The world of start-ups is ruled by amazing animals. The most common is the unicorn, a status that refers to a company worth more than a billion dollars. There are now 283 in Europe, ten times more than in 2014, according to GP Bullhound’s annual report “Titans of Tech”, published on the occasion of VivaTech, the European tech fair organized by Publicis and “Les Echos” from June 15 to 18, 2022.
Decacorn refers to start-ups worth more than 10 billion dollars. They are 37 on the Old Continent, including Swedish fintech Klarna (45 billion) and the British neobank Revolut (33 billion). In comparison, the capitalization of Societe Generale reaches 18 billion euros.
A more rare species has emerged recently: the centaur. This time, there is no valuation to achieve but turnover. To enter this club, a start-up must generate at least $ 100 million in annual recurring revenue (ARR), the primary indicator for start-ups charging subscriptions (“SaaS”).
It’s hard to know the exact number of centaurs because young shooters rarely communicate their financial results. In France, marketplace operator Mirakl was the first to announce that it had exceeded ARR 100 million. The latest tricolor EcoVadis unicorn, which runs in the CSR analysis segment, will pass this milestone for its 2022 financial year.
While fundraising costs often make headlines, it’s not always the best criterion for evaluating a company’s vitality.
Roland Berger’s latest report on the structuring of start-ups in Europe
Behind this new key indicator is the question of profitability. “The more mature the company is, the more investors are focused on growth, and monetization issues become more central,” explained William Kunter, CFO of employee benefits specialist Swile, in Roland Berger’s latest report on the development of start-ups in Europe.
The urgency of the effect
This document lists other markers that show that European start-ups have changed in size. “Although fundraising costs often make headlines, it’s not always the best criterion for evaluating a company’s vitality. Hypergrowth is no longer a sufficient condition for investors, requiring companies to prove their profitability in order to agree to support them “, underline the study authors. This review is makes more sense because fundraising has dropped worldwide, in either number or amount.
Like large companies, tech nuggets are taking impact issues into their own hands. Impact -focused job offers such as “chief impact officer” positions will rise by 50% between 2020 and 2021 at tech companies, the report recalls. Impact directors are not just found in climatetech, agricultural or second-hand start-ups.
Kat Borlogan, former boss of French Tech, for example, joined unicorn Contentsquare in December 2021, an expert on Internet user experience. More and more start-ups are talking about their CSR commitments. In 2021, 106 French start-ups have pledged to conduct a complete carbon analysis before the end of the year and take concrete action to limit the identified emissions. A year later, they are 300 and aim for 3,000 signatories by 2023.
More equality and M&A
Parity has also become an important topic among start-ups, which are still a very large ecosystem. The French Tech mission announced in May a “parity pact” notably establishing a quota of 20% of women on the boards of directors (CA) of start-ups for three years, then 40% in 2028. This measure is reminiscent of The Copé-Zimmermann law of 2011 which set a quota of 40% of women on the board of directors of companies with more than 500 employees by 2017. “We know it will work. We even reached 45%, which is a world record, ”enthuses Clara Chappaz, director of the French Tech mission. So far, nearly 140 start-ups have signed the charter.
Another sign that the ecosystem is growing: the proliferation of mergers and acquisitions. Faced with the collapse of IPOs in Europe (18 in 2021, one in 2022 so far), M&A is an exit route increasingly favored by young shoots.
“Well-funded companies can take advantage of the current recession to get struggling businesses, get competitors to consolidate the market, or double down to emerge from the crisis stronger,” those with author of “Titans of Tech”. Among the most recent significant operations, we can mention Vestiaire Collective, which got its hands on its American competitor Tradesy. Shopping is just beginning.