Europe is the fastest growing major region for venture capital investment, according to a recent report from Dealroom. Investment for European startups grew 2.9 times (vs 2.3 times globally) Year-on-Year during the first half of 2021.
Image Credits: Austin Distel / Unsplash
This sits within a wider trend of greater VC investment during 2021 compared to previous years. Low interest rates, all-time highs on the Nasdaq and forced acceleration of digital adoption due to the pandemic are factors that are likely to have caused this.
2021 has also seen an increase in new unicorns. Compared to pre-2014, when new companies valued at $1B appeared once a month, there are now, on average, over two unicorns announced daily. This rapid growth of high value companies is largely due to greater internet accessibility, scalable software, massive growth in the VC industry and more experienced entrepreneurs.
Source: Dealroom
The industries which have produced the most unicorns so far in 2021 are Fintech (27%), Enterprise software (23%) and Health (15%). Around 43% of these $1B+ companies are in the SAAS space, with the majority of all unicorns being B2B.
The hub for new unicorns is shifting
Since 2014, the hub for new unicorns has shifted away from the San Francisco Bay Area. Whilst the US remains the region with the most unicorns, it’s cities outside of the Bay Area that look set to see more growth, including Salt Lake City, New Jersey and San Diego. All have seen an increase in the number of unicorns since 2015.
Outside of the US, apart from China, all other major regions are seeing sharp increases in the number of new unicorns. The US, China and the UK still dominate in terms of $1B+ exits, but countries such as Australia, Canada and Brazil have seen growth of around 20 times the number of unicorns since 2015.
Source: Dealroom
And there’s diversification in the number of unicorn cities (cities with one or more unicorns HQ’d there) with 170 globally, compared to 28 a decade ago. Europe has the highest number of unicorn cities, with 65 in total. And it seems success breeds success. Of the 28 cities with one unicorn in 2014, 82% have more in 2021.
Europe is also taking a more prominent place when it comes to VC investment at earlier stages, hosting 35% of all seed stage companies globally. This creates an impressive pipeline for future unicorns.
