European unicorn creation races ahead of global peers
In the first six months of the year, Europe saw 30 VC-backed startups exceed a $1 billion valuation, according to PitchBook data—over half the total number that did so in 2021. Meanwhile, the US and Asia saw a slowdown in unicorn creation, with just 118 and 35 companies exceeding the threshold valuation, respectively; both figures are less than half the previous year’s total.
Europe’s venture ecosystem is less established than that of the US or Asia, but it has matured significantly over the past decade. An influx of capital from overseas investors—particularly from the US—pushed round sizes to grow larger, and with them valuations.
Since 2018, the rate of unicorn creation in Europe has surpassed the US and Asia almost every year. New entrants in Europe’s unicorn stable in 2022 include edtech company Multiverse and payments platform GoCardless.
Unicorn creation is likely to slow as the year progresses, due to harsher fundraising environments and increased pressure on valuations. Decreased appetite for high growth, unprofitable companies is expected to lead to more down rounds, like Klarna’s 85% haircut—a trend that could even cause existing unicorns to fall below the threshold.
The impact of the current macroeconomic climate has yet to be fully seen, but early signs suggest that Europe may fare better than its larger counterparts. Capital raised by startups in H1 2022 has noticeably slowed in the US and Asia, with neither reaching last year’s halfway mark—deal value in both regions currently stand at 42.2% and 30% of last year’s total, respectively. Meanwhile in Europe, capital invested is still on pace to exceed €100 billion for a second consecutive year, as deal value surpassed 50% of 2021’s total, with €54.4 billion in aggregate as of June 15.
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