New technologies are a matter of strategic policy as Europe aims to become a competitive centre for innovation. Increasing the number of unicorns, or high growth emerging tech companies with a value over $1 billion, is now a matter of technological sovereignty for Europe – developing and protecting expertise and ownership of new technologies in order to stay competitive and independent.
These young companies need a few key ingredients in order to successfully develop their innovative products and services and grow their businesses to become the unicorns of tomorrow. These ingredients need to exist in a consistent and constant manner for the long term.
A conducive market environment
Unicorns enjoyed a positive momentum in Europe in the aftermath of the Covid-19 pandemic, spurred by of the rapid digitalisation experienced across all sectors of the economy.
Crunchbase reports that an unprecedented number of European companies — 86 in total— joined its Unicorn Board in 2021; over five times more than in 2020, and three times more than the previous record in 2019 (at 23).
The unicorn story is happening right here in Europe. This can be attributed to several factors, from the pandemic that accelerated the innovative companies’ business models, to several government initiatives across EMEA promoting this segment.
Eric Jacquemot, Head of Innovative Companies, BNP Paribas CIB
“The unicorn story is happening right here in Europe. This can be attributed to several factors, from the pandemic that accelerated the innovative companies’ business models, to several government initiatives across EMEA promoting this segment. US investors have also decided to look more at Europe to find the next tech champions, with their investments hitting an all-time high last year; double that of the previous year,” noted Eric Jacquemot, Head of Innovative Companies at BNP Paribas CIB.
Recently, the market has admittedly undergone a correction in tech valuations. “However, since the products and services developed by these innovative companies are here to last, this should be seen as an indication that investors are being more selective,” added Jacquemot.
At Portzamparc, we favour the IPOs of companies displaying real visibility, growth potential and benefitting from early cornerstone investor commitments.
Vincent Le Sann, Deputy CEO, Portzamparc (Groupe BNP Paribas)
“Compared to the same period a year ago, we are seeing a two third less IPOs. Those that have gone public are often starting their stock market history with valuations at the bottom, and the amounts requested by investors are also lower,” Vincent Le Sann, Deputy CEO of Portzamparc (Groupe BNP Paribas), further commented. “At Portzamparc, we favour the IPOs of companies displaying real visibility, growth potential and benefitting from early cornerstone investor commitments such as Waga or Entech in renewable energies or Afyren, a greentech that remplaces petroleum-sourced molecules in food or cosmetics, which have significantly outperformed the market since their IPO in the second half of 2021, respectively by +28%, +33% and +21%. Renewable energy is still at the top of investors’ mind in Europe in 2022. Our last IPO in July for OKWind Group (photovoltaic trackers) has outperformed its index by +30% since its IPO. ”
Growth pains: a challenging journey
More than ever, innovative companies are needed to build a more sustainable, inclusive future at a time of uncertainty and disruption. Many early-stage start-ups offer promising cutting-edge solutions that are much needed to alleviate the world’s current challenges, be they in energy savings, healthtech, foodtech, cleantech, fintech or Deep Tech (such as artificial intelligence and virtual reality).
However, these high growth companies are, in most cases, not yet profitable: path to profitability is a key element to be assessed at each stage of development of these businesses. In this new world of higher interest rates and rising inflation, investors are more selective on these type of assets and remain focused on the capacity to generate revenues at scale and then substantial cash flow in a not too distant future.
To tackle the big challenges of our century, such as climate change, ageing populations and technological sovereignty, we need the minds and drive of innovative entrepreneurs.
Tommaso Fassati, Head of Innovative Companies EMEA, BNP Paribas Commercial Banking
“To tackle the big challenges of our century, such as climate change, ageing populations and technological sovereignty, we need the minds and drive of innovative entrepreneurs. BNP Paribas’ integrated offering and ecosystem of investors will play a key role in supporting their ambitions in this new market environment,” explains Tommaso Fassati, Head of Innovative Companies EMEA at BNP Paribas Commercial Banking.
Connecting start-ups with capital
The good news is that on top of various government initiatives, many institutions are increasingly offering alternative and easier routes to access the capital start-ups desperately need during their listing journey.
This year for instance, European stock market platform Euronext announced the launch of a Euronext Tech Leaders segment, a new initiative in partnership with key players in the private and public ecosystem, including BNP Paribas. It aims to enhance the visibility and attractiveness of high-growth and leading tech companies and connect them with international investors.
Our partnership with Euronext on Tech Leaders reflects our commitment to be a leader in the tech sector, from emerging tech to unicorns and well-established tech giants.
Sophie Javary, Vice Chairman, BNP Paribas CIB EMEA
Euronext’s Tech Leaders pool includes more than 100 high-growth and leading companies, each meeting a specific set of criteria to qualify. They get to benefit from its pre-IPO programmes and exposure to a large international investor base financing all growth profiles.
“Our partnership with Euronext on Tech Leaders reflects our commitment to be a leader in the tech sector, from emerging tech to unicorns and well-established tech giants,” said Sophie Javary, Vice Chairman, BNP Paribas CIB EMEA. “This underlines our commitment to technology as a pillar of our 2025 GTS plan, as well as our ambition to be the leading European Equity House.”
An ecosystem of partnerships
BNP Paribas, a founding member of the Scale-Up Europe Initiative, a group of over 300 start-up and scale-up founders, investors, researchers and corporations committed to step up European tech, recently supported a string of high-profile tech IPOs in Europe.
They included Allfunds, a fund distribution platform; Majorel, a leader in customer experience management (CXM); and eco-friendly parcel locker service Inpost in Amsterdam. In Paris, BNP Paribas supported one of the largest tech IPO on Euronext Paris since 2014: OVHCloud – the leading European cloud provider. BNP Paribas was also involved with Lhyfe, which produces and supplies renewable green hydrogen for mobility and industry, Exclusive Networks, an innovative cybersecurity technology specialist, Believe Digital, one of the world’s leading digital music companies, and Aramis Auto, a pioneer in the sale of vehicles online.
This was possible thanks to a deep relationship with the investor community on one hand, including venture capital (VC), private equity (PE) growth funds, and family offices, and an integrated ‘One Bank’ model on the other hand, offering the full range of services that cover all the needs of emerging corporates throughout their growth into tech leaders, from Cash Management (Mirakl) to Acquisition Financing (Doctolib), Private Placement (Ionity), IPO or deSpac (Lilium).
“BNP Paribas’ in-depth knowledge of innovative companies and investors enables us to support start-ups, scale-ups and unicorns across sectors, from raising debt or equity in private or public markets to providing banking and advisory services, as part of our long-term relationship approach,” commented Jacquemot. “We also have a clear understanding of their markets and business models, which is essential to help them become the European champions of tomorrow.”
BNP Paribas already backs 75% of companies in the French Tech 120 (FT 120), a support programme for the 120 fastest growing start-ups and scale-ups in France, and is successfully developing the same strategy in other European countries such as Germany, the Nordics or the UK, with a particular emphasis on investments in tech solutions that will accelerate the green transition.