A new report has shed light on the impact that European and Israeli unicorns have had on the broader tech ecosystem since the world economic crisis 14 years ago.
The report, titled “Europe and the factories of Israeli start-up founders”, was produced by Venture capital firm Accel with strong support from the inception and data platform of VC Dealroom. He reveals that of the 344 VC-backed unicorns since 2008, nearly two-thirds (203) have led to at least one startup being founded by former employees, with 1,018 tech startups springing up in total.
Founded In 2005, French ad-tech giant Criteo leads the pack with its alumni creating 29 so-called “second generation” start-ups. They are followed by Spotify (27), Delivery Hero (27), N26 (24), Klarna (23), Revolut (23), Skype (21), BlaBlaCar (21), Zalando (20) and Wise (19).
Number of “second generation startups” generated from European and Israeli unicorns Image Credits: Negotiation Room / Accel
While many of the names like Spotify or Skype are long-established founding factories, what is perhaps most notable is that some of the more recent entrants to the unicorn brigade, like Glovo Y wefoxthey are already spawning plenty of new start-ups.
In fact, a number of the unicorns covered in the report have only achieved unicorn status since 2019.
Unicorn Founder Factories: Cohort Distribution Image Credits: Negotiation Room / Accel
Experience
This latest report comes as companies of all the industrial spectrum to have faced an icy reckoning with reality this year due to the global economic recession: ratings in quite all stages are down.
However, with the sheer number of tech workers laying off this year, from the big tech giants as goal Y Twittera growth stage startups In almost each vertical, this could create a fertile landscape for a swath of new start-ups to emerge. And that, perhaps, is why Accel is producing this report now: it wants to show that something good can come from hard times.
In fact, the time scale of this report is particularly remarkable, as its data begins at the time of the last major financial crisis, a time that also marked a major transformation in the technology industry, with the newly emerging smartphones in the mainstream arena. In the intervening years, countless technology companies have sprung up, some catapulting to world dominationsome fading into oblivion and some falling somewhere in between. But regardless of how events unfolded, it all served to produce a host of people with experience building and scaling complex tech-infused startups. even failure not necessarily a bad thing.
“While the founders and their teams are navigating a difficult macroeconomic environment, it is also true that the community is in a much stronger position than it was during the financial crisis of 2008/9,” Harry Nelis, a partner at Accel, said in a statement. release. “There are now a host of strong founders and operators building innovative companies who have experienced the start-up journey before and have the know-how to create global success stories.”
It seems that this trend is not lost on the unicorns themselves. Just last week, the Spanish shipping company Glovo, which was acquired by Delivery Hero in January and what fired several employees this year, he announced a new program called Glovo Housespecifically designed to support Glovo founding alumni through mentoring, networking and money-raising support.
Methodology
For the purposes of the Accel and Dealroom report, the term “unicorn” describes any venture capital-backed company that achieved a valuation of $1 billion or more while privately held, although it excludes pharmaceutical or biotech companies. And “startup” refers to any technology company that was founded by someone previously employed by a unicorn full-time for at least five months, and who started their new venture within six years of the unicorn’s departure.
Digging into the data reveals some potential flaws, to the extent that less than half (44%) of second-generation startups have confirmed raising more than $1 million in funding. While VC funding isn’t the only benchmark for what constitutes a successful startup launch, it’s certainly a strong indicator; therefore, it is difficult to know how many of the startups gained significant traction.
In fact, when pressed on the data, Accel said that only 48% of startups had disclosed raising $100,000 or more. However, he cautioned against this by noting that 54% of startups had only been founded since 2020, meaning many of them are still at a very early stage and have yet to raise any external funding or have yet to do so. announced.
second generation unicorns
Digging further into the numbers reveals a few other notable nuggets. Delivery Hero, for example, has given birth Flink, gorillas Y Jokrwhile skyping led to wise, Screw Y pipedrive – each of these companies have gone on to achieve unicorn status on their own.
Plus, there’s at least one third-generation unicorn out there. israel-founded payment company payoneer has spawned about 12 new companies, one of which is IronSource, which recently merged with Unity in a $4.4 billion deal. And it was IronSource employees who launched Noname Security, which reached a valuation of $1 billion last December just a year after it was founded outside of Israel.
In all, there are 23 examples of unicorns giving birth to unicorns, though not all of those secondary unicorns are necessarily based in Europe. However, the report indicated that 56% of second generation companies were founded in the same city as the original unicorn.
Besides all that, with layoffs Y scalebacks aboundit is not clear if the respective valuations of all these companies are still at a “unicorn” level today; some of these valuation needles may turn back in a future funding round.
Located
The report also delved into founding factories by city, with the data suggesting that London remains a foundation In the European tech sphere, the UK capital tops the list in terms of the total number of startups spawned by unicorns. In fact, 27 London-founded unicorns created 168 startups in the last 14 years, 69% of which are also based in the city. Berlin came in second with 24 local unicorns creating 138 startups, 70% of which were founded in the German capital. Rounding out the top five were Paris (125 startups from 22 unicorns), Tel Aviv (108 startups from 27 unicorns), and Stockholm (98 startups from 11 unicorns).
Founder factories by city Image Credits: Dealroom / Accel
However, it can be difficult to pin a startup in a specific region, as companies may move their headquarters to the US early on to secure funding or be closer to customers. GitLab, whose former VP of Product remote launchedwhich recently reached a valuation of $3 billionis perhaps a good example of this: while its foundations certainly have their roots in Europe, the company is formally incorporated in the US. with a fully distributed workforce distributed in dozens of markets worldwide. Similarly, Payoneer has been headquartered in New York. almost from its beginnings.
The report did note that the placement of companies in the data set was based on where they were initially created, regardless of where they later relocated. Simply put, in a world of remote work and itchy-footed founders, it may not be as easy to pigeonhole a startup as “European” or “Israeli” in 2022 as it was 14 years ago.
But despite all those gray areas, Dealroom’s data still provides interesting insights into founding factories and the flow of tech talent over the past 14 years.
