In 2022, 47 European companies reached a market value exceeding $1 billion for the first time, compared to 69 the previous year, according to the latest data from research firm Sifted. Although this is still more than three times higher than in 2020, now is a good time to analyze old practices and the value the business creates. This will put the company in a stronger position when the market shifts again, believes Paulius Insoda, CEO at NFQ Technologies, an international IT company helping global brands implement innovation, which has 2 unicorns and several aspiring companies in its portfolio.
According to Sifted data, the decline in the pace of new unicorn creation was inevitable, as funding available to startups fell by approximately 23% in 2022 compared to 2021. The UK, France, and Germany continue to dominate unicorn creation in Europe, but their lead over other European countries is no longer as overwhelming as it once was.
Last year, 11 unicorns were created in the UK, accounting for 23% of the total herd. In 2021, this share was as high as 55%. Meanwhile, 14 new unicorns appeared in France and Germany, compared to 29 in 2021. The Netherlands and the Nordic countries followed. No new unicorns were created in Poland last year.
The outlook remains promising
Despite the decline in the number of new unicorns, the future outlook is not bad. This is due, among other things, to the growing interest of global investors in European startups, as well as the policy of supporting startups that the EU has been pursuing for years and which has recently been further intensified.
– American startups first aim to build scale without looking at profit, while in Europe it is usually the other way around. This means that, on one hand, Europeans have significantly fewer unicorns, but at the same time, far fewer of their startups suffer spectacular failures. This approach is valued by American venture capital funds, which often look for profitable European startups operating in attractive niches and then try to acquire them to build scale for their American counterparts. This is an opportunity for Polish and, in general, EU startups, because focusing on profitability attracts American investment – says Paulius Insoda, CEO at NFQ Technologies.
The NFQ representative also points to the recent move by the EU, which established “The European Tech Champions Initiative” (ETCI). This new institution has been provided with a budget of 3.75 billion euros to support startups at a later stage of development. These funds are intended to enable them to continue scaling their operations and enter the global market as independent companies, rather than being acquired by American capital.
– ETCI represents a significant opportunity for European startups to grow and succeed. It is certainly a step forward for the European tech industry – comments Paulius Insoda.
Logistics is among the industries that can benefit most from EU funds
As the CEO of NFQ points out, in 2023, EU funds will primarily support the introduction of new products and services to the market, automation, mechanization, and robotization of enterprises, as well as export promotion, advertising, cost reduction, environmental impact reduction, and research on new products and services.
This presents a significant opportunity for many Polish companies, especially those in the logistics industry, where many processes are still manual, lack automation, and are undergoing major changes due to global events. Additionally, logistics has a significant impact on the environment, which is an important criterion for obtaining EU funds.
– The potential of European funds and co-financing for development, e.g., through the creation of modern software and protective environments, is very promising – said Paulius Insoda.
How to scale startups?
New funds for scaling startups should help Polish companies expand in the global market. However, it is worth remembering that this is a long and complex process, requiring a lot of effort and commitment from the entrepreneur.
– To prepare for this process, you should conduct an audit of your own product or service and examine what can be improved or changed to increase its value. Then, you need to develop a strategy that will allow you to achieve the set goals. While doing so, it is worth remembering that investors, when looking for companies to invest in, look primarily at profitability and scalability. Profitability alone is not enough, because the ability to grow rapidly while maintaining profitability is key. A strong technology partner can bring added value in this regard – advises Paulius Insoda.
Part of the business scaling strategy should also be finding the right people who have the appropriate skills and experience, as well as reaching for modern technologies and tools that will allow for process automation, improvement of product or service quality, and increased operational efficiency.
– In conversations with investors, what counts most is a coherent vision of development and the ability to ensure growth, e.g., through a Minimum Viable Product, a working prototype of the target solution ready for market launch – argues the head of NFQ Technologies.
NFQ Technologies has 2 unicorns in its track record (KAYAH and HomeToGo), as well as a number of services that aspire to this title, such as CityBee, Plugsurfing, Alaiko, or Home24. For all these brands, NFQ Technologies has been a comprehensive technology partner from the beginning (and in some cases also an investment partner), which created and continues to develop their solutions.
Source: NFQ Technologies