Wired

For over a decade, the tech industry has been chasing unicorns—those elusive startups valued at over $1 billion. The obsession began in 2013, when Aileen Lee—a VC based in Palo Alto—coined the term that captured the imaginations first of founders and investors, and then prime ministers and presidents. But these mythical beasts are also rare: only 1 percent of VC-backed startups ever reach this status.

As society enters the age of AI, and financial markets put renewed value on business fundamentals, our understanding of what makes a successful tech company is evolving. Promise alone doesn’t make a national, regional, or global champion. Champions are those companies that combine both the promise of untapped growth and the fundamental metrics that demonstrate strong and sustainable customer demand.

The 2023 Atomico’s State of European Tech Report revealed Netherlands to be a standout success, cementing its position as a star player in the startup ecosystem. In terms of capital invested in its private tech companies, for instance, it’s risen back into the top five countries with a projected $2.1 billion. And while the UK has seen the share of its European capital invested drop by almost 3 percent within the past three years, the Netherlands comes out top, capturing the biggest gains in Europe at almost 2 percent. The hub of the Netherlands’ startup ecosystem is Amsterdam, which hosts around 4,000 startups, including unicorns like Mollie, Mambu, and Backbase. Known for its international focus, collaborative ecosystem, and diverse and skilled workforce, it’s also dedicated to tackling urgent societal issues.

German innovation is not limited to the country’s capital. In fact, some of this year’s most prolific startups are based hundreds of miles away. The AI startup Alpha Alpha hails from Heidelberg. Helsing, which sells AI to Europe’s militaries, was set up in Munich. Yet both companies operate Berlin offices. The city attracts too much talent to ignore. Universities, such as TU Berlin, churn out generative AI founders, and the capital is such a magnet for international talent that many offices operate in English, not German.

Thanks to low corporation tax and government incentives, Dublin has hosted the European headquarters of many large US technology companies—Google, Meta, LinkedIn and Microsoft all have offices in the city’s Silicon Docks.

“The big US companies operated independently of the startup world for many years,” explains Will Prendergast, partner at Frontline Ventures. “But in the past five years, US technology companies have been building product and engineering functions here, and that talent is starting to spill out, driving startup creation.”

Helsinki’s startup scene evolved around behemoths such as Nokia, games giant Supercell, and food delivery platform Wolt. It’s reaping the rewards with experienced entrepreneurs, investors, and engineers powering a lively scene based around the Aalto University campus and the startup festival Slush, one of the world’s largest gatherings of investors and startups.

“We appreciate work-life balance and collaboration,” explains Jonne Kuittinen, deputy chief executive of the Finnish Venture Capital Association. “The Supercell guys were very open about paying all their taxes in Finland, and this giving-back mentality is visible now these founders are helping out on a lot of the current funding rounds. I think the scene is about to be turbocharged.”

Two years ago, Jon Fath moved with his family to Portugal from the Netherlands with the sole purpose of launching a fintech startup there. “This country is brimming with talent and ambition,” Fath says. “I thank Lisbon for welcoming me, along with so many other expats and entrepreneurs, so warmly.”

Indeed, it’s no surprise that the European Commission named Lisbon as 2023’s European Capital of Innovation, while the Financial Times, in partnership with Statista, ranked two Portuguese startup hubs in Europe’s top 10 startup hubs—including the Unicorn Factory Lisboa, which launched in 2022 and has already supported more than 820 startups and helped raise more than €1 billion ($1.1 billion).

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In the “Start-Up, Scale-Up” review report published last year, chancellor Rachel Reeves promised to make Britain the “high-growth startup hub of the world.” Now, almost six months into the new government, entrepreneurs remain encouraged by the promises made in the Labour manifesto. “The ambition embodied in Great British Energy and the 2030 decarbonization targets is precisely what we need and deserve,” says Shilpika Gautam, CEO of greentech startup Opna, about Labour’s energy policies. “It’s high time the UK caught up with the policy and financing innovations in other countries, such as the Inflation Reduction Act in the US.”

Having spent many years as second fiddle to Barcelona, Madrid surpassed its Catalan cousin in 2023 with startups securing €605 million ($672 million) investment above Barcelona’s €457 million ($507 million). “Lots of Latin American talent is arriving thanks to the recent entrepreneur visa and talent programs run by Telefonica to bring promising startup founders from Mexico, Argentina, Columbia, and Venezuela,” explains Bu Haces, innovation consultant at Madrid’s Impact Hub.

The city has seen solid growth in transportation, mobility, and fintech startups during the last three years with AI and deep tech supercharged by an astonishing 56 universities. “The business schools in particular are providing lots of startup networking opportunities, and are keen on developing an entrepreneurial ecosystem,” says Miguel Arias, general partner at VC K Fund.

In the past two years the French capital has been in the throes of AI fever and has launched some of Europe’s most talked-about startups, including Mistral, which is currently valued at $6.2 billion (£4.7 billion). That’s partly due to the support the industry has received. President Emmanuel Macron has given French AI startups some emphatic political backing, while telecoms billionaire Xavier Niel has provided much investment and will to finance national ambition. In September 2023, Niel invested €200 million ($212 million), splitting that money between funding for startups such as Mistral, an AI research lab called Kyutai, and a cloud supercomputer powered by Nvidia. “I’m the old guy who likes entrepreneurs and the idea was always the same: How we can help this talent to stay here, creating companies,” says Niel.

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Why is Stockholm, a capital city with a population less than 1 million, home to global brands such as Skype, Spotify, Klarna, and Minecraft? “I think it has to do with the Swedish creed,” says Ben Eliass, CEO of body-care brand Estrid. “It’s a nation which put emphasis on high-quality education and invested heavily in telecoms infrastructure in the ’90s, so we all grew up with high-speed internet.”