The tech ecosystems of Europe and Israel remain in good health despite early signs capital markets are tapering off, as the fundamentals look stronger than at the start of the 2008/2009 global financial downturn.
That was the conclusion of a data report published today by American VC giant Accel, which found that of more than 300 VC-backed Euro and Israel-based unicorns, more than two-thirds (203) have re-invested gains into new "tech-enabled startups." Often, the unicorn's former employees become new startup founders.
Commenting on the data bulletin, Accel partner Harry Nelis said: "Talent is the most fundamental ingredient of any successful tech ecosystem.
"It’s clear that European talent is now at a very different level than in 2000 when Accel opened its London office.
"While founders and their teams are navigating a tough macroeconomic environment, it’s also true that the community is in a much stronger position than during the 2008/9 financial crisis. "
The report was prepared in collaboration with the Amsterdam startup intelligence provider Dealroom. A further key find was that over half (56%) of ex-unicorn employee-led startups stayed in the same European city, raising the prospect of supercharged Euro tech hubs and a virtuous circle of innovation.
Hotbeds for European innovation include London (where 27 unicorns spawned 168 startups, 69% remaining in London) Berlin (138 startups from 24 unicorns, 70% staying in Berlin) Paris (125 startups from 22 unicorns, 75% staying in Paris) and Stockholm (98 startups from 11 unicorns, 59% staying in Stockholm).
Fintech leads the way
Accel also found Europe's economy was generating "enormous" value from the fintech scene, including multiple decacorns (€10 billion valuations) as well as unicorns.
Over the past 14 years, Accel has tracked 61 fintech startups in Europe that've surged above the $1 billion valuation watermark and led to 310 new startups founded by former employers.
Also made clear by the report is the continued momentum of fintech going forward. Accel says four in 10 startups founded by ex-employees of fintech unicorns decided to stay in the fintech ecosystem with their newest business. The trend is likely backed by the potential of emerging fintech strands like embedded finance (as reported by Tech.eu last week, with embedded/capital's acquisition by NYC London VC Motive Capital.)
Many of the new startups materialised from the heavyweights of fintech, like Sweden's Klarna (produced 23 startups, 15 of which stayed in Fintech,) Estonia-born Wise (produced 19 startups, 11 of which are Fintech), and UK-based challenger bank Monzo (produced 16 startups, 7 of which are fintech.)