In Europe, Unicorns are the New Norm

October 12, 2021

In the current world of finance, private equity valuations are king. And in the world of valuations, the most prestigious valuation is known as being a unicorn. What is a unicorn? A unicorn is a company with a private valuation of $1 billion or more (€1 billion if you’re in Europe). What does the private equity unicorn picture look like in Europe? Here’s a look.

The Unicorn Picture in Europe

Before looking, would you guess that the number of unicorn companies in the old world is going up or down? The answer, unsurprisingly, is up. The following figure provides the evidence.

The figure covers the unicorn counts and aggregate post-money valuations from 2011 to 2021. The light blue bars represent the cumulative number of unicorns. Amazingly, the number of unicorns in Europe has grown from two in 2011 to 92 as of June 2021. Incredibly, there are 41 new unicorns in just 2021 so far (dark blue bars are the new unicorns by year).

In terms of valuations (right axis), aggregate unicorn post-money valuations have exploded in recent years. Aggregate post-money valuations of Europe-based unicorns were barely above €1 billion in 2011. Since then, aggregate unicorn valuations have surpassed €250 billion and rising. If the trend keeps going, total unicorn valuations at the end of 2021 could potentially surpass €300 billion. Strength, simply strength.

Source: Pitchbook

Breaking Down the Unicorn Deal Activity

How does unicorn deal activity look like by deal stage? The following figure has the answer. On deal count (light green line), deal count has grown to almost 40, with around 35 being Angel & seed deals. Interestingly, Early-stage VC and Late-stage VC have been relatively low comparatively and will likely continue to be so for the foreseeable future.

On deal value, the total deal value through June 2021 is about €18, well above the 202 total of a little less than €8 billion.

Source: Pitchbook

Median Years for VC-Backed Companies to Achieve Unicorn Status

With the rising status of unicorns, one might ask how long it has taken for companies to make it to unicorn status. The following figure has the answer. In 2011, it took a little over four years for a company to achieve unicorn status. Interestingly, given the rise in the number of unicorns, some might have expected that time to come down, the opposite is true. In 2020, it took a median of 6.8 years to reach unicorn status. In 2021 so far, that figure has risen to 7.2 years.

Source: Pitchbook

Summing Up

Overall, the Europe’s private equity universe is in a quite healthy state. Amazingly, unicorns are becoming the norm, something no analyst would have expected just five years ago. May the good times live on forever.

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