“Tech Scaleup Europe 2018” SEP Monitor presented in London. All the data!
In 2017 Scaleup Europe experienced a year of growth which can be described as sustainable: more than 1,200 scaleups were born in Europe (+22% of the total, +28% YoY growth from 2016) reaching a total of 5,596 that have cumulatively raised $83.2B (+36 growth in capital raised). But the gap with other ecosystems remains hug.
This is what emerged from the last “Tech Scaleup Europe 2018” SEP Monitor presented today in London on the occasion of the second SEP Scaleup Summit organized by Mind the Bridge and hosted by the London Stock Exchange.
“Let me share some good news: Scaleup Europe is growing, finally – commented Alberto Onetti, Chairman of Mind the Bridge and SEP Coordinator, while opening the event – We’ve measured good progress, but there is still of course a lot of work ahead of us. We know that the innovation is not a plant that gives you harvest quickly, you have to continuously seed and work to bear fruits. And we are seeing the initial European crops.”
The research highlighted that the strongest economies continue to produce the most scaleups: UK, France, Germany and Sweden top the Scaleup Europe Country Index, by contributing to almost 70% of that growth in absolute terms. The UK continues to lead the pack with a 28% growth rate, adding 368 scaleups to its population for a total of 1,668 as of end of 2017 (30% of the Europe’s total), clearly unhindered by Brexit talks in the meantime. France and Germany follow with a 32% growth rate each: France added 165 scaleups for a new total of 681 (12% of total), and Germany added 129 for a total of 530 (10% of the total). Sweden ranks 4th in the Scaleup Europe Country Index with a 35% growth rate, adding 126 scaleups in the past year for a new total of 489.
The regional averages show a similar story with Northern Europe (24%) performing the strongest and Southern Europe once again dragging their feet in the innovation wave, with a lower growth rate of only 16%.
“2017 was an amazing year for the startups in the growth phase. The glass is half full. Startups ecosystems in Europe are starting to be connected among themselves – added Isidro Laso Ballesteros, Head of Startups and Scaleups at the European Commission – This high level of connectivity contributes significantly to help startups in their growth phase. We still need to do more. Beyond US, Asia is growing at high rate. Ecosystems in Asian countries have unique characteristics that are helping with their high growth rates. Our competitive advantage is to be united in diversity. An advantage that can only be realised by working at ecosystems level to be a Startup Europe: a startup continent.”
On average, Europe nowadays registers approximately 1 scaleup for every 100,000 inhabitants, slightly up from 0.9 in the previous year. The Nordic countries outperform the other areas by producing on average over 3.7 scaleups every 100K people. In particular, Sweden (with 4.9 scaleups per 100K inhabitants), and Finland are definitely leading the way in terms of scaleup density. Among the larger countries, the UK leads with a 2.5 density ratio.
London has been confirmed to be by far the largest scaleup “hub” in Europe with over 1,100 scaleups based there. Paris follows (453 scaleups), Berlin and Stockholm are behind with slightly less than 300 scaleups. Other relevant emerging tech hubs (over 100 scaleups each) are Dublin, Helsinki, Amsterdam, Barcelona, Copenhagen, and Madrid.
“Beyond these main scaleup hubs, there is another Europe comprised of “tier-two” cities and municipalities whose role cannot be neglected – said Alberto Onetti – We will publish after the summer a dedicated study focused on these minor hubs that are key for Europe.”
As mentioned, in 2017 $22B of new capital (average growth +36%) was invested in Europe for total $83.2B.
In terms of growth, large countries stay close to the European average: UK outperformed with a solid +40%, Germany registered a +36% average growth, while France a +30%. Northern countries are running faster, while Belgium and Netherlands reporting respectively +44% and +38% growth rates. In the Southern Europe, Italy is 2 point below the average (+34%) ,while Spain is slowing down (half than European average, +17%).
In absolute terms, the UK still dominates with $27.5B (33% of the total capital raised) and Germany ($14.6B, 18%) precedes France ($8.9B, 11%), this last change being the most noticeable since last year: in relative terms, Germany is home to “only” 10% of scaleups, but those scaleups took in 18% of the total funding in Europe. France by comparison accounts for 12% of the scaleup population, and 11% of the funding. Following, the Scaleup Europe Country Index finds Sweden with $7.3B (9%), Switzerland with $3.6B (4%) and Spain with $3.3B (4%).
EUROPE vs SILICON VALLEY/ISRAEL
Despite the growth, the gap with other ecosystems remains huge. In terms of number of scaleups, the Silicon Valley is worth, alone, a little more than the entire European continent, while in terms of capital raised it accounts for almost 3 times the entire amount raised by all European scaleups. Considering all the United States as a whole, scaleups there have raised $657.5B since inception, 8 times more than the $83.2B raised by their European counterparts. Israel scores better than all European ecosystems – apart from the UK – per number of scaleups and is second only to Germany and the UK per capital raised.
ACCESS TO CAPITAL: NOT (YET) A SINGLE WAY TO SCALE-UP
There’s not (or not yet) a single European way to scale-up for tech companies: while some are pursuing the venture capital funding path, other are leveraging private investors and family offices. One large and recently emerged group in particular is exploring crowdfunding and fundraising through cryptos (ICOs).
- Venture Capital: data shows that $70.7B of capital poured into European scaleups comes from venture capital and private investors, by far the large majority (85%) of the total capital. European scaleups are still mostly depending on venture capital.
- IPOs only represent 12% of the capital raised by scaleups ($9.7B) comes from stock markets through IPOs (losing 10 points compared to last year when it was 15%). Only the 1% of the European tech scaleups have gone public. And not all of the IPO money comes from Europe: 25% of the capital has been raised on US stock markets. On average, European scaleups collect about $120M in new funding when they start trading on stock markets. However, it takes time to plan and implement large IPOs: on average, European scaleups go public 8.7 years after inception.
- ICOs: the main point of discontinuity compared to the recent past is that $2.8B was raised through ICOs (Initial Coin Offerings), where Europe seems to have a competitive advantage over the United States. This is about 3% of the total capital raised.
3% of European scaleups have completed an ICO. Central States (driven by Switzerland rather than Germany and France) play a dominant role ($1.3B raised, 50% of the total), followed by Eastern Europe and the Baltics (that cumulatively raised over $0.5B, 19% of the total). Less than 15% ($395M) of the ICO capital total was raised in the British Isles.
An interesting example is the Swiss canton (province) of Zug, becoming more and more known as the European Crypto Valley. 27 scaleups that made an ICO – raising $1B+ – are headquartered there.
ICO’s have proven to be a very interesting substitute for the first round of financing of tech scaleups. On average, the ICO channel provides 4 times more capital (an average of $17.6M), than the generic series A raised with traditional VCs ($4.5M on average). Another benefit scaleups are leveraging from ICO’s is speed, which is just as important as availability when it comes to funding. European scaleups on average take 3.3 years to complete the Series A financing, and almost 9 years to go public. The ICO path is much faster.
“When it comes to the origins of the investments, in 2017 on average 43% of capital invested into scaleups come from domestic investors, plus another 11% from investors from other European countries, and approximately 40% from outside Europe – added Alberto Onetti – US investors play a leading role in this case with 26% of overall investments, followed by China (4%), Singapore (1%), and Israel (1%). One round out of ten is led by US investors, but they account for about one quarter of the capital raised by European scaleups.”
FINTECH DRIVES THE TECH INDUSTRY IN EUROPE
Out of the $22B invested in 2017, approximately $4.7B (about 20% of total) was invested with Fintech scaleups, a number that’s three times more than last year. 33 new Insurtech scaleups were tracked in 2017 and collectively they raised $210M. Agritech, Artificial Intelligence & Big Data, Autotech and Gaming are all present in a group that doubled investments in 2017 when compared to 2016.
A LAND OF SMALL SCALEUPS
In 2017, only 48 scaleups (2.4% of the total) crossed the $100M bar of capital raised and turned into “Scalers” for a total of 134 scalers nowadays in Europe (they were 86 in 2016). They cumulatively raised slightly close to $37B that is less than half of the total capital made available to European tech scaleups. 5 companies raised more than $1B in funding (or very close to it). These so-called “Super Scalers”, cumulatively managed to raise about $8B, 10% of the overall funding secured by the European scaleups.
That said, not counting the Scalers, Europe is land of “small” scaleups. 76% of scaleups (4,231 out of 5,596) raised between $1 and $10M attracting only $13.5B, the 16% of the total investments made available to European scaleups. 22% (1,228 scaleups) raised between 10 and 100M securing slightly less than $33B (the 39% of the total).
SEP ELITE TECH SCALEUP 100
The first 100 have been just unveiled: today, during the second SEP Scaleup Summit taking place at the London Stock Exchange in London, Mind the Bridge in collaboration with ELITE as part of Startup Europe Partnership (SEP), launched the “SEP ELITE Tech Scaleup 100” ranking, the index of the Top 100 tech European Scaleups.
Inclusion in the ranking is based on an algorithm that factors capital raised by the company since inception and qualitative parameters (such as employee growth, competitive position, IP and trademarks, traffic growth, sentiment analysis, M&A activity), analyzed in partnership with AI startup Zirra. The weight of the qualitative component will be increased over time, as more parameters are added and data is collected and increasing the accuracy and training of the AI models.
“Through this new Index we aim to provide international visibility to the best European tech companies by tapping into the analytical methodology we have developed in these last few years with Startup Europe Partnership. Currently the ranking for the top 100 European tech scaleups has been unveiled. We plan to issue the SEP ELITE Tech Scaleup 250, SEP ELITE Tech Scaleup 500, SEP ELITE Tech Scaleup 1000 in the incoming months.” – commented Alberto Onetti.
Here the full dedicated press release.
Applications open for IoT acceleration programme
IoT Tribe are launching our next equity-free accelerator programme for early-stage IoT start-ups. Are you interested in joining us?
We will be supporting 10 startups in a 12+12 week intensive acceleration programme based out of the North of England where you will power up your product development, market testing and investment readiness with engineers-in-residence, access to a prototyping and testing lab and joining in on supply chain missions to South East Asia.
- An early-stage IoT company?
- With an existing prototype and some evidence of product-market fit?
- With 2 or more founders?
- And the ambition to scale?
If so, apply to IoT Tribe North, the equity-free IoT accelerator. We’re offering 10 early-stage IoT start-ups a package worth over £100,000- and yes, its equity free!
More information at: http://bit.ly/IoTSupsAI
Startup Ole Accelerator co-organises the CEE Acceleration Summit
Startup Ole Accelerator, along with PwC Poland, Business Link and Hardgamma Ventures is a co-organizer of the CEE Acceleration Summit – the region’s largest event dedicated to entrepreneurship, corporate- and university acceleration. The event will take place in Warsaw on Oct. 26th and will gather the most influential innovation and acceleration ecosystem builders.
CEE Startup Ecosystem is one of the most rapidly developing ones, with a room and prospects for countless investment opportunities. Warsaw, as the CEE’s innovation hub, linking the western and central-eastern European cultures and capital, is a modern symbol of successful transformation into the center of innovation.
The event will be divided into three paths: Corporate Acceleration, University Acceleration and Social Innovations, so that all the potential target groups will find the crucial information on how to develop businesses to foster innovations within the companies, or how to manage investment portfolio effectively, in a sustainable and responsible manner.
Moreover, during the Summit the key representatives of the Public Sector, including the European Commission’s agendas and Polish Development Fund’s representatives will also introduce the accelerators and investors to the support instruments aimed at facilitating startup-related investments and ecosystem building activities.
Key representatives of various innovation initiatives from all over Europe will share their knowledge and experience with the CEE’s stakeholders to create bridges between various ecosystems and engage in potential cooperation.
To find out more, please visit the event’s website.
ePlus Ecosystem – a retrospective
ePlus connects three local ecosystems (Lisbon, Nice/Côte D’Azur, Baden-Württemberg) to prepare European businesses and potential entrepreneurs for the changing global digital market, equipping them with the knowledge and skills needed to offer new products and services by digital means, to compete, thrive, and to create new jobs. This is achieved via a unique combination of talents, tools and services of a European scale, in all key elements: team, concept, technology and capital.
In this past 2 years, ePlus has been offering tailored serviced to startups, including mentoring, meet-up with relevant investors, training, networking or funding support for attending relevant events.
Ultimately it is about supporting web entrepreneurs go global. Through a combination of the partnership own experience with external experts, a successful experience is offered to startups helping them reach higher.
HIGHLIGHTS FOR 2017
ePlus work will continue to offer its services until June 2017 to support the startup ecosystem:
Nitro acceleration programme:tailored and high level training for startups this time taking place in Lisbon during May! Applications will be available soon.
Micro-grants: financial support for startups to participate in events that are useful for their growth strategy. Final round is now open – http://epluseurope.eu/blog-entry/open-call-announcement-mg-round-4
eMentoring: an on-going process to match mentors with startups – join-in now – http://epluseurope.eu/basic-page/ementoring
eTalent:want to grow your business through direct knowledge transfer from a researcher? Join this on-going service http://epluseurope.eu/basic-page/etalent
Nitro the extreme acceleration event
Startup Europe proudly launches Nitro: the extreme acceleration event. 20 European startups are invited to work with expert consultants, corporates and investors to gear up for the next episode in their development.
Nitro: the extreme acceleration event
Startups in the Growth phase can apply for Nitro: the Extreme Acceleration Event. The event is tailored to the specific needs of startups and will be taking place on the 1st and 2nd December 2016 in Sophia Antipolis, France. Interested startups can apply for Nitro on F6S until November 6 2016 (new Deadlne).
After being selected the startup will be contacted for the pre work on their chosen topics.
During the event, 20 international mature startups will work together with consultants and business angels from Capgemini Consulting, Europe Unlimited, Inovamais, INTRASOFT International, the European Crowdfunding Network, and the European Business Angels Network on topics ranging from customer journey to investment readiness, from sales to innovation management.
Topics Summary (see the extended description and the trainers profiles)
- Investment Readiness
- Pitching Session
- Growth & Internationalisation through European Funding
- Growth & Internationalisation Strategies: Sales
- Customer Journey Design
- Intermediaries to Innovation Management in the Digital Era
- Innovation Governance
- Negotiating a Technology Agreement
- Grow with the Crowd
The key is that the startups themselves choose which topics they want to work on before, during and after the event. They will have the opportunity to use the knowledge and experience of these groups of consultants.
Even more so, delegates of large corporations and investors are present, creating the opportunity for the startups to present their products and receive feedback from representatives of their actual target group and customers. In short, a great opportunity to apply the new insights from the consulting sessions against the standards of the market.
All of this will be set up in a truly interactive way, no long presentations but real working sessions to create value for startups.
Nitro: the Extreme Acceleration Event is open for startups that have the following profile:
- Mature startup that already has a (small) customer base in the domestic market and is on the brink of international expansion
- Can be classified as a web-entrepreneur
- Have a good understanding of the needs to make the next stage
Interested startups can apply for Nitro on F6S until the 6th of November 2016 (New Deadline). After being selected the startup will be contacted for the pre work on their chosen topics. Apply here
Nitro is totally free of charge thanks to the support of the European Commission. Furthermore candidates can also applied for a Micro-Grants to cover part of their travel costs.
More information on how to apply can be found in the “Guide for applicants”.