If 2015 was the year of the unicorn, 2016 has been the year of the decacorn.
Supercell, a Finnish game developer, earlier this year became Europe’s first ever $10bn (£8.2bn) technology company.
Even a few years ago, commentators did not believe the European technology sector could achieve this milestone. Now, it is evident that London can be the base for the consistent creation of $10bn businesses.
The difference between now and then is one of critical mass. We have seen London’s tech sector on an upward trajectory for the past decade, steadily accumulating the capital, talent, and ambition required to build a world-beating technology ecosystem. We have now reached a tipping point where we can regularly break through the $10bn threshold.
First, we are seeing an unprecedented growth in investment activity. This might seem at odds with murmurs of tech bubbles and, of course, the potential impact of the UK’s decision to leave the EU. However, since June we have seen nothing but rising interest in London tech from the world’s leading investors.
Take the Venture Capital funds recognised at our annual Investor Allstars. The likes of Index Ventures, Accel Partners, and MMC Ventures have on average raised $679m in the last twelve months, an increase of 10 per cent from 2015. Channelling this scale of investment capital is essential to the growth of a world-beating technology sector, and vital to the funding of $10bn businesses.
Second, we have now reached a level of experience and expertise that can inspire the growth of decacorns in London. Access to talent has been one of the greatest concerns of the UK’s technology sector in the aftermath of the referendum. Whilst I will readily admit we must continue to attract top tech talent to London, we already have access to thousands of entrepreneurs in the capital with the hard-nosed experience to build world-beating businesses.
What has traditionally set Silicon Valley apart from hubs across Europe and Asia is the fact that it can call upon entrepreneurs and investors that have multiple successes under their belt. This experience cannot be bought, and it is one area in which the youthful dynamism of London’s tech ecosystem has actively worked against it.
However, there is now a growing number of entrepreneurs that have been through the life cycle of starting, scaling, and exiting a multimillion-pound business. These entrepreneurs make for the perfect investors, bringing a level of expertise and insight that is invaluable to building success in this sector. It is no surprise, then, that Atomico, the venture capital fund created by Skype co-founder Niklas Zennström, was one of the lead investors in Supercell. Without doubt, Zennström was able to bring to bear his nous and experience of building a global, multi-billion-dollar business to guide Supercell to its $10bn valuation.
These unprecedented levels of talent and investment are tipping the balance in the favour of the UK’s leading digital entrepreneurs. However, what has truly set the sector apart in the last year has been a level of ambition that we have never seen before.
Almost without fail, this generation of entrepreneurs has the belief that they can build the next great success story. This ambition is magnetic: investors are drawn to entrepreneurs that are committed to the future prospects of a business, while talent is drawn to the long-term vision of building revolutionary technologies.
We have built a dynamic startup ecosystem, and we have even scaled up 14 billion-dollar businesses. Chasing the likes of Apple, Google, and Facebook, and building companies of genuine scale is no longer a pipedream. London will be home to a decacorn soon, and in the next five years Europe will create a $100bn technology company to rival Silicon Valley.