The European startup scene has experienced big changes over the past few years.For a long time, the old continent’s tech sector has existed in the shadow of Silicon Valley, being unable to challenge it and compete with it. But not anymore.

Today, new-generation European startups are booming, breaking records and reaching impressive milestones, seriously challenging the Silicon Valley, as Europe’s tech ecosystem is — wait for it — growing at a faster rate than the US. The global venture capital company Atomico and its “State of European Tech Report“ has revealed some interesting things.According to the report, total investment in European startups reached $23 billion in 2018. This year, $21,4 billion has already been invested across Q1 and Q2, and Europe is the only region showing a significant VC investment growth in 2019 to date. 

Tom Wehmeier, partner and head of research at Atomico, who authored the report, said that “This year has been an incredible year for the European tech ecosystem. We’re at risk of sounding like a broken record about breaking records — but we can’t dispute the data.“

The report has also revealed that last year, sixty-nine tech companies have gone public in Europe, compared to twenty-eight in the US. In the same period, share prices of European startups increased by 222 percent, compared to a 42 percent rise for US companies. 

Atomico has also reported seventeen new unicorns in Europe last year. In other words, the number has doubled compared to the year before. The list includes such names like Revolut, Monzo, N26, TransferWise, and other new-generation European startups.There’s a good reason why these new-generation European startups are so successful, and  why its software aimed at niche sectors. 

A few years back, startups managed to benefit from the spread of smartphones and cheap cloud computing. But as many of those companies built global empires by simply using existing businesses — think taxis, food delivery, and hotels — and making them mobile, today new, emerging companies tend to focus on software for specific industries like banks, science companies, and farms.

This new up-and-coming generation of startups is all about adopting more technology in different industries: health care, automotive, retail, banking, consumer package goods, advanced manufacturing companies. Anand Sanwal from CB Insights noted that “The marriage of technology and data is speeding things up“, and new-generation startups “are all trying to figure out how technology helps reduce costs or how technology is going to help them build their next business model.“

There’s one more thing why new-generation European startups are so successful. The “State of European Tech Report“ authors noted that Europe has at last figured out how to effectively attract talents to its startups: “The tech sector is attracting more participants -– whether measured by the healthy increase in professional developers or the uptick in talented executives moving into tech from other sectors. This talent comes from universities, anchor tech companies, and innovation hubs — leading in turn to increases in investment, and growth in anchor tech companies.“

Interestingly, new-generation finance startups are especially booming in the old continent right now, as Revolut, Transferwise, and N26 showed extraordinary growth trajectories in the last few years, seriously challenging the US giants.

A great example is Revolut, which has added six million new customers in just four years, using its mobile payment and money transfer app and debit cards.Revolut’s founder Nikolay Storonsky thinks that at this point US companies can definitely learn from European startups: “To be honest, I think we are more advanced. We are three-four years more advanced compared to US companies in terms of product, in terms of regulation, in terms of size. US companies should learn from Europe.”

According to Capgemini, half of the banking customers globally are now using FinTech companies, and to remain competitive, traditional finance institutions had to decide their next move — collaborate or compete with startups.

The most successful effort so far has been Goldman Sachs: it launched a banking app named Marcus and signed up 25,000 customers in just eight months. As Revolut, N26 and other new-generation finance startups are thriving, everyone wants to know whether they can catch up with Barclays. 

Well, Barclays has twenty-five million customers and clients, compared to six million for Revolut, but Simon Cook says that “The idea that N26 or Revolut could go on to be the size of Barclays, that looks believable to me.“Nikolay Storonsky also thinks that Barclays should be concerned in the long term regarding the European competition: “We are so small compared to them, right? So I think they might be a bit worried, but they still don’t feel it. They might be starting departments and assembling big teams and building some of the products that we build. But in terms of revenue, in terms of management, they are still not really paying attention.“

What is more, European unicorns are already outpacing US rivals: here they are growing at a much faster pace and the overall number of new unicorns have increased by 28 percent in the last year, compared to just 20 percent in the US. 

“We are in a very different state than just a few years ago. We have full ecosystems with incubators, angel investors, and seed funds, as well as entrepreneurs with real desire to build big companies,“ said Bernard Liautaud, the managing partner at London venture firm Balderton Capital LLC.

It’s true: Europe is no longer shadowed by Silicon Valley, as twenty-one billion-dollar startups have emerged here in 2018, bringing a total number of European unicorns to eighty-four, up from thirty in 2014. 

Simon Cook, Draper Esprit CEO, a board member and investor at the startup, noted that “This generation like N26, UiPath, Revolut, and Transferwise are growing twice as fast as previous startups. They could get to in $607,5 million revenues in five years. This means we are building real, $10 billion companies in Europe for the first time.“

To be honest, the actual number is even more impressive, as Europe will soon boast its first $50 billion ‘tech titan’

According to the new research by investment banking company GP Bullhound, Swedish music app Spotify, which is currently sitting at a $34 billion valuation, is expected to reach this impressive milestone in just a few years — by 2021. 

Another front-runner in this race is Dutch payment systems company Adyen, with a current valuation of $22 billion. 

Tom Wehmeier noted that Spotify’s success led other European unicorns in the spotlight, as he said that “There’s a lot of talk sometimes that European founders can’t compete on the global stage, and I think Spotify has shown that…you can still come out on top if you start from the outset thinking big.“

Besides Spotify, there are a few other names that helped to start a shift in the European startup scene: Klarna, Playerhunter, Meero, FoxIntelligence, iZettle, Mono, to name just a few.The UK remains the biggest tech hub on the continent: according to industry group Tech Nation, the UK has now created more unicorns than any other country, besides the US and China.Among other fintech companies, it has given the world TransferWise, Funding Circle, Monzo, and Revolut. 

“We have something like seventy unicorns and 50,000 people with product-level experience, which is a testament to how incredibly dynamic tech sector is in the UK,“ said Daniel Korski, a co-founder of Public, a venture capital firm. He also added that “Nearly 40 percent of the unicorns created in Europe in the last ten years have been in the UK and that lead is increasing.“

But other countries in Europe — think Germany, France, Sweden, Spain — are also blooming when it comes to startups. Upcoming hubs, including Tallinn, Dublin, Lisbon, Copenhagen, Oslo, and Barcelona, not only are growing rapidly but also starting to attract more and more investments.Europe’s startup scene has been eclipsed by Silicon Valley for a long time. But when you think about it, today there’s no reason why European startups can’t match it. 

In recent years, Europe has slowly grown its startup ecosystem, which is in full bloom right now. It’s all right there: direct access to the world’s largest economy, funding, general positivity towards startup entrepreneurship, less competition, less confusion.

For example, in the US, companies have to contend with each state’s banking and insurance regulators, not to mention that laws in each state may vary widely. Meanwhile, a company regulated by European Union financial authorities can operate in all twenty-eight continent countries without having to apply to individual agencies. 

As over the past few years Europe has made incredible progress and is seriously rivaling the US and Asian tech, Manish Madhvani, a tech-focused adviser and managing partner of GP Bullhound, says that “We have every reason to be optimistic about the strength of European tech. Access to capital has improved hugely in the past three years, and with continued ambition, a constant reinvention of the product and a willingness to embrace risk, the Spotifys, Farfetchs, and Adyens of Europe will soon rival the Ubers and Facebooks of Silicon Valley. Europe’s tech ecosystem has the talent, ambition, and velocity for that.“

And when that time comes, we will have our bets on Europe.