Europe Tops China in Tech Unicorns

"BRUSSELS -- Europe has overtaken China in creating billion-dollar tech startups, according to a new analysis that points to Europe's rising status in the field and the effect of Beijing's crackdown on capitalist entrepreneurialism. Both economies still lag behind the U.S. in creating so-called unicorns.

Over the past year, China has reined in its most successful and freewheeling tech giants, including Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Didi Global Inc., leading to a loss of market value that has cast a chill across the whole sector. Europe, meanwhile, has attracted further investment in its expanding tech industry, particularly from U.S. funds.

While China still has far more large tech companies than Europe, and a larger internal market for them, trends have shifted over the past year according to research by Atomico, a London-based venture-capital firm that produces an annual analysis, the State of European Tech.

This year, China has added 26 tech companies with valuations above $1 billion, known as unicorns, bringing its total to 300, according to Atomico and data from analysts Dealroom.co. Europe has 98 new unicorns this year, bringing its total to 321, according to Atomico. It defines Europe as all 27 European Union countries and 18 others, including the U.K., Norway and Switzerland.

The U.S. still leads Europe and China with 1,178 unicorns, of which 384 were added this year, according to Atomico.

 

Europe has also leapfrogged China on venture capital investment this year, according to Atomico. In the first nine months of 2021, China drew $45 billion in venture funding compared with $52 billion for all of 2020, while Europe has already surpassed last year's total, Atomico said. Through September, venture capital funds invested $77 billion in Europe, up from $48 billion for the whole of last year.

 

Both Europe's number of unicorns and venture capital inflows are records, according to Atomico partner Tom Wehmeier, who leads the preparation of the report.

Europe's venture funding total is near that of Asia overall, which saw venture capital investments of $110 billion through September, versus $87 billion in all of last year, Atomico said.

Investors, particularly from the U.S., have been drawn to Europe by an expanding number of tech startups launched by a growing population of entrepreneurs, many of whom have already worked in other tech companies. Over recent years, European governments and the EU have tried to encourage people to start businesses and embrace a degree of risk, particularly as the continent's traditional social safety nets have strained under economic pressure and demographic shifts.

European universities' strong science and engineering programs have long fed into large industrial enterprises but increasingly send graduates to the tech industry.

Tech-sector ties across the Atlantic have deepened recently, particularly as China and other parts of the world have become less welcoming. U.S. tech companies including Amazon.com Inc., Alphabet Inc. and Facebook parent Meta Platforms Inc. have established research centers in Europe or partnerships with universities to tap into the continent's talent pool." [1]

1. Business News: Europe Tops China in Tech Unicorns
Michaels, Daniel.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 08 Dec 2021: B.3.