too venture capital driven. This poses a problem, because IPOs, beyond simply providing growth capital, offer exit opportunities to the VC funds. Without exits, the venture capital engine risks being flooded.

Scalers in Europe

The Report identified also 86 “Scalers”, i.e. scaleups able to raise over $100M – in Europe, representing 2% of the European scaleups and raising cumulatively $25B, 43% of the overall capital raised. Only 14 countries have been able thus far to produce scalers: 29 (34%) are from UK, double the number in  Germany (15), which is then followed by France (11). Sweden comes in fourth place with 7 scalers, directly followed by Spain (6 scalers) and Denmark (5). In Luxembourg, scalers accounted for the largest percentage of capital raised by scaleups (71%), followed by Sweden (62%), Germany (55%), Denmark (50%), and Spain (47%). 4 scalers raised more than $1 billion in funding: Markit (UK), Delivery Hero and Zalando (Germany) and Spotify (Sweden). Those 4 “super scalers” managed to raise $6B cumulatively, representing the 12% of the total funding secured by the European scaleups.

Sources, full article and, full report


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