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UK Leads Europe In Year of Record Tech Investment

Brian Baglow

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Space Companies in Scotland

The UK continues to dominate the European tech scene – despite Brexit fears…

The UK’s digital technology industry is Europe’s leading creator of billion dollar businesses, according to new research from tech investor GP Bullhound.

In the past year, the UK has added six billion-dollar tech companies – worth $12.4 billion to the collection of 26 existing companies, more than any other European market. The UK has also produced the greatest number of billion-dollar companies across Europe since the year 2000, which have  – contributing $64bn to Europe’s $240bn tech ecosystem.

Mega Rounds

According to GP Bullhound’s, Titans of Tech: European Tech Comes of Age report, of the 50 companies predicted to become Europe’s next billion-dollar businesses, 50% are in the Enterprise SaaS, Fintech and Transportation industries, while close to 60% are in the UK, France and Israel. 2017 marks the highest year of tech investment on record for European billion-dollar companies, with $20bn raised within Europe.

The report highlights so-called ‘mega rounds’, in which funding of $200m or more is raised, as a key factor powering Europe’s biggest and brightest tech companies. The number of such rounds rising in Europe, with nine tech companies in 2017 securing ‘mega’ funding, including British companies Deliveroo, Transferwise, and Improbable. For comparison, in 2013 only two companies raised this sort of funding.

Strategic Investors

A growing percentage of funding is now coming from strategic rather than financial investors. 42% of ‘mega’ funding and 75% of funding to date this year has come from strategic organisations such as BBVA, Naspers and Softbank, indicating a significant shift in the investor ecosystem, as strategic investors take the place of traditional financial investors.

GP Bullhound also highlights the fact that Asian investors are most likely to invest, delivering 35% of ‘mega’ funding in 2017 and over 50% of all ‘mega’ round funding to date this year.

The report highlights several key companies within Europe, which ‘demonstrate the strength and velocity to reach ‘titan’ status’ with a valuation of over $50 billion – within the near future.

Decacorns

Since 2014, five ‘decacorns’ – companies worth $10bn or more – have emerged onto Europe’s tech scene: Yandex, Zalando, Supercell, MobilEye and Spotify.

Thanks to its recent IPO, Spotify has emerged as the frontrunner, with a valuation growth of 122% in the last twelve months.

14 new billion-dollar businesses emerged from Europe in the past year, more than doubling the total number from 30 in 2014 to 69 today.

Looking ahead, the Titans of Tech report highlights companies including Darktrace (UK), iZettle (Sweden), Algolia (France) and GetYourGuide (Germany) as potential entrants to the billion dollar valuation club.

Manish Madhvani, Managing Partner at GP Bullhound, commented:

“The UK’s tech ecosystem continues to present an attractive proposition to global investors, and British tech companies are driving up the ambition level and paving the way for the rest of Europe.

“The US and Asia may still dominate the market for billion-dollar tech businesses, but our report indicates a hugely optimistic outlook for the UK’s tech industry over the next decade.”

Movers and shakers

Brian Baglow

Editor

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