The chances are that you have actually seen a unicorn. Probably several of them and encounter them on a daily basis. When Aileen Lee coined the term in 2003, unicorns were almost mythological. Today there is a herd of them, both in the US and here in Europe. What can we learn from this trend?
The latest report on European unicorns from the team at GP Bullhound is well worth a read. It looks at the tech companies in Europe established since 2000 that have achieved valuations of over $1bn. There are 40 of them in Europe today, 13 of which have reached the threshold in the past year. They include many well known brands such as Skype, Spotify, King and Vente Prive. But some are surprisingly not household names, such as Powa, Ve, Home24.
The UK comes out on top with 17 unicorns to boot, nearly three times as many as the next country (Sweden).
While special because of their valuation, unicorns are expensive and require on average over $140m of funding to attain the lofty valuation. Many of the best known Unicorns are consumer businesses and the median amount they have raised is $278m. Building a brand is a capital hungry activity.
Most (58%) have been started by entrepreneurs in their 30s and nearly all of them still have one or more founder leading the business. This is a great sign for the European tech ecosystem as each of these companies will over time spawn numerous entrepreneurs in the future. The senior team will probably do another start up and almost certainly become angel investors once (and if) they realize some of their holdings.
For both entrepreneurs and investors, syndicating these large rounds can be beneficial and this is a feature of the European tech landscape. Over 2/3 of unicorns have more than 3 institutional investors backing them, and Spotify has 17.
Around 3 unicorns are born every year and the next generation are emerging. The tech market appears to be in rude health today. While some talk about exuberance and bubbles, there is a growing body of evidence to show that it is based on strong foundations. Most of the big valuations have been limited to a small group of companies. At the Seed, Series A and Series B end of the market, it looks more like 'business as usual'. But the prospects for achieving stronger valuations and exits are better than they have been for a long time
Co-founder of Oxford Capital Partners. Husband, father, adventurer and polar marathon runner. Represent Great Britain at master level in Modern Pentathlon.