Britain leads the way in playing host to ‘unicorn’ tech companies – firms that have passed the $1 billion valuation mark – but Europe’s big players still lag far behind the numbers accrued by their American counterparts.
In a report released by GPBullhound, an investment banker, 30 European unicorns were created between 2000 and May 2014. Eleven of the firms were based in the U.K., more than twice that of the closest competitor, Russia, whose five unicorns rely on a large domestic market. Sweden, home to Skype and Spotify, ranks third with four unicorns and Finland and France share two each.
In the same period, 39 unicorns were created stateside, with an average valuation of $3.6 billion, compared to $3 billion in Europe. However it is the size of the largest American unicorns which dwarfs Europe’s: Apple, with a value of $734 billion, is worth over six times all the unicorns in Europe combined. Google is worth three times, and Facebook is worth over twice.
U.S. unicorns also take a year less – seven, as opposed to eight – to reach an IPO or sale. The age of founders is 33 in Europe and 34 in the U.S.
That will be of concern to those who claim Europe is becoming an easier market for giant companies to emerge. But with investors less willing to take big risks, and a region still hankering for a single digital market, it is a trend that looks set to continue for some time.
That will not be helped by a potential ‘Brexit’ – a referendum on the U.K.’s position in the E.U. before 2017 – which could cost it 2.2% in GDP by 2030.
London has the most to cheer about from this report. The British capital has revamped itself as a tech hub in recent years, with over 200,000 employed in the tech sector. This includes a burgeoning FinTech industry that was reported in Red Herring as Europe’s best. Technology is predicted to contribute £18 billion ($28.1 billion) to the British economy this year.
U.K. unicorns include lender Wonga, property firm Right Move and fashion retailer ASOS.
Elsewhere in the research it was found that consumer-facing companies comprise the vast majority of European unicorns – 24 compared to six enterprise firms. Consumer unicorns reap on average 104 times their private investment, compared to the 33x an enterprise firm can expect to make.
Unicorns are still, as the name suggests, a rarity: they make up just 0.27% of the comparable market. E-commerce is the biggest producer of in Europe, at 43%. Software (20%), gaming (17%) and FinTech (13%) round out the top four.