There are barriers to scaling up in Europe. Notably:
The Report on Startup Transatlantic M&A produced by MIND THE BRIDGE in partnership with Crunchbase shows that European scaleups get acquired too early (36% are less than 5 years old) and with a 45% discount compared to American scaleups. Furthermore, 44% of European scaleups are acquired by US-based corporates. European corporates are not in the forefront of open innovation: the report shows that the first European company in the ranking of the most acquisitive corporates is only 33th. Extending the analysis to procurement and other forms of corporate-startup collaboration, still a US company leads the ranking of corporates working with European startups.
The number of European scaleups going public in Europe is still too small. The latest SEP Monitor shows that only 2% of European ICT scaleups go public. The ones that decide to go public in the US raise 6 times more capital than the ones that IPO in Europe. If we consider IPOs of European scaleups, over $100M, 45% are completed in the US.
The growth process of scaleups is too much venture-capital-driven. In turn, venture capitalists depend on opportunities to exit their initial investment, returning capital for reinvestment in new firms. Properly functioning primary and secondary markets are therefore key to boosting angel and VC investment.
For VC-backed companies, trade sales to corporates are significantly more common than IPOs. In Europe, VC-backed exits represented less than 2% of all exits during 2010-2014; this compares with an average rate of over 13% in the US for the same period.
SEP 2.0 supports European scaleups to grow internationally with three main activities:
• Matching
• IPO Conduit
• International Showcase
