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2019-03-06
Enterprise & Scaleups Solutions

EU tech companies are growing fast, but the US still hold the leading position on the market

Nuno Barbosa

Though in terms of value the tech companies market in Europe is still much behind the one in the US, it is undoubtedly an attractive place for development of new startups. In 2018, we witnessed a record amount of investments in Europe that was up to $23 billions. Does this mean that Europe is chasing the US market?

Potential of European’s tech market

The European tech market companies are developing very dynamically. Though its value is still much lower than in the US or Asia, the numbers show that the trend is growing. According to the GP Bullhound Report in 2018, in Europe comparing to 2014, the number of companies worth billions of dollars doubled.

The entire European ecosystem is estimated at nearly $250 billion. This amount is almost three times higher than in 2014. In Europe the market leader is Britain, followed by Sweden, Germany, Russia. The Baltic market may also provide a great potential. In terms of value, it yields to other European giants, but the ratio of the population to revenues is very favorable.

Startup from Sweden

The largest European tech companies

Spotify is an absolute leader among the largest tech companies in Europe. It has crossed the 30 billion US dollars’ mark. The music service created in 2008 gained huge interest among the audience. But its success is not the only thing Europe can boast of. It is worth paying attention to such companies as Mobileye, Adyen, Zalando, Yandex or Supercell. In 2018 all of them made a profit of over $10 billions. This makes them one of the largest tech companies in Europe.

Being the leader of the market, the United Kingdom can boast of Just Eat, Daliveroo and Improbable’s success. They are one of the most profitable startups in the country. In Sweden, apart from Spotify, Skype and Avito are doing really great. Germany is famous for Zalando’s success. Meanwhile, on the local market it is also worth paying attention to Delivery Hero and Rocket Internet. There are also many interesting companies among the other market leaders in the world. Gett, Waze, Mobileve have brought a success to Israel, and in Russia Yandes, VK and Qiwi have become a golden calf.

In 2018 the magical barrier of 1 billion US dollars was exceeded by such companies as: Taxify (Estonia), Outsystems (Portugal), LTG (Bosnia and Herzegovina), Darktrace (UK), iZettle (Sweden) and Celonis (Germany).

Tech companies in Europe and the US

The total value of the European market is around $240 billions. In the US, this amount reaches $1,3570 billions. Therefore, the difference is quite significant. On the other hand, in terms of the market growth Europe looks much better. On average, it grows by 29% annually, while in the US – only by 21%. The group of the largest tech titans in the US includes Facebook, Uber and Tesla.

Another successful startup

Experts emphasize that one of the reasons for such a large difference between the market value in the US and Europe is the size of the average funds rate. In Europe, it is $1.6 billions, and in the US and Asia up to $7.3 billions. It is up to 4.5 higher value. This happens due to the fact that more funds are available in the US, where startups can obtain these funds as a part of a Venture Capital.

What the conclusions will be? First of all, it should be emphasized that the US position is very strong and not undoubtable. It is difficult to expect the situation to change in the near future. However, it is impossible to remain indifferent to the constantly growing and dynamically developing market in Europe. More and more innovative startups, increasing revenue statistics and the constantly growing number of investors in Europe, mean that in the coming years this market will continue to strengthen its position.

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