Vivatech: European startups are entering the big leagues

The world of start-ups is populated by fantastic animals. The most common is the unicorn, a status that designates a company valued at more than a billion dollars. There are already 283 in Europe, ten times more than in 2014, according to the annual report “Titans of Tech” by GP Bullhound, published on the occasion of VivaTech, a European technology fair organized by Publicis and “Les Echos” from 15 to June 18, 2022.

The decacorn refers to startups valued at more than 10 billion dollars. There are 37 in the Old Continent, including the Swedish fintech Klarna (45 billion) and the British neobank Revolut (33 billion). By way of comparison, the capitalization of Société Générale is 18 billion euros.

Towards profitability

An even rarer species has recently appeared: the centaur. This time, no valuation to be achieved, but turnover. To join this club, a startup must generate at least $100 million in annual recurring revenue (ARR), the leading indicator for subscription-based (“SaaS”) startups.

It is difficult to know the exact number of centaurs, as the sprouts rarely communicate their financial results. In France, marketplace operator Mirakl was the first to announce that it exceeded ARR 100 million. The most recent tricolor unicorn EcoVadis, which operates in the CSR assessment segment, will pass this milestone for the year 2022.

While fundraising figures often make headlines, it’s not always the best criterion for assessing a company’s vitality.

Roland Berger’s latest report on structuring start-ups in Europe

Behind this new key indicator is the question of profitability. “The more the company matures, the more investors are focused on growth and the more monetization issues become central,” explains William Kunter, CFO of employee benefits specialist Swile, in Roland Berger’s latest report on start-up structuring. ups in Europe.

The urgency of impact

This document lists other indicators that show that European start-ups have changed in size. “While fundraising figures often make headlines, it’s not always the best criterion for assessing a company’s vitality. Hyper-growth is no longer a sufficient condition for investors, who need companies to prove their profitability in order to agree to support them”, underline the authors of the study. This analysis takes on even more significance as fundraising is in decline across the world, whether in number or value.

Like big companies, tech nuggets are taking impact issues into their own hands. Job postings dedicated to impact, such as “director of impact” positions, increased by 50% between 2020 and 2021 at technology companies, the report recalls. Impact directors aren’t just found in second-hand, agricultural, or climate technology start-ups.

Kat Borlogan, former head of French Tech, for example, joined Unicorn Contentsquare in December 2021, an internet user experience specialist. More and more start-ups are communicating about their CSR commitments. In 2021, 106 French startups have committed to carrying out a full carbon assessment before the end of the year and to taking concrete steps to limit identified emissions. A year later, there are 300 and aim for 3,000 signatories in 2023.

More parity and M&A

Parity has also become a key issue in start-ups, which is still a very masculine ecosystem. Last May, the French Tech mission released a “parity pact” that establishes, inter alia, a 20% share of women on the boards of directors (CA) of start-ups within three years, after 40% in 2028. This measure is reminiscent of the 2011 Copé-Zimmermann Act, which had established a 40% quota for women on the board of directors of companies with more than 500 employees by 2017. “We know it worked. We even reached 45%, which is a world record”, enthuses Clara Chappaz, French Tech mission director. To date, around 140 start-ups have signed the letter.

Another sign that the ecosystem is growing: the proliferation of mergers and acquisitions. Given the drop in IPOs in Europe (18 in 2021, one in 2022 for the moment), M&A is an exit route increasingly favored by young shooters.

“Well-funded companies can take advantage of the current recession to acquire struggling businesses, acquire competitors to consolidate the market or double down to emerge stronger from the crisis”, say the authors of “Titans of Tech”. Among the latest significant operations, we can mention Vestiaire Collective, which got its hands on its American competitor Tradesy. Shopping is just getting started.

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