Titans of Tech 2023

Nine years ago we launched Titans of Tech to showcase the progress of the European tech ecosystem and raise the ambition levels of founders in creating world-leading tech companies. Since then, the European technology ecosystem has seen a record 10-year wave of growth as technology continues to outperform every sector.

But the technology sector globally has reached the end of its most recent bull market – a run propped up and extended by post-pandemic macroeconomic factors. Companies need to adapt to the new environment. For those that can pivot and get their priorities and funding in order, value-creation opportunities will continue to exist.

In the face of the downturn, 34 trailblazing Unicorns were formed and lifted the aggregate value of European Unicorns above $1tn. We see a positive trajectory for the next decade in hitting $2tn and believe that the next wave of value creation, societal gains, and technology disruption will be found in AI, climate tech, and workplace productivity software – all areas gaining momentum and billions in funding as of Q1 2023. One out of four Unicorns in the past year were ML- or AI-enabled, investment in climate tech remains in line with bull-market levels at $3bn, and 15% of new Unicorns were HR software businesses.

This report explores the technologies, business models, and companies that will build on Europe’s track record of value creation, now and into the future. It’s the end of a bull run, but far from the end of the story, and we are proud to celebrate the continued resilience of Europe’s technology ecosystem.

Creation slowed but is in line pre-pandemic. The total number of European Unicorns is up c.10x since 2014 and Decacorns by c.4x since 2018.

Manish Madhvani

Managing Partner

alon kuperman

Partner

Head of Insights

jennifer eller

Carlos de La esperanza

Associate

Principal

Laurence Devriese

Vice President

Freddie Dodge

Maria Lazareva

Minh Phung

Analyst

Authors

The view

From GP Bullhound

MANISH MADHVANI

GP Bullhound managing partner

$1.15tn

Associate, Insights

STATE OF THE european technology landscape

KEY TAKEAWAYS

34 new Unicorns

Despite unprecedented headwinds, Europe's technology landscape continues to grow, with total Unicorn value surpassing the $1tn milestone reached last year.

The top two Unicorn generators still reign, now followed by Germany; these three top growers account for $500bn+, nearly half the value of all European Unicorns.

UK and Israel

Q1 2023 marked a return to a more normal pre-pandemic state, in line with Q1 2019, but valuations remain hampered, and founders should stay vigilant.

Normalised funding growth

Large buy-out funds are seizing the opportunity – take-private activity nearly doubled in 2022 versus 2021, and former Titan contenders are also on the hunt for acquisitions.

Downturn carpe diem

"The 2023 edition of the Titans of Tech report, published in partnership with VivaTech, is a strong indicator of the resilience of the European tech ecosystem. This is a time for scale-ups to consolidate their business models, focus on their core businesses, deepen their markets and contribute to renewing the financing models of the ecosystems. And VivaTech – Europe’s biggest tech and startup event – has emerged as an essential catalyst for European scale-ups entering the consolidation phase.”

François Bitouzet, CEO of VivaTech

Several European founders have turned to private debt to avoid the risk of a down round; debt funding reached €23bn in 2022, up c.2x from 2021.

Debt centre stage

We look for these sectors to produce the next tech giants, with maintained if not increased bull-market funding levels and exponential growth in the number of companies.

AI, climate tech, and HR software

France leads with 20% of top Contenders for Unicorn status in the next two years.

Next generation

Note: In this report, the term ‘climate tech’ is purposefully broad in order to incorporate the broad swathe of technologies and innovations being used to address GHG emissions and the broad array of industries in which they are being applied

Markets have cooled

FROM pandemic-DRIVEN TAILWINDS TO MACRO HEADWINDS

Pandemic restrictions accelerated the digitalisation of businesses and users, unleashing unprecedented tailwinds for all technology companies and leading to an 18-month-long bull market.

Companies focused on capturing as much of the tailwinds as possible, putting revenue growth at the core of their strategy; consequently, funding levels were also inflated to back these fast-growing businesses.

This period of abnormally high multiples was followed by a sharp burst at end-2021 as pandemic tailwinds vanished and macro instability arose; we have now returned to the pre-pandemic era – a time when structural digital trends drove fast revenue growth in inherently highly-profitable business models.

FUNDING HAS returned TO 2019 LEVELS

As interest rates increased and tech companies were punished in the public markets, the amount of private funding more than halved from its peak in 2021.

However, we have returned to the normalised funding levels of 2019, after a period of inflated fundraising activity.

Private debt has gained the attention of tech companies that avoided equity markets in 2022 to maintain bull market valuations.

REMAIN RESILIENT

While LTM generation of Unicorns is down by 73% (as of March 2023), current figures are in line with pre-pandemic levels, suggesting a rebound is underway.

The UK, Israel, and Germany have led the Unicorn creation with Enterprise Software and Fintech, but AI, climate tech and HR software are getting increasing attention from VC investors.

CHAPTER 1.

Tech industry readjusting after investment boom

Note: For full methodology, please see the end of this report

The lingo and journey to $50bn

A refresh on the terminology for our report

GP Bullhound classifies the companies featured in the Titans of Tech report into four key categories: Titans, Decacorns, Unicorns, and Contenders, based on their market valuation. All companies featured in this report were founded in 2000 or later.

CLASSIFICATION OF COMPANIES BY most recently disclosed market VALUATION

Q1 2023 tech funding at normalised levels

Funding party is over, return to pre-pandemic

The macroeconomic instability that began in early 2022 with the war in Ukraine, high inflation, and rising interest rates led to a material decrease in the amount of funding that the tech community received.

Total tech funding stood at $16bn in H2 2022, down by 68% YoY. Despite this significant drop, Q1 2023 funding was in line with, or even above, pre-pandemic levels.

After a period of unprecedented activity and frenzied investing, we believe we are now approaching a state of funding normality.

Sources: GP Bullhound Insights and Pitchbook (as of 31 March 2023)

Total tech funding in Europe and Israel

MARKETS HAVE COOLED

After the frenzy, a return to pre-pandemic creation

34 new Unicorns

Despite what media headlines may suggest, the recent drop in the number of new European technology Unicorns and the aggregate valuation does not necessarily indicate a negative outlook.

While there were only 34 new Unicorns created in the last 12 months and the aggregate valuation is down by 79% to $59bn¹ compared to the previous year, we believe that the decrease shows that the industry is returning to normal levels after a period of intense activity (e.g. inflated valuations and excessive funding).

However, we are still generating more Unicorns than before the pandemic. What's more, in today’s valuation environment, many great tech companies are delaying fundraising or public listings, creating a backlog of Unicorn-quality companies for the coming years.

NUMBER AND CUMULATIVE VALUATION OF NEW BILLION-DOLLAR COMPANIES¹
( March LTM)

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases
Note: Cut-off date for inclusion in report 31 March 2023; valuations correct as of 16 May 2023; and 1) Net aggregate number of Unicorns in Europe and Israel across public, private and acquired Unicorns; in the last 12 months, some public Unicorns have traded down and lost their Unicorn status

NUMBER OF tech IPOS
(March LTM)

MARKETS HAVE COOLED

Headwinds response: Proven path to profitability rewarded

Steady shift in tech ecosystem

Europe has reached 311 Unicorns after the creation of 34 $1bn+ companies over the last 12 months¹.

Since our first report on Europe's Unicorns in 2014, the number of billion-dollar companies has increased by c.10x and the ecosystem’s aggregate valuation by c.13x to more than $1.1tn.

Leveraging new emerging technologies and embracing the shift in value creation offer tremendous opportunities for those who seize them. Be part of the wave and reap the rewards.

EUROPEAN TECH ECOSYSTEM GROWTH¹

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases
Note: Cut-off date for inclusion in report 31 March 2023; valuations correct as of 16 May 2023; and 1) Net aggregate number of Unicorns in Europe and Israel across public, private and acquired Unicorns; in the last 12 months, some public Unicorns have traded down and lost their Unicorn status

Shifting focus from revenue growth, investors are now looking for companies that generate cash amid an uncertain economic environment. Companies and business models that can prove their path to profitability will continue to thrive.

CONTINUED FOCUS ON PROFITABILITY

POCKETS OF OPPORTUNITY

MARKETS HAVE COOLED

Macro pressures driving valuations down

The end of the bull

"Free cash" and pandemic tailwinds gave a boost to tech valuations not seen since the dot-com boom.

Today, exacerbated by macro pressures, the technology market has undergone a boom-and-bust cycle with average public Unicorn valuations in 2022 roughly half of those in 2021.

However, with operational fundamentals normalising and remaining strong, it is only a matter of time before valuations recover as technology continues to shape the way we live and work .

Valuation multiples have contracted to below pre-pandemic levels
GP BULLHOUND Software INDEX EV/LTM Revenue

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases (as of 31 March 2023)
Note: Includes all public Unicorns as of the cut-off date for inclusion in report (31 March 2023); data correct as at 19 May 2023

MARKETS HAVE COOLED

Lockdowns brought increased demand for digitilisation, accelerating growth for tech and software businesses

Pandemic tailwinds led to a frenzy

After Covid-19 hit, internet and software companies saw unprecedented tailwinds as people and businesses around the world were forced to embrace the digital world as the new reality.

The dimension of these tailwinds prompted a shift in business mindset and software companies raced to capture as many clients as possible, putting the focus on revenue growth and setting off an 18-month bull run for tech companies.

GP Bullhound Software index NTM revenue growth and NTM EBITDA margin

3-month rolling average, January 2020-July 2021

Sources: GP Bullhound Insights and Capital IQ (as of 19 May 2023)

MARKETS HAVE COOLED

Investors continue to demand business model resilience through proven profitability

By the end of 2021, as the world started to move past the pandemic, other macro factors began to take hold including rising inflation, the Russia-Ukraine war, and increased operational volatility.

Battling post-pandemic headwinds, tech companies were forced to cut costs and improve profitability on the back of the increasing scrutiny of unprofitable business models.

However, signs of recovery and a return to pre-pandemic levels are materialising.

Sources: GP Bullhound Insights and Capital IQ (as of 19 May 2023)

GP Bullhound Software Index NTM revenue growth and NTM EBITDA margin

3-month rolling average, November 2021-May 2023

MARKETS HAVE COOLED

Unicorn ecosystem growth has slowed but is resilient

An ecosystem that grows

Despite several factors working against the ecosystem, the aggregate value of European billion-dollar companies is up by 8% as of March 2023, a deceleration from the 32%+ annual growth as of March 2022.

Private companies still hold most of the value, and we expect this to continue in the short term as listed market valuations remain weak.

While public market valuations correct rapidly, the lag with private market mechanics means that the current valuations will be inflated.

AGGREGATE NUMBER & VALUATION OF BILLION-DOLLAR COMPANIES¹

Sources: GP Bullhound, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases
Note: Cut-off date for inclusion in report 31 March 2023; valuations correct as of 12 May 2023; and 1) Net aggregate number of Unicorns in Europe and Israel across public, private and acquired Unicorns; in the last 12 months, some public Unicorns have traded down and lost their Unicorn status

AGGREGATE VALUATION OF BILLION-DOLLAR COMPANIES BY STATUS¹

MARKETS HAVE COOLED

Champions' league

Billion-dollar stables

The UK remains the top Unicorn factory, minting eight new billion-dollar companies over the past year and increasing the cumulative value of all 61 Unicorns to $271bn.

Germany has risen to the top three from our previous report, boosting its tech ecosystem with six new Unicorns and lifting its total number of Unicorns to 38 for a cumulative value of $119bn.

Israel also created six new Unicorns and maintained its crown as the largest factory by the number of companies.

Sweden and the Netherlands remain strong stables by cumulative value, and France added four new Unicorns for a total of 33, increasing its Unicorn cumulative value by $7bn YoY to $77bn.

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases Note: Cut-off date for inclusion in report 31 March 2023; valuations correct as of 16 May 2023; and 1) Net aggregate number of Unicorns in Europe and Israel across public, private and acquired Unicorns; in the last 12 months, some public Unicorns have traded down and lost their Unicorn status

MARKETS HAVE COOLED

The startup powerhouses

When mature technology companies reach a liquidity event, such as a sale or an IPO, early employees and investors create the ideal scenario for further business startups.

Early employees have access to capital through stock options and can usually cash out their shares even before a full liquidity event and, most importantly, have gained invaluable industry knowledge and business execution experience; similarly, investors receive fresh cash available for re-investment.

Successful ventures creating value waterfalls

Sources: GP Bullhound Insights, “Europe and Israel’s startup founder factories”, Accel, Dealroom, and news articles (as of May 2023)

WATERFALL OF ENTREPRENEURSHIP

MARKETS HAVE COOLED

How successful startup exits generate exponential value

Selected successful European companies are big NEW BUSINESS incubators

Successful exits and second-generation startups build local tech hubs with exponential growth

The waterfall of knowledge and funding for both employees and investors has led to the surge of local tech hubs following sector trends.

For example, 32 businesses have been founded by former ex-Delivery Hero employees, most of which operate in the same or adjacent sectors. In this fashion, London has become a hub for Fintech businesses and Paris for Marketplaces.

MARKETS HAVE COOLED

Europe’s tech factories

The UK clinched the global startup race with eight billion-dollar companies valued at $18.1bn combined, showcasing its expertise in Enterprise Software and Fintech.

Israel secured silver with six unicorns worth $9.2bn combined, solidifying its reputation for technological innovation.

Germany followed in third place, with six new Unicorns at a slightly lower combined value of $7.2bn, and is a strong contender in European Enterprise Software and Fintech.

Enterprise Software and Fintech reign in top three countries

Sources: GP Bullhound, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases
Note: Cut-off date for inclusion in report 31 March 2023; valuations correct as of 12 May 2023

MARKETS HAVE COOLED

"France has managed to create consistent access to capital across all stages of business development. The first generation of successful tech startups has served as a blueprint and enriched the country's pool of tech talent, particularly in management. France is also known for its strength in maths and AI, a resource predicted to flourish with the rise of Generative AI. This new technological landscape promises to enhance the already rich French tech scene, solidifying its position as a lead."

FLORIAN DOUETTEAU,
CO-FOUNDER & CEO, DATAIKU

France took fourth place with four new Unicorns over the past year.

Switzerland and Italy tied for fifth, together introducing four new Unicorns to the league. Other European heavyweights such as the Netherlands, Spain, and Finland secured one new Unicorn each, with an aggregate valuation of $6.4bn.

"To truly harness the power of the remarkable surge in startup creation in Germany over the past year, we must first acknowledge the key factors that have contributed to this growth: Germany's vibrant startup hubs, its growing supportive infrastructure, and strong market with access to a skilled workforce and internationalisation opportunities. By recognising and further leveraging a supportive ecosystem, legislation, and access to capital, we can foster collaboration, unity, and continued growth within Germany's startup ecosystem."

HANNO RENNER, CO-FOUNDER & CEO, PERSONIO

The idea for Oyster was born out of my own need to build a fully remote and diverse company. I couldn't find a solution that met my requirements, so I decided to create one. I'm inspired by the massive societal and economic impact of democratising opportunity. Research shows that removing the concept of borders from talent mobility could potentially triple the world's economy. This potential impact is what drives us to create a platform that empowers companies to employ talent anywhere.

The market for remote employment software is still in its infancy, with a pre-pandemic value of $30bn. We expect three to four platforms to become the de facto standard for global employment. The ones that prioritise employee well-being and care will lead the category, as a human-centric approach is crucial in times of talent shortage.

The most challenging period for Oyster was at the beginning of 2020, right before the pandemic. The sudden increase in demand for remote employment solutions caught us off guard, and we had to rely on partners. This experience, however, led to rapid learning and valuable insights, which were eventually built into our platform and became our superpower.

HOW DID YOU START OYSTER AND WHAT INSPIRED YOU?

HOW DO YOU SEE THE MARKET FOR REMOTE EMPLOYMENT SOFTWARE EVOLVING?

Expert view

CO-FOUNDER & CEO | OYSTER HR

WHAT WERE THE MOST CHALLENGING PERIODS ALONG THE WAY? HOW DID YOU OVERCOME THESE PERIODS?

We’ve navigated the macro turbulence by quickly adapting to the changing economy. We curtailed our expenses and focused on making our business more efficient and resilient, all while maintaining high growth. The crisis served as a catalyst for us to build a stronger, more scalable business.

WHAT CHANGES/INITIATIVES DID YOU IMPLEMENT OVER THE LAST 12-18 MONTHS TO HELP NAVIGATE THE MACRO TURBULENCE?

TONY JAMOUS

WHAT KEY COMPONENTS FOR SUCCESS ARE YOU FOCUSING ON NOW TO TAKE YOU THROUGH THE NEXT 12-18 MONTHS?

In the next 12-18 months, we are focusing on scenario planning and controls to steer the ship more accurately. Maintaining a strong and cohesive culture is essential for navigating change, so this remains our underlying foundation.

WHAT IS NEXT FOR OYSTER? WHERE DO YOU WANT TO TAKE THE BUSINESS?

Our long-term vision for Oyster is to make the world more equal and free by empowering companies to hire people anywhere. We aim to bring over one million employees on the platform by 2030, expanding our impact exponentially and moving closer to achieving our vision.

"We’ve navigated the macro turbulence by adapting quickly. We curtailed our expenses and focused on efficiency and resilience."

"Maintaining a strong and cohesive culture is essential for navigating change, so this remains our underlying foundation."

EXPERT VIEW: oyster hr

HR platform for globally-distributed companies

Together with my co-founders, we were trying to solve a problem that we ran into ourselves. At the time, we were building sophisticated enterprise content management systems, and dealing with very large volumes of messy and connected data. We had to invent a new type of database that uses relationships in data at its core. The fundamental premise was simple – the world is becoming increasingly connected. Because data describes the world, data then becomes increasingly connected. And connected data can't be managed well in traditional table-based databases. Therefore over time, we will see more and more use cases for a database centred around relationships. That was the premise when we got started, and that premise unfolded to be true as we've seen an explosion of use cases like fraud detection, recommendations, digital twins, customer and patient journeys, product catalogues, and more.

Five years from now, the best way to use generative AI, especially on the tech side i.e. large language models, will be via your internal enterprise data and knowledge graphs. The combination of large language models (LLM) and knowledge graphs will allow users to operate LLMs on their internal, confidential data. Additionally, it will allow you to declare explicit truths, which will stop the hallucination problem in LLM. Today, LLM is ultimately probabilistic, but knowledge graphs allow you to make explicit, deterministic connections. Combining the two will allow you to override the probabilistic model from the LLM and deploy LLMs at scale in the enterprise.

We had invented this new piece of software but didn't have a category name for it. We could have called it a database, but that would be simultaneously overselling it and underselling it, because it could do more than SQL, but it was also less mature. At the time, I was visiting a friend at Harvard University and he showed me a local website that was consumer student-facing. The website said “We are a utility for the social graph” and its name was TheFacebook.Com. I realised that if Facebook could use the term “graph” in a consumer offering, we could certainly use it for our super technical developer-facing creation. That’s when we coined the term “graph database”. Users intuitively understood what we were offering, but that posed other challenges. Graphs were still seen as very niche. It was challenging to raise awareness around the real, proven use cases that we were building. But that’s the nature of category creation – people can’t grasp the total addressable market (TAM) yet. While our customers were easier to win because they realised the power of graph databases, investors were much harder to convince. The only way to overcome that was through sheer metrics.

HOW DID YOU START NEO4J AND WHAT INSPIRED YOU?

HOW DO YOU SEE THE MARKET FOR DATA ANALYTICs, AND MORE SPECIFICALLY FOR GRAPH-CENTRIC TOOLS LIKE NEO4J, evolving?

Expert view

CO-FOUNDER & CEO | NEO4J

WHAT WERE THE MOST CHALLENGING PERIODS ALONG THE WAY? HOW DID YOU OVERCOME THESE PERIODS?

Database companies are generally capital-intensive businesses because of the high R&D and go-to-market spending, but despite that, we’ve always been relatively capital efficient and haven’t raised a lot of money. However, even we got caught up in the pandemic-accelerated growth-at-all-cost mentality. So we’ve focused on a few key things: we re-tuned the company towards efficient growth and decided to be ruthless in our prioritisations. We’ve declared a small number of “must-win battles” and decided to only focus on those, deferring other ideas, no matter how lucrative, to 2024. We’ve also made significant executive hires, by appointing Chandra Rangan, who previously ran marketing for Google Cloud Platform, as CMO, Alyson Welch, who came from Twilio, as CRO, and a new CPO, Sudhir Hasbe, who ran the entire data analytics portfolio for Google. They are crucial to getting us to the next level.

WHAT CHANGES/INITIATIVES DID YOU IMPLEMENT OVER THE LAST 12-18 MONTHS TO HELP NAVIGATE THE MACRO TURBULENCE?

EMIL EIFREM

WHAT IS NEXT FOR NEO4J? WHERE DO YOU WANT TO TAKE THE BUSINESS?

A major focus for us is cloud transformation. We started as a self-management product but switched to the cloud a few years back with Neo4j Aura, which is a fully managed cloud database service. We've also launched a new offering which allows data scientists to use relationships in their machine learning, similar to how we allowed developers to build relationship-centric applications with our core technology. We call this Graph Data Science (GDS). We see a huge amount of interplay between that and generative AI. Both of those are exciting new products for us. Previously, we targeted the operational database market, which is the largest market in enterprise software, but now we are adding an entire data science piece to it. And a cloud product suite enables us to also monetise the small and midmarket. Both of those are new vectors of growth for us. From a financing perspective, I think about "IPO-able" rather than IPO. Being “IPO-able” means focusing on metrics that are a proxy for a high-quality company – converging efficiency metrics, strong growth, and a massive TAM. That’s what we goal ourselves on, regardless of how we choose to raise money, privately or publicly.

“Being ‘IPO-able’ means focusing on metrics that are a proxy for a high-quality company – converging efficiency metrics, strong growth, and a massive TAM.”

“To navigate the current macroenvironment better, we’ve declared a small number of ‘must-win battles’ and decided to only focus on those, deferring other ideas to 2024.”

EXPERT VIEW: neo4j

Graph database and analytics company

A market downturn – déjà vu

Funding has returned to pre-pandemic levels, but valuations have not. Founders must maintain a long-term vision and use existing cash to achieve their goals, carefully scrutinising expenditure on customer acquisition and product development. We recommend keeping a cash runway of over 12 months at all times to minimise dependency on outside capital.

Remember that previous downturns, such as the dot-com crash and the Great Recession, have served as launchpads for some of the world’s most iconic tech companies.

Refresh on GP Bullhound's guide to navigating market turbulence and remaining resilient

POSITION COMPANY EARLY AND BE READY TO ACT FAST

FUNDRAISING STILL POSSIBLE, BUT INVESTORS are focused ON KPIS

HOW select ICONIC COMPANIES have BATTLED THE BEAR

Keep calm, support your clients and grow efficiently

Software companies have feared that reduced IT budgets would hamper the growing digitalisation of businesses and ongoing transition to the cloud.

Splunk’s product uniqueness and innovation track record have enabled it to overcome macro uncertainty. Staying focused on its mission, Splunk has continued to develop its clients' transition to the cloud, beating its guidance and market forecasts that factored in this uncertainty.

This focus has led to a strong push for operational efficiency, restructuring sales teams and cutting unnecessary expenses.

When everyone is defensive, be offensive and thrive

Microsoft is not resting on its laurels during this downturn. With its latest $10bn investment in OpenAI, the tech conglomerate is opening up a new avenue of growth that will be a key rainmaker for the business.

By integrating generative AI into its Intelligent Cloud and Productivity & Business Processes units, Microsoft is set to attract a flurry of new customers looking to leverage novel AI tools to streamline workflows and reduce costs.

While its competitors worked on internal efficiencies and with mostly defensive moats, Microsoft seized the opportunity to get ahead of the curve and pioneer the AI revolution.

Big player in the growth game, now proving profitability

Since its inception, Uber was purely focused on capturing a fast-growing market and building strong network effects, which implied a large cash burn.

When the market turned, the company acted quickly to prove its value, executing profitability initiatives to improve its cost structure and user acquisition. This came at the expense of non-core business units that were still largely cash-burning.

Despite growth slowing, Uber has successfully walked a path to cash generation.

Find your true edge and double down

With the growth slowdown in its Advertising segment and Reality Lab’s sharp decline in revenue from Q1 2022, Meta strategically pulled back on several non-focus initiatives, freezing hiring and reducing expenses across teams.

After the frenzy of the bull market, Meta doubled down on its core social media platforms, developing its Reels ad model and improving user engagement in the name of higher monetisation.

Meta’s focus on its competitive advantages, improving its positioning to benefit from long-term trends despite potential short-term instability, has been well-received in listed markets.

Sources: GP Bullhound Insights, company reporting. Capital IQ, and Goldman Sachs (market data as of 19 May 2023)

“The world's most advanced AI models are coming together with the world's most universal user interface – natural language – to create a new era of computing. We are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”

–Satya Nadella, Microsoft’s CEO

fcf margin

1

2

3

Growth equity

Fewer mega-rounds as large non-traditional investors go quiet

2021 was the year of mega-rounds (with >300 over $50m), 2022 saw c.200 transactions, and 2023 is off to a slow start with just 20 in Q1 2023.

Non-traditional tech investors, such as hedge funds, crossover firms, and public equity boosted activity to record highs in 2021-2022; however, their investments in tech have materially decreased during the downturn.

Downturns create opportunities, and buyers are seizing them

With the re-rating of several listed software companies, large-cap private equity buyers were busy in take-private activity at attractive valuations, up c.2x in 2022 versus 2021.

Former European tech Titan contenders have been acquiring companies to expand product offerings and enter new markets; we foresee more market consolidation in 2023 as the storm settles, but valuations are still low.

Debt takes centre stage as alternative to equity funding

A high-quality tech ecosystem in Europe, a buyer-friendly M&A landscape, and a less attractive environment for equity fundraising have allowed debt to thrive.

European founders have turned to private debt to lower the risk of down rounds in an environment rocked by uncertainty and macro headwinds.

Debt lending in Europe reached €23bn in 2022, up c.2x from 2021.

CHAPTER 2. Growth equity

CHAPTER 2.

Change in expansion plans as companies adapt to new fundraising environment

A strong start to 2022 sustained over $30bn for the year

Mega-rounds in 2022 at pre-pandemic levels

Following unprecedented deal activity in 2021, it was unlikely that 2022 would be able to keep pace. However, with nearly 200 mega-rounds amounting to over $30bn in value, 2022 still ranked materially above pre-pandemic levels.

As macro pressures continue to bite, a starkly different story emerged in Q1 2023. With only 20 mega-rounds in total raking in $2bn in value, the appetite for $50m+ deals in the first quarter of the year confirms that deal activity is normalising.

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases
Note: Disclosed rounds greater than $50m between 1 January 2017 and 31 March 2023

GROWTH EQUITY

NUMBER AND CUMULATIVE VALUE OF MEGA-DEALS OVER $50M

But still participated in c.$15bn of 2022 mega-rounds

Non-traditional VC and growth investors such as hedge funds, crossover firms and public equity investors have played a meaningful role in mega-rounds in recent years, attracted to the reward and underlying fundamentals traditional investors have enjoyed.

Non-traditional participation has mirrored the mega-round market for the last two years, with enterprise software and fintech collectively representing c.75% of activity (compared to c.70% of overall mega-round value). Overall activity was equally reflective with alternative investors participating, at least in part, in c.50% of announced mega-rounds in Q4 2021.

While Q4 2022 underscored the signs of retreat, as mega-round activity wanes and non-traditional investors turn to alternative, more macro-resilient asset classes, we expect these investors to eventually return as markets normalise.

Non-traditional investors showing signs of retreat

CUMULATIVE VALUE OF MEGA-DEALS OVER $50M WITH NON-TRADITIONAL INVESTOR PARTICIPATION

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases (as of 31 March 2023)
Note: Includes all mega-rounds greater than $50m in disclosed transaction value in which non-traditional investors have participated in some capacity

Founders seeking debt issuers to dodge down rounds

Private debt to the rescue

2022 was the year for private debt. This change was driven by several factors, including the high-quality tech ecosystem in Europe, a buyer-friendly M&A landscape, and a less attractive environment for equity fundraising.

With these factors in play in an environment rocked by uncertainty and macro headwinds, many European founders made the strategic decision to pivot away from raising equity rounds, which otherwise would have brought in lower valuations.

total volume of tech debt lending in europe (€bn)¹

Sources: GP Bullhound 2023 report "Credit it. Step forward" and Dealroom (as of 31 March 2023)
Note: 1) Debt includes loans by banks and non-bank lenders directly to companies and including venture debt, growth debt, AR financing, and other forms of loans

european debt/vc funding ratio

Surge in take-private deals in the last 12 months

Large buy-out funds seizing the opportunity

While the market has seen a correction in valuations, the fundamentals for investing in technology remain strong and companies remain operationally solid and with a growing share.

Private equity has taken note, seizing the opportunity through increased take-private activity in the last 12 months versus the same period one year prior.

GLOBAL TAKE-PRIVATE ACTIVITY

Sources: GP Bullhound Insights and Capital IQ (as of 31 March 2023)

MAJOR TRANSACTIONS

GROWTH EQUITY

Acquirers and investors benefitting from attractive valuations and reduced competition

Slowed transaction activity unlocking opportunity

Despite tapering transaction activity, where Q4 2022 saw only 25% of the number of transactions compared to the same quarter in 2021, a "carpe diem" mentality is enabling former Titan contenders to acquire and invest at unprecedented valuations today, building strength through capability and scale for tomorrow.

Founders' and sponsors' continued demand for liquidity is underpinning the supply of assets coming to market, with 2023 YTD showing green shoots of renewed focus on M&A.

CUMULATIVE NUMBER OF TRANSACTIONS INVOLVING 2022’S TECH TITAN contenders OVER TIME

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases (as of 31 March 2023)
Note: Includes transactions where the 2022 Titan cohort has participated as either an acquirer or investors based on date of announcement; transaction value is based on public disclosure only; and 1) Two subsequent transactions in November 2022 and March 2023 respectively

Undeterred by choppy waters, a select group of particularly active former Titan contenders have participated in four transactions since January 2022, with collectively over $1bn in disclosed transaction value.

GROWTH EQUITY

Enterprise software on the rise

Dealmaking shift towards B2B software points to focus on sound business models

CUMULATIVE FUNDRAISING SPLIT BY SUB-SECTOR IN 2022 AND Q1 2023

GROWTH EQUITY

Sector insights

THE BREAKTHROUGH OF AI

The exponential growth of computer processing power and data points created have allowed us to automate tasks and decision-making processes that were unimaginable just five years ago.

Companies embracing the power of AI will have a competitive advantage. Funding to AI businesses has grown from 22% of total deal count in early 2021 to 27% in early 2023.

TECH TO SOLVE THE CLIMATE CRISIS

A growing population with increasing consumption habits has created an urgent environmental challenge; software is becoming a critical tool on our path towards a sustainable world.

Driven by consumer demand and regulatory pressure, companies are increasingly setting net zero targets and sustainability goals, which is laying the groundwork for new tech businesses.

SOFTWARE FOR HUMAN CAPITAL MANAGEMENT

One of the structural shifts from the pandemic we expect to remain is location flexibility for the workforce.

Four European Unicorns are helping businesses navigate all implications of having a distributed workforce across several geos.

The digitalisation of the workforce has unlocked the value of software for HR efficiency and benefits management; these fast-growing businesses are receiving a significant amount of funding.

AI and climate tech are the rising stars; HR software in the spotlight in post-pandemic reality

SECTOR INSIGHTS

CHAPTER 3.

Key technologies emerging

As the world continues to grapple with unprecedented challenges, the intersection of technology and sustainability is taking centre stage. Climate change has become one of the top priorities, leading to significant investments in innovative solutions.

At the same time, machine learning is transforming industries, unlocking new possibilities and attracting significant funding, and HR software is proving to be a mission-critical solution for businesses of all sizes, freeing up resources and driving strategic initiatives.

These three areas hold great promise and are poised for significant growth and development in the coming years, with technology and innovation playing a critical role in shaping the way we work and live.

Transformative technologies are taking centre stage

AI

The future of machine learning models and their novel applications is brighter than ever

With computer power and data volume growing exponentially, software can achieve unprecedented levels of automation

With significant dry powder, the weight of funding for AI businesses is at the centre of attention, especially later-stage

CLIMATE TECH

Climate tech is rapidly emerging as a critical area of focus as the world urgently tackles climate change

Investors are increasingly deploying more capital, seeking to support innovative technologies that can help address this pressing global challenge

Climate tech companies are embracing the growing relevance for later-stage investors, and we expect this trend to continue

HR SOFTWARE

HR software is stealing the spotlight as a mission-critical and cost-saving solution for enterprises of any size

Remote working is here to stay, and a new wave of software businesses are sorting out the complexities

This year, funding for mature companies backing this trend is record-high; 15% of all new unicorns are HR software businesses

Sources: GP Bullhound Insights and Pitchbook (as of 31 March)
Note: In this report, the term ‘climate tech’ is purposefully broad in order to incorporate the broad swathe of technologies and innovations being used to address GHG emissions and the broad array of industries in which they are being applied; and 1) Last 12 months from 31 March 2023

sector insights

Percentage of total VC deal count from AI companies

Climate tech VC funding growth
in Europe and Israel

Percentage of new Unicorns that are HR software companies¹

The breakthrough of AI

The power of our computer and our data accelerating exponentially

Turning from algorithm to palpable use case

Years of technological development, increasing data volume, and improving computing ability have paved the way for artificial intelligence to enter our day-to-day lives to improve our efficiency and further automate processes.

What AI entails

Sources: GP Bullhound Insights, Statista, and TOP500 Supercomputer Database

SECTOR INSIGHTS: ai

We define AI/ML companies as those developing technologies that enable computers to autonomously learn, deduce, and act, through the utilisation of large data sets. The tech enables the development of systems that collect and store massive amounts of data and analyse that content to make decisions based on probability and statistical analyses.

Despite deal count decrease, VC investors have greater interest in AI and ML

AI startups enjoying the hype, investors remain bullish

One out of four Unicorns in the past year were MLOps or AI-enabled startups

The breakthrough of OpenAI’s ChatGPT has led to increased investor attention on AI and ML startups. Although the deal count has slowed, deal dynamics have adapted to the AI hype with late-stage VC funding remaining at its 2021 level. As a result, AI and ML startups continue to attract significant investment interest despite some market adjustments.

The sectors we expect to first reap the benefits of the AI boom are those that belong to the mission-critical infrastructure layer of AI and ML development: semiconductors, data warehouses, cloud storage and computing, and DataOps. We note the recent positive development of infrastructure players such as Microsoft (cloud service provider) and Nvidia (leading high-performance chipmaker) with the rise of generative AI.

Following mission-critical infrastructure, we look for more consumer-facing sectors, such as healthcare, finance, online customer service, and media & entertainment, to follow suit in reaping the benefits of the AI boom.

Sources: GP Bullhound Insights and Pitchbook (as of 31 March 2023)

AI/ML-ENABLED BUSINESSES RAISING MEGA-ROUNDS (>$50M) SINCE JAN-22

total number of AI startups and scale-ups in Europe and Israel up 2x in just three years

SECTOR INSIGHTS: AI

AI a structural transformation, but caution warranted

Big Tech riding the trend

AI shows significant potential, but the hype is high and expectations may be inflated.

For AI to continue to evolve and mature, it will be important to manage expectations and focus on the fundamental value added of businesses enabled by the technology.

Sources: GP Bullhound Insights, OpenAI, Microsoft, Stability AI, Meta, Google, The New York Times (as of 31 March 2023)
Note: 1) Dataiku survey, May 2023, of over 700 senior decision makers of companies in the UK, France, the Netherlands, Germany, and the United Arab Emirates actively using data science platforms and AI models across the enterprise

PROPRIETARY DATA SETS
Companies using the same data sets in AI will end up building the same capabilities, consequently competing away the excess earnings. Proprietary data sets instead prevent competition.

Don't get trapped in the hype; identify businesses in AI with long-term defensible models and products

“BORING” USE CASES
The enticing use cases shown in media and chased by investors are rarely where the future business winners lie. Instead, it is often the “boring” workflows that are prone to disruption.

PROVE VALUE FOR CUSTOMERS
We invest in companies that have shown they can provide real value for their customers by increasing their productivity, improving their capabilities, or reducing their costs.

June 2020: OpenAI launches GPT-3 which delivers AI search, conversation, and text competition

Text

June 2021: Microsoft’s GitHub together with OpenAI launches Copilot that generates software code

Code

September 2022: Meta presents Make-A-Video that can generate video from text descriptions

Video

September 2022: Google presents DreamFusion that can generate 3D models from text descriptions

3D

January 2023: Microsoft announced it is working on VALL-E, a text-to-speech AI tool capable of life-like intonations

Audio

March 2023: Apple acquired WaveOne, an AI-powered Image compression technology developer to enhance their photo capabilities

Images

SECTOR INSIGHTS: AI

SECTOR INSIGHTS: ai

79%

Are leveraging AI to its full capacity

DATAIKU SURVEY OF 700+ EMEA SENIOR COMPANY DECISION-MAKERS
ACTIVELY USING DATA SCIENCE PLATFORMS AND AI MODELS ACROSS THE ENTERPRISE¹

80%

Can measure the ROI of their AI investments

84%

Use low- and no-code platforms to achieve AI goals

Top three business goals
to achieve with AI over next five years

Innovation

59%

49%

Cost reduction

48%

Increased revenue

Dataiku was conceived from the realisation that there were significant communication gaps between data experts, such as data scientists, and domain experts, like marketing analysts or supply chain managers. This divide often hindered the effective implementation of analytics and AI projects in businesses. Dataiku’s journey began in 2013 in France, where we tapped into the wealth of great engineering talent to establish our foundation. At the time, we saw that, while there were abundant opportunities in the data science landscape, there simply weren't enough human resources with the required skill sets to tackle these challenges. This insight inspired us to develop a platform that would bridge the gap between different stakeholders and empower them to work together effectively, leveraging their combined expertise to drive better decision-making and create value for their organisations.

The AI/ML market is rapidly democratising. It will soon be integrated into nearly every interaction we have. I refer to this state as "Everyday AI" akin to the French concept of "Pain Quotidien," which refers to the daily baguette that is enjoyed by many. The idea is that AI will soon be as pervasive and ubiquitous as the daily loaf of bread around the world. Companies are progressing in their AI journey from statistical analysis to predictive modelling and advanced AI capabilities. We aim to accelerate their journey by providing the necessary tools and support to navigate the evolving landscape of AI/ML technologies.

Amid the macro turbulence that many businesses have faced in EMEA and beyond, we’ve observed a significant acceleration in demand for analytics and AI solutions as companies seek more efficient and data-driven ways to navigate the challenges. Recognising this trend, we’ve undertaken several initiatives to better support our clients during uncertain times. Firstly, we’ve increased our investment in research and development to continuously improve our platform, ensuring that it remains at the forefront of innovation in the analytics and AI space, developed in line with EU laws on data protection and privacy. Secondly, we’ve expanded our educational and training resources to help clients upskill their teams to integrate analytics and AI into their business processes more effectively. Ultimately, we believe that analytics and AI are vital for unlocking additional efficiency, particularly in the face of macroeconomic challenges.

HOW DID YOU START DATAIKU AND WHAT INSPIRED YOU?

WHAT CHANGES/INITIATIVES DID YOU IMPLEMENT OVER THE LAST 12-18 MONTHS TO HELP NAVIGATE THE MACRO TURBULENCE?

Expert view

CO-FOUNDER & CEO | DATAIKU

HOW DO YOU SEE THE MARKET FOR AI/ML EVOLVING?

Our success stems from understanding the growing need for faster time-to-value from AI initiatives, while supporting the extraordinary people driving this work. Instant gratification is the norm in today's fast-paced world, and we believe that success with AI requires not only efficient tools but also a skilled team and an inclusive approach to data. With this in mind, we've introduced new capabilities, like ready-built business solutions, machine learning operations, governance, and access to large language model, that accelerate the time to data, upskill teams, and promote collaboration between stakeholders. Our platform unlocks the full potential of data-driven solutions for organisations of all sizes and industries, helping customers find value in our platform in the time it takes to stream an episode from a TV series. Despite the rapidly evolving market demands and complexity of the landscape over the past 12-18 months, we've remained committed to ensuring that our platform remains relevant and useful for our clients.

WHAT WAS THE KEY TO BEING SUCCESSFUL? AND WHAT WAS THE MOST DIFFICULT ASPECT OF THE LAST 12-18 MONTHS?

FLORIAN DOUETTEAU

WHAT KEY COMPONENTS FOR SUCCESS ARE YOU FOCUSING ON NOW TO TAKE YOU THROUGH THE NEXT 12-18 MONTHS?

Over the next months, we're focused on several key components to propel our growth and better serve clients. Firstly, we're addressing the adoption of cloud-based solutions for analytics by ensuring Dataiku strengthens our existing integrations with major players like Microsoft, Google, Amazon, Databricks, and Snowflake. Secondly, we recognise that enterprises need a business layer on top of their new data infrastructure to fully leverage the benefits of these technologies. Our platform already provides an easy-to-use layer, and we're investing in marketing and outreach to raise awareness of its compatibility with leading cloud-based analytics solutions. By focusing on these components, we aim to position Dataiku as the go-to platform for organisations looking to drive innovation and stay ahead of the competition.

WHAT IS NEXT FOR DATAIKU? WHERE DO YOU WANT TO TAKE THE BUSINESS?

Our long-term vision for Dataiku involves capitalising on the rapid advancements in AI, such as large language models and Generative AI, and integrating these technologies into our platform as they evolve. As AI continues to mature as a technology, we understand the importance of striking the right balance between democratisation and control to achieve success within the enterprise environment. AI is meant for all, but in a governed way. To accomplish this, we recognise the need for an independent, business-focused platform that can serve as a workbench for users to interact with the diverse array of data and technologies associated with AI. Our goal is to position Dataiku as that platform. As we look to the future, we aim to establish Dataiku as the go-to solution for organisations seeking to harness the power of AI in a controlled, collaborative, and accessible manner.

“Instant gratification is the norm in today's world, and we believe that success with AI requires not only efficient tools but also a skilled team and an inclusive approach to data.”

“Amid the macro turbulence, we’ve observed a significant acceleration in demand for analytics and AI solutions as companies seek more efficient and data-driven ways to navigate the challenges.”

EXPERT VIEW: DATAIKU

Artificial intelligence and machine-learning platform

World population per year

Climate tech: The path for sustainability

Tackling urgent challenges

Our current systems and loop of consumption, with the exponential growth in the global population over the last decades, now over 8 billion, have created urgent sustainability challenges.

Stakeholders at the forefront

Sources: GP Bullhound Insights, Our World in Data, and Clim8
Note: In this report, the term ‘climate tech’ is purposefully broad in order to incorporate the broad swathe of technologies and innovations being used to address GHG emissions and the broad array of industries in which they are being applied.

SECTOR INSIGHTS: CLIMATE TECH

CO2 emissions per year

The European Commission is adopting the new Corporate Sustainability Reporting Directive (CSRD), which will impact 50,000 EU companies

c.20% of FoRtune 500 companies

93 Fortune 500 companies have committed to net zero targets, expanding the market opportunities in climate tech

73% of global consumers

According to Nielsen, 73% of global consumers would change their consumption habits to reduce their environmental impact

legislators

50,000 eu companies

Institutions and capital

c.$32bn in 2022

The World Bank Group delivered a record $31.7bn in 2022 to help countries address climate change, a 19% increase from the previous year

former European Titan contenders taking action

Carbon positive by 2030
Growing circular economy

Net zero by 2030

Compensating all carbon emissions

Net zero by 2025

Climate tech coming to the rescue of our planet

Beyond infrastructure, software can help achieve sustainability goals

Beyond the trend towards green energy consumption, the exponential digitalisation of our business activities and of the data linked to it position software at a point where its influence and impact on society are becoming increasingly noticeable – and we expect several Titans to emerge in this space.

As Europe shepherds environmental policies, some companies emerge as leaders, with French ESG data intelligence platform, Deepki, and Norwegian first fully-digital energy company, Tibber, as the front-runners in our Contenders list. Norway’s almost entirely renewables-based electricity system (99%) enables and supports the creation of next-generation tech driving sustainability, and, in 2022, France ranked fourth worldwide on the Global Sustainability Index and, with rising energy prices on the continent, interest in green startups surges every year.

Investors are not sitting on the sidelines. While overall funding volumes have decreased since the bull market’s peak, funding for climate tech has not slowed. This increased investor focus should boost R&D and accelerate our path to net zero.

Sources: GP Bullhound Insights, McKinsey, and Pitchbook (as of 31 March 2023)
Note: Last twelve month (LTM) from 12 May 2023 in Europe and Israel, and in this report, the term ‘climate tech’ is purposefully broad in order to incorporate the broad swathe of technologies and innovations being used to address GHG emissions and the broad array of industries in which they are being applied.

European Climate Tech VC funding has maintained 2021 bull-market levels

SECTOR INSIGHTS: CLIMATE TECH

Recently launched climate and sustainability equity funds

Annual climate tech investment by 2025

Funding per annum needed to hit net zero by 2050

Global primary energy coming from fossil fuel

$2.0tn

$4.0tn

>60%

EXPERT VIEW: ecovadis

When co-CEO Pierre-Francois Thaler and I founded EcoVadis in 2007, globalisation of supply chains was bringing economic growth, but multinationals were starting to acknowledge the sustainability impacts – including environmental, labour, human rights, and ethical risks and opportunities – of their value chain partners worldwide. Stakeholders such as customers, consumers, employees and governments were demanding more accountability. But this presented major challenges: many procurement officers saw the immense potential of their purchases as a lever for driving positive change. However, most procurement teams did not have visibility into their ESG risks, nor globally consistent indicators or internal expertise to measure ESG practices of suppliers. We were able to work closely with some visionary CPOs and supply chain managers, to help create the EcoVadis methodology¹, rating, and platform for collaborative and mutual transparency and improvement.

One key evolution we see is from breadth of visibility and estimations to depth of engagement to guide ESG action. At one end of the scale, you have supply chain due diligence regulations, with specific requirements to manage risks of specific things like human rights and modern slavery. Another example would be predictive models for estimating emissions at a high level based on commodities and activities. But in order to take the next steps beyond mitigating risks, to make positive impacts such as providing living wages, or actually reducing emissions, you have to get in and engage and go deep. You must have reliable indicators of performance based on primary data from multiple sources. You must get your trading partners to collaborate on a continuous improvement journey, building capacity to improve practices, and measure their GHG emissions, and so forth. Scaling this level of engagement is the tough challenge that we are tackling.

Our growth has continued throughout this period. A year ago, we raised $500m in Series C funding to secure our growth plans to continue our geographic expansion, broaden and deepen our solution portfolio, and accelerate our technology development – for example in artificial intelligence and machine learning.
Shortly after, we completed our first acquisition (Ecotrek, a German startup doing ‘sustainability datamining’), which enabled a huge leap forward for our tech development and grew the team to augment our capabilities.
We became a purpose-led company. This effort has crystalised our vision and purpose for all stakeholders – including employees, customers, investors, as well as our advisors such as our Scientific Advisory Board, our partners and the ecosystem.

How did you start Ecovadis and what inspired you?

What initiatives did you implement over the last 12-18 months to help navigate the macro turbulence?

Expert view

CO-FOUNDER & co-CEO | ecovadis

How do you see the market for sustainability ratings, intelligence, and services evolving?

Agility to adapt to market conditions: Supply chain due diligence regulations have been expanding quickly; we adapted our solution to cover these, from risk visibility tools to rating adjustments to reporting dashboards.
Leveraging our unique data to power digital/technology scale-up: AI is only as good as the data it can be trained on. Having the largest database of high-quality, validated ratings and scorecards positions us strongly. Within months of our first acquisition, we integrated Ecotrek tech and launched our IQ-Plus product. This brings contactless ESG risk visibility with the industry’s first automated DocScan feature that automatically scans and delivers public supplier ESG documentation, plus Live News Monitoring – an AI-curated feed of significant risk events – all of which scales across the global value chains.
Listening to customers: Our customer committee and advisory groups enabled us to conceive and build our decarbonisation solution called Carbon Action Module, along with our Academy E-learning platform, which are tightly aligned to customer needs, and driving rapid adoption. Now in its second year, we are already tracking improvements and a sharp increase in decarbonisation maturity and engagement.

What was the key to being successful in the last 12-18 months?

Frédéric Trinel

What key components for success are you focusing on to take you through the next 12-18 months?

Scaling our network reach, which means expanding industry sector initiatives, geographic growth and our data intelligence reach. We now have 10 industry collaborations, with more in the pipeline and our data intelligence reach now includes predictive profiles of over 1.2 million suppliers through our IQ-Plus product.
Scaling the depth of capacity for supporting supplier improvement. For example, technology and content (built or acquired) that is improving the experience, automation, onboarding, rating, and improvement of companies. For example, our EcoVadis Academy now has over 40 courses in nine languages.

What is next for Ecovadis? Where do you want to take the business?

Our long-term vision is embodied in our Company Purpose to 'Guide all companies to a more sustainable world', and it's put into action through our Model for Impact. This Model leverages the immense power of global B2B commerce to cascade continuous sustainability improvement across value chains, from buyers/investors purchasing policies and decisions, to their suppliers/portcos benchmarking and improving practices, to create positive impacts on planet and society. Driving this positive impact means moving on two axes at once: network scale and improvement scale. We have risk-profiled more than 1.2 million companies, and our ratings cover 2.5 trillion in procurement spend – but we’re just scratching the surface. There remains 15 to 20 trillion in value chain commerce with millions of companies that we want to reach, to help them become more sustainable. By scaling up our model, we want to give every business the tools and guidance to be net-positive, and even regenerative, for their communities and the planet we all depend on.

"To secure success, we have ensured our agility to adapt to market conditions, leveraged our unique data to power digital / technology scale-up, and listened to our customer needs to build new solutions"

"For the next year and a half, we will continue to focus on scaling our network reach as well as the depth of capacity for supporting supplier improvement."

Provider of business sustainability ratings

1) For EcoVadis Methodology visit resources.ecovadis.com

When we started EcoVadis 15 years ago, we had a huge challenge to start a ‘network’ from scratch: sustainability was not a mainstream topic for corporates, and there was no standard on how to measure – or share – sustainability. It took persistence and passion to convince some pioneer customers to believe in the vision. Once we bootstrapped our first customers and rating of a few suppliers, those customers – who have supply chains with thousands of suppliers – wanted to scale up. So we had to scale up those ratings while maintaining quality, which initially relied on people analysis in many languages. Today, we address much of that scaling challenge with tech like AI, machine learning and automation to accelerate our analysts' work. Lastly, it has been a huge challenge to scale up our team while maintaining our unique culture and values. This has taken a combination of uncompromising standards for recruitment and development of our people – including actively seeking and cultivating diversity across all dimensions, and nurturing deep values that recognise the influence and power business has to drive meaningful change.

What were some of the key challenges along the way? How did you overcome these?

Employees expect a smooth-running digital experience

HR software for the new reality

Initially boosted by pandemic-driven digitalisation, increasingly more businesses are realising the benefits of digitalising their human capital management and embracing software tools for the automation of most tasks.

Software is becoming a mission-critical enabler for what employees covet most, the perks and benefits, and these tools will likely be commoditised over time as employers compete for talent.

We expect the adoption of HR software to continue, with the global market set to reach $24bn by 2024 at a 12% CAGR.

Global talent management software market size

Sources: GP Bullhound Insights, Reportlinker - Talent Management Market Research Report, Accenture Future of Work Research, Work Institute 2022 Retention Report, Google Trends
Note: Numbers represent search interest relative to the highest point on the chart for the given region and time; Gallup survey, Feb-22 (N=13,085)

SECTOR INSIGHTS: HR SOFTWARE

Massive shift towards remote work since pandemic

GROWTH IN Vacancy postings offering hybrid or fully remote work

The pandemic led to a significant step change towards remote working. Now the new normal, software is helping to manage a distributed workforce. For many organisations and employees, remote working has been an effective solution with several benefits such as access to a global workforce, increased productivity, and location flexibility.

However, Human Capital Management (HCM) software was traditionally tailored to enterprises with large and complex workforces, requiring entire technical teams to operate that software. The cost of licensing necessary software was too high for European SMEs, until players like German Personio, Coachhub and Omnipresent offered user-friendly and affordable tools to support the ecosystem. In 2021, Germany-headquartered HR firms received 26% of all investment in European HR tech.

Sources: GP Bullhound Insights, National Bureau of Economic Research – Remote work across jobs, companies, and space, and Unleash.ai

SECTOR INSIGHTS: HR SOFTWARE

New generation OF software companies to manage hurdles of distributed workforce

My co-founders and I had a shared interest in building a company that had a positive impact on a really big problem, and that people enjoyed working in. The genesis of the idea for Personio actually came from talking with a CTO friend about how his company struggled with HR processes, because the only software available was designed for enterprises. We pooled our savings and set to creating a solution built specifically for SMEs, quickly signing our first customers.

Talk to any leader in business and they’ll tell you that talent is a key concern. Be that finding the right people, or developing employees to ensure they deliver impact. HR plays a critical role in both of these tasks, but historically they have had to focus on admin rather than creating time for what really matters – people. Personio exists to democratise HR software for Europe’s SMEs. We’re helping more and more HR teams with the day-to-day, so they can focus on really delivering impact for their organisations. The market is rapidly growing as teams reject manual processes, and realise the benefits of digitising their approach to HR.

Looking back there are a few moments that really stand out in terms of challenges. From a business perspective, at one point before our first funding round where we only had a couple of hundred euros left in our bank account. Or when – like now – we are preparing for big new product developments that require huge team efforts. But the most consistent challenge is change. We’re a fast-growing company, which means we have to keep redefining our roles all the time. It's not something you can prepare for, so you must adapt your mindset and embrace it. If change is a constant, then you must always be ready to learn and challenge yourself.

HOW DID YOU START PERSONIO AND WHAT INSPIRED YOU?

HOW DO YOU SEE THE MARKET FOR HR SOFTWARE EVOLVING?

Expert view

CO-FOUNDER & CEO | PERSONIO

WHAT WERE THE MOST CHALLENGING PERIODS ALONG THE WAY? HOW DID YOU OVERCOME THEM?

Macro turbulence affects all businesses and actually means that the type of efficiency that we provide becomes even more important. As such we have placed an even greater emphasis on our product, making sure it is increasingly relevant to our customers and is clearly solving their problems in these uneasy times. Because of this we actually saw very low levels of churn as a sticky product became even more vital.

WHAT CHANGES/INITIATIVES DID YOU IMPLEMENT OVER THE LAST 12-18 MONTHS TO HELP NAVIGATE THE MACRO TURBULENCE?

EXPERT VIEW: personio

HANNO RENNER

WHAT WAS THE KEY TO BEING SUCCESSFUL IN THE LAST 12-18 MONTHS?

Staying close to our customers and ensuring that we put them at the forefront of everything that we do was the single most important contributor to our success. We’ve pushed our product and customer service teams to ensure that we’re building and delivering the best functionality and experience to win time for our customers. This time is incredibly valuable to give HR teams the space to drive strategic projects that deliver tangible business impact for their organisations.

WHAT KEY COMPONENTS FOR SUCCESS ARE YOU FOCUSING ON NOW TO TAKE YOU THROUGH THE NEXT 12-18 MONTHS?

I’d break this down into two areas. The first is talent: we have built a great team at Personio, but we are a rapidly-growing organisation that is always looking for the right people to help us succeed. The second is product. We are always thinking about new areas where we can help our customers to succeed. These can be small updates that serve a specific market, or major additions to our service that can really transform how HR teams across Europe work.

WHAT IS NEXT FOR PERSONIO? WHERE DO YOU WANT TO TAKE THE BUSINESS?

However we grow, we never want to lose sight of our values and our customer focus. That’s what will make the difference and ensure that we’re a true partner – and first choice – for Europe’s SMEs.

“We’re a fast-growing company, which means we have to keep redefining our roles. It's not something you can prepare for, so you must adapt and embrace it.”

“To navigate turbulent times, we’ve placed an even greater emphasis on our product, ensuring it’s increasingly relevant to our customers and solving their problems.”

HR software for small and mid-sized businesses

Europe’s next generation

STARTUPS NEARING UNICORN STATUS

90% OF OUR 2021 TOP 10 REACHED $1BN

We have analysed the performance and development of thousands of European tech startups since 2015 for our top 50 list of Contenders with the most potential to reach $1bn in the next two years .

We show those demonstrating the greatest ambition and taking the largest risks, and look at the sectors and countries most likely to deliver the next European leaders.

Many of our top Contenders in 2021 are Unicorns today or are on the path to reaching the billion-dollar mark.

Leading the cohort are notable Fintech company Qonto at $5bn, Gaming company Sorare at $4.3bn, Enterprise SaaS company Contentful at $3bn, and Marketplaces standout ManoMano at $2.6bn.

where to look AND what to watch

The next billion-dollar companies will likely continue to grow from a diverse spread of geographies and sectors.

We expect Enterprise SaaS, Fintech and Big Data/AI to lead the charge.

France and the UK are hotspots where we look for future Unicorns to find their feet, based on our top Contenders, but we are keeping an eye on DACH region and the Nordics as they ramp up their Unicorn production.

CHAPTER 4.

Our billion-dollar companies

OUR FORMULA FOR TOP 50 CONTENDERS

CRITERIA

Tech companies only, with a bias towards internet/software (Cleantech and Biotech excluded)
Headquartered in Europe and Israel
Founded in 2000 or later
Raised $20m or EV of $400m+ from 2017 onwards
Exceptions made for fast-growing companies

DATA-DRIVEN

Scale (1/3): Capital raised over the last four years and headcount as of end of March 2023
Velocity (1/3): Headcount growth from March 2020 to March 2023
Sentiment (1/3): Crowdsourced from the European VC community and GP Bullhound

How did we do?

90% of the companies we ranked as the most likely to become Unicorns reached over a billion-dollar valuation in the past two years.

The 2021 top 10 contenders

Sources: GP Bullhound Insights, Capital IQ, Mergermarket, Pitchbook, Crunchbase, and press releases (as of 31 March 2023)

EUROPE'S NEXT GENERATION

Europe’s most promising startups

THE 2023 TOP 50 CONTENDERS

The 2023 top 50 contenders

We analysed more than 100 European startups for scale, velocity and sentiment, and surveyed our GP Bullhound network of more than 120 VC and growth investors.

Based on the results, we have ranked the top 50 companies with the most potential to become billion-dollar companies in the next two years.

Sources: GP Bullhound Insights, company data, Capital IQ, Mergermarket, press articles and LinkedIn (as of 31 March 2023)

EUROPE'S NEXT GENERATION

The next European billion-dollar company

From our top 50 contenders, we have chosen the top 10 that we believe have the potential to become billion-dollar companies in the next two years.

For each metric, scores for all companies are rebased as a percentage of the leading company at that metric (100%).

The top 10

Sources: GP Bullhound Insights, company data, Capital IQ, Mergermarket, press articles and LinkedIn (as of 31 March 2023)

EUROPE'S NEXT GENERATION

Top 10 Contenders

THE 2023 TOP 50 CONTENDERS

The next European billion-dollar company

By geography and sector

Sources: GP Bullhound Insights, company data, Capital IQ, Mergermarket, press articles and LinkedIn (as of 31 March 2023)

Looking at the top 50 Contenders by geography and sector, France and the UK, and
Enterprise SaaS, Fintech, and Big Data/AI, respectively, are most likely to produce the next billion-dollar companies.

EUROPE'S NEXT GENERATION

Expert view

2023 Contenders

DANIELA BRAGA, PhD, FOUNDER & CEO

Defined.ai is the largest marketplace of training data for AI, ethically sourced, in the world. We were ahead of GDPR when we started the company seven years ago, building a crowdsourcing platform that has always operated based on consent and paid contributions of people around the world while it was ensuring the right demographic representation of the data in gender, race, and dialect. We saw a significant problem in the lack of diversity and quality control in data annotation, which led to biased and unreliable AI models that perpetuated inequalities and discrimination.

We started Defined.ai to bridge the gap between businesses' growing data needs, always with a focus on quality, transparency, and diversity. As the vision evolved, we sought to create a platform for AI enthusiasts, providing data for AI builders and models for AI users. Our platform exclusively utilises transparent and ethically sourced data, contrasting with the prevalent trends of data scraping and the appropriation of user data without proper disclosure. Our goal is to establish a trusted, responsible, and transparent AI ecosystem.

As for the models, we launched our conversational AI initiative, powered by the Government of Portugal, to create virtual assistants for digitally low-resourced markets. Our vision is to create a world where AI works for everyone, not just a few privileged groups, where human expertise and diversity are valued and integrated into every step of the AI development process and where we can “explain” the models produced based on the quality of the data that has been used to train them.

GUENTHER EISINGER, CO-FOUNDER & CO-CEO

At Omnipresent, we’re on a mission to help our clients to build the best teams on earth. The adoption of remote work is changing the way that companies build their teams, with many more companies wanting to be much more global than they have traditionally. However, running a global team in-house can quickly become a bureaucratic mess. Each country (or even state/region/province) has its own rules, regulations, taxes, and registration requirements. This is particularly challenging for small and medium-sized businesses that don't have an army of lawyers and finance experts on hand.

We believe that every business should be able to operate globally with ease. By leveraging cutting-edge technology, and deep human expertise, we enable businesses to hire anywhere in the world.

To take advantage of international talent, companies must address complex risks, employee misclassification, tax compliance, permanent establishment risk, and local legal requirements. Omnipresent’s approach has been designed with a compliance-first mindset. We build compliance into everything we do, enabling clients to focus on hiring the best talent while we address the complexity.

OMRI GELLER & RONEN DAR, CEO & CTO, co-FOUNDERS

ROB CASSEDY, CEO

Wallapop was founded to empower a more conscious and humane way of consumption. We create value for people and the planet by extending the useful life of products – inspiring people to participate in the circular economy and reducing the barriers to do so. Thanks to our platform, millions of people have been able to buy and sell objects they no longer use in an easy and convenient way, both in their own neighborhood, through our geolocation technology, and further away, thanks to the logistic options available via Wallapop Envíos (Wallapop’s intermediated e-commerce service).

Looking forward, we will continue to leverage new channels and technologies to create a more inspiring brand and experience and to reduce friction across the trading journey. Additionally, we are scaling our impact by extending our ecosystem to new markets – over the past two years we have entered Italy and Portugal while increasing our presence in Spain, creating the largest network of used consumer goods across these markets.

We believe that the challenging macroeconomic environment and increasing societal concerns about climate change make Wallapop more relevant than ever and are determined to empower southern Europeans to consider reusing in every shopping decision, making second-hand their first purchase choice.

We met at Tel Aviv University while working on our Master’s and PhD Degrees, respectively, and our work brought about an obvious trend in the industry: An insatiable and repetitive need for enough compute power to accelerate machine learning and deep learning, which often overtook available infrastructure. Together we decided to find a solution and started Run:ai with a mission to significantly impact the AI revolution, pioneering positive change across industries for humanity.

Run:ai is the only AI/ML computing platform that is truly open and optimised for GPUs. The platform is purpose-built for IT and Ops teams to deliver an enterprise-class centralised AI stack across clouds and on-premise. By pooling and sharing resources it delivers unmatched infrastructure efficiency, enabling customers to fully exploit their AI/ML investment, and complete the journey from build to train to inference. The deep technology of the company combines a smart scheduler with lightweight GPU virtualisation.

Run:ai's vision is to become the foundational layer for running any type of AI workload on any type of AI Hardware across any location – from the data centre to cloud to edge.

expert view: contenders

EXPERT VIEW: CONTENDERS

Sources: GP Bullhound Insights; Bridge, “Russian aggression in Ukraine: How do Ukrainian startups survive”; Dealroom (November 2022); LVIV IT Cluster; and press releases.
Note: 1) Defined as the aggregate enterprise value of companies based in or founded in Ukraine

Thriving in adversity

Ukrainian tech ecosystem remains resilient

The Ukrainian technology landscape has long played a key role in IT export, providing pioneering tech solutions globally. Inherently digital, with over 280,000 software developers and hybrid working in place from the onset of the pandemic, the ecosystem continues to develop despite the ongoing war. Home to six Unicorns and an ecosystem valued at c.$26bn in 2022, the country’s IT export grew 5%+ in 2022.

Ukrainian tech ecosystem growth ¹

Ukraine

Ukrainian global category winners

$7.35bn

Generated by Ukrainian tech companies from foreign clients in 2022

>5%

IT export growth in 2022

Tech startups still operational

88%

65%

Startups did not lay off employees despite the war

77%

Ukrainian tech companies operating with global clients

"Just a month after the invasion later, tech company productivity was at relatively normal levels. Unlike other industries, technology jobs are flexible and can be done fully remote. Luckily, the companies in our portfolio reacted quickly, surfed the storm, and continue to grow globally. The ecosystem is still lacking fresh funding as international investors remain cautious. We hope that operational strength brings back the global appetite for Ukrainian technology."

Vitaly Laptenok,
Co-founder

"During the first months of the war, our priority was ensuring the safety of our employees. We helped relocate over 300 people (including families) from the more conflictive areas into Kyiv and aided them with accommodation and financial support. We also opened an office in Warsaw for those looking to work from abroad. Since the pandemic, our team and infrastructure were ready to operate remotely, but we were forced to change the strategic mindset: From growth to survival, focusing on primary business targets and mature, consolidated sources of revenue. As we adapted to the new normality, anything non-essential was put on hold. To safeguard the continuity of the business, we also ensured that crucial teams had a strong weight abroad. The team’s resilience has been remarkable. We saw no resignations due to the invasion and the size of our team has doubled. More than half of our employees are working from Kyiv and coming into the office voluntarily. Tech is a key industry for Ukraine, backed by pioneering universities and governmental support and investments in innovation. The greatest minds in the country work in technology, and we have globally leading tech companies based in Ukraine still operating."

"When Russia invaded Ukraine, just under a third of the team was in Kyiv – c.150 people. Our priority was ensuring that every employee had everything they needed, from transportation means to accommodation in the west of Ukraine or outside the country. We provided financial aid as well as mental health support. Many of our employees relocated to Barcelona, where we have a main office, or elsewhere outside of Ukraine. Just as Ukraine itself has been extraordinarily resilient, so has Preply. Most of our customers and the fabric of our business are outside of Ukraine, so we managed to minimise the impact on our operations. We even raised a $50m round in July 2022 and continued to scale revenues and our user base quickly. Ukraine’s tech sector plays a vital role in sustaining the economy. I’m incredibly proud to see how the country's tech community has responded to the war. Just as I appreciated the incredible support from employees outside of Ukraine who did everything they could for their colleagues in Kyiv, I thank every investor who continues to be active in the region from outside. Ukrainians have shown the world their extraordinary determination and resilience, a reassuring sign of their incredible capability and commitment to future success."

Anton Pavlovsky, Founder & CEO
Alexander Vorona, COO

Kirill Bigai,

Co-Founder and CEO

Methodology

We have crunched the data on European billion-dollar technology companies founded since 2000, analysing what it takes to create outstanding success.

OUR METHODOLOGY AND SOURCES

Note: 1) Including Israel, and companies founded in Europe and later relocated to different geographies

Tech companies only, with a bias towards Internet/Software (Cleantech and Biotech excluded)
Companies falling into the following macro-sectors: E-commerce (e.g. sale of goods or services), Audience (e.g. monetisation through ads and lead gen), Software (e.g. license of software), Gaming (including gambling), Fintech, Marketplaces, and Augmented Reality/Virtual Reality (AR/VR)
Headquartered in Europe
Founded in 2000 or later
With an equity valuation of $1bn+ in the public or private markets (including acquired companies)

we have included:

Our sources only include public data (e.g. data platforms such as Capital IQ, Pitchbook, press articles, etc.), and the accuracy of our dataset is limited to the disclosed data.

first caveat:

second caveat:

For this year’s report, companies are tracked for inclusion as billion-dollar companies until 31 March 2023 with valuations updated as of that date, unless otherwise stated, which has limitations related to, for example, the state of equity markets, recent company performance, etc.

About GP Bullhound

GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world's entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 14 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.

GP Bullhound partners with entrepreneurs throughout their founding journey, supporting them with advisory, capital, insights and access to our global network.

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