Of those unicorns created in the UK, the largest percentage (35%) evolved from London’s exciting new tech centres – though another 4 (two gaming, 1 white appliance sales, 1 travel booking sites) hail from the outer regions.
Planning on joining the esteemed unicorn club on UK soil? Well, first you should know what they are, what the competition looks like, and what elements for success these companies share in common. You’ll also want to be sure to research and find startup lawyers UK-based with plenty of experience in the tech industries. With billions at stake, protection of your future assets is crucial (intellectual property being just one of many concerns).
‘Birth’ of the Unicorn
The term ‘unicorn’ was first attributed to companies valued at over $1bn by public or private market investors by Aileen Lee’s Cowboy Ventures seed fund, according to her 2013 post: Welcome to the Unicorn Club. Lee went on to categorise these highly successful startups into 4 primary business models:
- E-commerce: the consumer pays for goods or services
- Audience: free for consumers, monetisation through ads or leads
- SaaS: Users pay (often via a “freemium” model) for cloud-based software
- Enterprise: Companies pay for larger scale software
The Unicorn has Legs
The latest research compiled by GP Bullhound follows Lee’s lead, with updated figures. The attributes apparent from the following facts and graphs seem to underscore the reasons why the UK has experienced a rising birthrate of unicorns – appearing to be giving good odds for continued ‘home runs’ within the current tech-friendly ecosystem:
- The total number of tech unicorns in Europe (40) grew by 33% in the past year (from 30).
- The average valuation of new entrants to unicorn status is $3.0bn.
- Most new unicorn companies are in industries with a consumer focus.
- Enterprise companies need less capital than those which are consumer-focused.
- The UK unicorns are more diversified, with software dominating the field.
- 17 of the 40 European unicorns are UK-based, with a cumulative value of $40.4bn.
- 58% of European unicorns are founded by entrepreneurs in their 30s; 23% under 30.
- 87% with unicorn status are still managed by at least 1 original founder.
- E-Commerce, Software and Marketplace each represent 20% of European unicorns.
- First-time European companies have raised capital to rival US peers.
- Average age of a European unicorn company is 9 years old.
- Building a unicorn takes an average of $140m in investment.
- The majority of unicorns (37%) have acquired investments from 5-8 sources.
Investing in a Unicorn Pays Off
Average return on capital invested is a whopping 54x, indicating that these investors have made some pretty great decisions overall. Several seed companies have invested in a number of unicorns, with Index Ventures at the top of the heap (having partnered with 10 unicorns). Their A-list includes front runner JustEats and popular Etsy, and they say that, “working side-by-side with these visionaries makes us incredibly optimistic about the future.”
Unicorns and the Global Economy
‘Fintech’ represents the fastest growing sector of unicorns, with over half those in Europe based in the UK (an outcome of London’s strong global finance position). Financial technology has helped to change the global pre-crisis economic standards of disinterested and status quo banking, into an enthusiastic and all-encompassing user-friendly industry. This veritable disruption of strict banking regulations has made way for a new foundation of support for startup concepts springing from the minds of the disenchanted.
Who’s Next in Line?
Here are GP Bullhound’s own predictions for the next unicorn brands to fall in with the herd: