Unicorns - venture capital-backed tech start-ups valued at $1 billion+ - are a relatively recent phenomenon. Some, like Airbnb($10B) and Uber ($50B)- have been around for several years and have an international footprint. Others - like Slack Technologies ($2B) - have seemingly come out of nowhere and have barely generated revenue.
According to the research firm CB Insights there are 102 Unicorns with 62 based in the United States, with China quickly catching up with 11.
The concept of Unicorns is also generating considerable interest in Europe:
Man spricht von ihnen. Manchmal hinter vorgehaltener Hand. Man fragt sich, ob sie tatsächlich das wert sind, was sie versprechen. Man wundert sich, was passiert, wenn die Erwartungen, die man in sie gesetzt hat, nicht erfüllt werden. Die Rede ist von einer ganz besonderen “Spezies” an Startups. Von jenen Unternehmen, denen man einen besonders romantischen Namen gegeben hat: “Einhörner” nennt man sie. Und zwar deswegen, weil sie so selten sind. Vor allem in Europa. Unternehmen, die mehr als eine Milliarde US-Dollar wert sind, werden so genannt.
The author of this post - an Austrian - complains that Austria has not produced a single Einhorn (Unicorn) so far. CB Insights lists two German Unicorns - Delivery Hero and Home24 - both eCommerce knock-offs of US companies incubated by Rocket Internet. Why so few? On paper, the conditions should be favorable to innovative tech startups in Germany and Europe in general:
Yet if any region of the world could compete successfully with the United States in technological prowess, it would seem to be Europe. The European Union has venerable universities, a well-educated work force, affluent and technically skilled consumers and large pools of investment capital.
But Europe lags far behind the United States in terms of creating potential Unicorns. This is in part because of a deep-seated suspicion of disruptive innovations such as Google and Facebook. The first impulse is to block their entry into Europe via the courts:
With this month’s announcement that the European Union is investigating Amazon for possible anticompetitive behavior in the sale of e-books, antitrust fervor in Europe seems to have hit fever pitch. Apple, Google and Facebook are all subjects of investigation, and Amazon is now the focus of at least three separate inquiries. Europe’s top antitrust regulator, Margrethe Vestager, wants us to believe it’s just coincidence that so many targets are American tech companies: “This just reflects that there are many strong companies in the U.S. that influence the digital market elsewhere,” she told Bloomberg this month.
The other issue is lack of venture capital and no viable exit for investors. Germans in general avoid the stock market - and they REALLY avoid Initial Public Offering (IPOs). While in the US both retail and institutional investors lined up to buy shares of Facebook and Twitter, there have been few takers in Germany for announced IPOs. (See In Deutschland funktionieren Börsengänge nicht: "Anscheinend wollen einfach nur wenige Investoren sich auf unerprobte Aktien einlassen.")
The one German company that competes with US enterprise software giants globally is SAP. But to remain competitive SAP has had to acquire US companies such as Concur and SuccessFactors. The SuccessFactors deal has allowed SAP to develop a strong presence in Cloud Computing. Actually, SuccessFactors was started by a European - Lars Daalgard, a Dane - who, however, had to launch his company in Silicon Valley in order to be successful.