In 2020 the global market has seen a significant increase in valuations to private and public cloud companies. Philippe Botteri, a longtime partner at Accel in London who invests in cloud applications and security companies, charts this expansion for European companies in Accel’s 2020 Euroscape report.
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“The entire amount invested in private cloud companies in Europe and Israel in 2020 has grown close to 30% so far to $9-9.5 billion, which is nearly half the $20 billion invested in US-born cloud companies,” said Botteri in the latest report on European cloud companies.
Botteri attributes this growth to Europe’s leadership in artificial intelligence in math, science and data, along with the increase in the number of ecosystems across Europe that are attracting startups, which in turn impact one another.
Accel’s London office earlier this year celebrated its 20th anniversary and the firm has been front and center through Europe’s rise as a startup hub.
- Two European software companies were valued at more than $10 billion in July this year.
- There are 100 companies to watch on Accels Euroscape cloud list, with 19 championship companies, up from 13 a year ago.
- A public index of 10 cloud companies founded in Europe and Israel is worth over $100 billion.
From consumer to cloud
Botteri built a cloud-investing profile in the early days of cloud at Bessemer Venture Partners in the U.S. When he moved to Accel, London in 2011, there was very little happening in software at the time.
For the first three years in Europe, Botteri’s investments were in marketplace companies like BlaBlaCar and Fiverr—more internet than software–Botteri told Crunchbase News. His first software investments were in PeopleDoc in 2014, and then Algolia and Doctolib.
“Europe had created some leading consumer companies like Spotify and Deliveroo from 2010 to 2015, and then moved into the era of software from 2016 to 2020,” said Botteri.
Accel’s investments mirror this progress. Between 2011 and 2015, Accel made 14 software investments in seven cities, and from 2016 to 2020, 35 investments in 20 cities. The investment amount rose from $150 million to $740 million when comparing these two time periods.
This rise in European cloud companies follows through in global revenue predictions. According to the report, the global cloud applications market has increased to $100 billion in 2020 and is estimated to grow to $1 trillion by 2025.
Botteri said that Europe was already very connected, and is now even more international due to the rise in remote work sparked by the COVID-19 pandemic. Europe’s time zones make it easier for people to hire in neighboring countries.
“There is a lot more mobility between these hubs than people think,” Botteri said. “You’ll see a company in Paris with engineers from Portugal, from Spain, from the U.K., even from the U.S.”
Many global software companies founded in Europe and Israel create U.S. headquarters while retaining R&D in Europe. “For every dollar spent globally on software, 50 cents are spent in the U.S. You can’t be a global software company and not have significant market share in the U.S.,” he said.
For Botteri, it really depends on the sector and the market being addressed on whether to have a U.S. headquarters or not. The Accel Euroscape Champions League includes 19 companies—all listed on the Crunchbase Unicorn Board—collectively valued at $48.4 billion. Of these companies, 10 are headquartered in the U.S.
The most highly valued companies, which were all founded in Europe and Israel, include New York-headquartered robotic process automation company UiPath valued at $10.2 billion, London-based online payment solution Checkout.com at $5.5 billion, and customer cloud communications company MessageBird based in Amsterdam and customer-engagement platform Talkdesk headquartered in San Francisco, each valued at $3 billion.
Security company Snyk, based in London, raised its Series A in March 2018 and reached a unicorn valuation at its Series C within two years. And live virtual-events platform Hopin, also based in London, which raised a Series A earlier this year, was most recently valued at $2.1 billion in November.
Just a year ago, the 2019 Champions league of 13 companies were valued collectively at $19.5 billion. Now, the new Champions league list of 19 companies for 2020 are valued at $48.4 billion, more than double the valuation of the 2019 list.
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