"“Why and how are some startups able to achieve the status

of Unicorn? What factors in the European entrepreneurial

ecosystem facilitate the rise of this type of company?”"

Kecskes, Antoine

ABSTRACT

Industries that have long been dominated by traditional business models are now welcoming new players
who are disrupting what has already been established with new technologies and digital platforms. These
are created by ambitious founders who want to dominate their market on a global level. It is with this
approach that some startups manage to raise several million dollars of investment and reach a valuation
of more than 1 billion dollars and achieve the coveted status of unicorn. The aim of this research thesis
will therefore be to analyse how and why certain companies manage to become unicorns and what their
distinctive financial, strategic and organisational criteria might be. The goal will also be to study why
the European entrepreneurial ecosystem lags behind countries such as the US or China in terms of
unicorn creation. For this purpose, an analysis of the three largest European markets will be made, i.e.
the UK, Germany and France with a case study on the first Belgian unicorn as well. This analysis will be
complemented by interviews with experienced entrepreneurs, executives and experts. In conclusion, we
will see that a unicorn is not only a high-growth startup or a financial indicator, but above all a company
that can change and facilitate the lives of a very large number of people and improve society in a global
and positive way.

CITE THIS VERSION

Kecskes, Antoine. “Why and how are some startups able to achieve the status of Unicorn? What
factors in the European entrepreneurial ecosystem facilitate the rise of this type of company?”.  Louvain
School of Management, Université catholique de Louvain, 2021. Prom. : Coeurderoy, Régis. http://
hdl.handle.net/2078.1/thesis:32105

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 Louvain School of Management

Why and how are some startups able

to achieve the status of Unicorn?
What factors in the European
entrepreneurial ecosystem facilitate
the rise of this type of company?

Author : Antoine Kecskes

Supervisor : Régis Coeurderoy

Research Thesis for the Master 120 in :

Business Engineering with a focus in International Business (IB)

Academic year 2020-2021

 II.

Acknowlegdments

First and foremost, I would like to thank Professor Régis Coeurderoy for having first proposed
the idea of this research topic which really fascinated me and for having then accepted to
supervise this thesis. His help, effective advice and guidance have greatly contributed to the
development of this work.

Secondly, my acknowledgments go to all the interviewees who provided useful, relevant and
interesting information for this thesis. I was particularly surprised by their interest in my
questions and the time given by these renowned executives, entrepreneurs and experts despite
their busy schedules.

Finally, I would like to say a big thank you to all the people who contributed to this work, taking
the time to discuss and be interested in the subject of unicorn startups whether in Belgium,
during my Erasmus in Prague or my internship in Luxembourg. A special mention to my family,
my girlfriend and my friends who continuously motivated and supported me during the whole
writing process.

Abstract :
 III.

Table of content

PART 1 - GENERAL INTRODUCTION ............................................................................................ 1

CHAPTER 1: CURRENT CONTEXT .......................................................................................................... 1

CHAPTER 2 : RESEARCH QUESTION ...................................................................................................... 2

PART 2 - LITERATURE REVIEW .................................................................................................... 4

CHAPTER 1- DEFINITIONS, ORIGIN AND CONTEXT................................................................................ 4

Section 1.1 - Startup company : Definitions ..................................................................................... 4
Section 1.2 - Unicorn startups : Origin, definitions and context...................................................... 5
CHAPTER 2- INTERNAL DESCRIPTIVE FACTORS OF UNICORN STARTUPS ............................................. 7
Section 2.1- Growth Strategy: Blitzscaling....................................................................................... 7
Section 2.2 – Unicorn Valuation model and criteria ...................................................................... 21
Section 2.3 - Investment types ......................................................................................................... 25
Section 2.4 - Success and failure factors ........................................................................................ 33
CHAPTER 3 – THE EUROPEAN ENTREPRENEURIAL ECOSYSTEM ........................................................ 38
Section 3.1 - Definitions and Actual context................................................................................... 38
Section 3.2 - Reasons for European delay ...................................................................................... 40
Section 3.3 - Practical Example : Stockholm ................................................................................. 42
Section 3.4 - Summary .................................................................................................................... 43

PART 3 – METHODOLOGY ............................................................................................................. 44

CHAPTER 4 - RESEARCH APPROACH................................................................................................... 44

Section 4.1 – Analysis plan ............................................................................................................. 44
Section 4.2 - Selected database and sample ................................................................................... 45

PART 4 – ANALYSIS AND DISCUSSION ...................................................................................... 46

CHAPTER 5 - GLOBAL OBSERVATIONS AND FACTS ABOUT UNICORNS .............................................. 46

CHAPTER 6 – TOP THREE EUROPEAN MARKETS ................................................................................ 50
Section 6.1 - The United Kingdom .................................................................................................. 50
Section 6.2 – Germany .................................................................................................................... 55
Section 6.3 – France ....................................................................................................................... 60
CHAPTER 7 - CASE STUDY : COLLIBRA ............................................................................................... 65
Section 7.1 - Company presentation and history ............................................................................ 65
Section 7.2 - The Product .............................................................................................................. 66
Section 7.3 – Investment timeline and strategic choices ................................................................ 67
 IV.

Section 7.4 – Organizational Description ...................................................................................... 70

Section 7.5 - How did they become a unicorn? : Success factors .................................................. 71
CHAPTER 8 – DISCUSSION .................................................................................................................. 72
PART 5 – CONCLUSIONS ...................................................................................................................... 75
CHAPTER 9 - LIMITS OF THE RESEARCH ............................................................................................. 75
CHAPTER 10 - CONCLUSION AND RECOMMENDATIONS ..................................................................... 75

PART 6 - BIBLIOGRAPHY ............................................................................................................... 78

PART 7 - APPENDICES ....................................................................................................................... I

APPENDIX 1: CHECKLIST: HOW TO BECOME A UNICORN STARTUP IN 2021. .......................................I

APPENDIX 2 : THE DNA OF A STARTUP ............................................................................................... II
APPENDIX 3 : GDP DISTRIBUTION BY REGION (%) : EUROPE VS THE US. ......................................... III
APPENDIX 4 : RESULTS TABLES FOR 3 EUROPEAN MARKETS : THE UK, GERMANY & FRANCE. ....... IV
APPENDIX 5 : TRANSCRIPT OF INTERVIEWS ........................................................................................ V
 V.

List of Abbreviations

AI : Artificial Intelligence

CEO : Chief Executive Officer

CFO : Chief Financial Officer

CMO : Chief Marketing Officer

CPO : Chief People Officer

CSO : Chief Science Officer

GAFAM : Google, Apple, Facebook, Amazon, Microsoft

HQ : Headquarters

IFRS : International Financial Reporting Standards

IPO : Initial Public Offering

MVP : Minimum Viable Product

GDPR : General Data Protection Regulation

ROI : Return On Investment

SaaS: Software as a service

SBR : Stockholm Business Region

US : United States

VC : Venture Capital
 1.

PART 1 - GENERAL INTRODUCTION

CHAPTER 1: CURRENT CONTEXT

Today people's needs and habits are constantly changing, especially when society undergoes
major changes such as we experienced with the 2008 financial crisis or more recently with the
pandemic that has affected the whole world. The digital age is omnipresent and all businesses
that are being created today must have a digital presence in order to survive. Industries that
have long been dominated by traditional business models are now welcoming new players who
are disrupting and transforming what has already been established with new technologies and
digital platforms. Major innovations such as artificial intelligence, virtual reality, cloud,
machine learning are increasingly influencing all market categories and our economy to change
the way we live and operate as a business and thus ensure a promising future. In medicine, new
machines and technologies are being created to improve care, in the financial sector traditional
banks are being replaced by fully digital neo-banks or smart grids that use software to make
power and energy consumption more efficient (Hoffman & Yeh,2018). The aim is to make life
easier for as many people and businesses as possible by saving them money and above all their
most precious asset, time.

This is how young ventures are created by ambitious founders who want to dominate their
market on a global level. To achieve this leadership status, a hyper-growth strategy is needed
to expand and overtake competitors. To fuel this growth, it is necessary to rely on human
resources by having the right founding team and hiring the right talent but also on significant
financial resources needed to develop the company to a very high level. There are now different
types of investments at each stage of the startup life cycle to raise the funds needed to meet the
ever-growing goals of these high-potential businesses. But before hiring the right people and
seeking sufficient funding, it will be a matter of choosing the right product and the right market
for growth such as the technology sector. Once these internal components are in place, a start-
up will have a better chance of success if it evolves in an environment that encourages the
creation of companies, innovation and research with a series of actors, structures and necessary
supports also known as ecosystem. Europe, for instance, has a number of countries that raise
awareness of entrepreneurship with structures that promote research and innovation, but lags
behind the world's leading economies such as the United States and China.
 2.

As a result, we observe the launch of startups growing at extreme speed and in significant
proportions by constantly recruiting new people and raising several hundred million dollars in
funding. One day such promising projects therefore reach a financial valuation of 1 billion
dollars even before going public and obtain the coveted status of “Unicorn ” (Baroudy,2020) .

CHAPTER 2 : RESEARCH QUESTION

This work will therefore be a research thesis based on the following problem and questions :

“Why and how are some startups able to achieve the status of Unicorn ? What factors in
the European entrepreneurial ecosystem facilitate the rise of this type of company ?”

This topic was chosen firstly because of the modern aspect of the subject of unicorns, which
is becoming more and more widespread in society but not yet sufficiently known by the
general public and secondly because of the author’s interest in entrepreneurship, which
interests a large number of students today who no longer particularly want to work for a
company or under the supervision of an employer.

First and foremost, a literature review will be provided by first defining the main terms of these
two research questions such as startups, unicorns or ecosystem. We will then focus on the
internal components that characterize these unicorns by elaborating an in-depth study of their
growth model, the adapted valuation method, the types of investments available as well as the
success and failure factors of a startup. We will end this literature review by addressing the
second sub-question about the European entrepreneurial ecosystem and how it supports the
creation of unicorns. For this, we will provide relevant insights on the current context in Europe
and the reasons why the continent is still behind the US or China in terms of unicorns creation.
This last chapter will be closed with a practical example of an effective European
entrepreneurial ecosystem, which is Stockholm.

An explanation of the methodology will then be given as well as the plan chosen to carry out
our research. For this, we will also define the selected database and the exact sample of unicorns
on which our analysis will be based. Our approach will be in the form of a global analysis both
quantitative, by providing descriptive statistics of the unicorns in the sample, and qualitative by
conducting 5 interviews with representatives of a unicorn, entrepreneurs, experienced
executives and entrepreneurial experts. To do this, we will first provide general facts and
 3.

observations of unicorns worldwide. A focus on Europe will be mainly made and more
specifically on its three biggest markets being the UK, Germany and France. The purpose will
be to identify potential distinctive financial, strategic and organizational aspects of these
unicorns to provide success criteria facilitating the growth of European start-ups. To illustrate
our analysis in a more concrete and complete way and to make a link with Belgium, we will
develop a case study on the first Belgian tech unicorn: Collibra. This case will consist of a
presentation of the company, its history, its product, the investments raised over time, the
strategic choices made, its organizational composition and finally the reasons for Collibra's
success and its evolution towards unicorn status. We will then interview the chairman of the
board of the startup and one of the co-founders to enrich and complete the case. In a subsequent
chapter of this part, the results of our analysis will be discussed and a summary of the key points
observed will be provided.

The last part will aim to provide all the conclusions that emerge from our research. We will
mention the limitations encountered in this work and we will bring a final conclusion with
general recommendations related to the subject but also to push the research further or to
explore new ideas.
 4.

PART 2 - LITERATURE REVIEW

CHAPTER 1- DEFINITIONS , ORIGIN AND CONTEXT

SECTION 1.1 - STARTUP COMPANY : DEFINITIONS

In order to be able to tackle this topic, let's start by defining the important and main terms of
the research question that will be recurrently repeated in this master thesis. To describe the
concept of unicorns, it is important to first have a complete and accurate understanding of what
a startup is.

A first definition describes it as a young company created by one or more entrepreneurs with
the aim of developing a unique product or service and then delivering it to the market. These
entrepreneurs therefore have an idea that they want to develop , test and validate with target
customers. However, it requires a certain amount of money and thoseventures usually have
little or no financial income at the beginning and are therefore looking for sufficient funds to
get started. For this, they have several sources of funding at their disposal, starting with the
traditional small loans granted by banks or credit institutions or subsidies/grants provided by
the state or non-profit organizations. They can also make use of incubators, which are structures
often linked to universities and business schools and can offer work space, coaching and seed
funding to develop the freshly launched company. Finally, they can also call upon so-called
venture capitalists, described as private equity investors who can provide a certain amount of
capital or angel investors often defined a high net worth individual and found usually via the
entrepreneur's entourage (Ganti,2020). They are willing to invest in promising startups in
exchange for a beneficial return or a share in the company once it has started. As they do not
yet have a track record or a substantial profit to prove, the challenge for these entrepreneurs
will be to convince, via a strong argument or even a prototype, one of these investors that their
idea is new or that it stands out concretely on the market (Fontinelle,2019).

Let's take another definition of a start-up company. According to author and entrepreneur Steve
Blank in his book "The Startup Owner's Manual", this refers to a “ temporary organization in
search of a scalable , repeatable, profitable business model”. It is a business at the intersection
of three key and specific elements: the founders, the financing and the business model.
Concerning the founder(s), represented by an individual, a team or a partnership, they define
 5.

what a startup is through their personality and values. As far as financing is concerned, this
kind of young company can’t hope to grow and develop without money (2012).

SECTION 1.2 - UNICORN STARTUPS : ORIGIN, DEFINITIONS AND CONTEXT

Let us now define and give some explanatory context to the concept of the so-called "Unicorn"
startups. The term was introduced by the American venture capitalist Aileen Lee in 2013 to
refer primarily to Silicon Valley's new technology-focused U.S. companies that have been
established in less than 10 years but refers primarily to privately owned startups valued at $1
billion or more before going public. This fancy and mythical animal, the unicorn, was chosen
by the economist to illustrate and highlight the rare and miraculous side of this type of new
high-value startups. These successful ventures are rare because the market for new technologies
is very competitive and miraculous because their development and evolution takes place very
quickly and in significant proportions (Gutter,2019). In this type of company, growth is so
phenomenal that it can afford to raise several million euros in one round of financing. If the
firm decides to go public (i.e. to carry out an Initial Public Offering or IPO) or is bought out, it
is no longer considered a unicorn (J’aime les Startups,2021). A recent update in June 2021
showed that there are more than 700 startup companies considered as unicorns in the world
today according to CB Insights. Compared to previous years, 240 Unicorn companies were
present worldwide in 2018 while there were “only” 82 in 2015. It can therefore be seen that
their number has almost been multiplied by 5 over a period of 5 years only . Other versions
also include those which are called “decacorns” for those valued at more than 10 billion dollars
or even “hectocorns” valued at more than 100 billion dollars. Unicorn startups are generally
found in 13 specific categories or sectors, these are: Artificial intelligence, e-commerce and
direct-to-customer, data management and analytics, cybersecurity, consumer and retail, e-
commerce and direct-to-customer, education-tech, fintech, health, supply chain, logistics and
travel (CB Insights,2021). We will also study further in this theoretical part the factors that
favor an evolution towards a unicorn status such as the most common features and prolific
industries in which we find these high growth businesses.

The largest number of unicorns are found in the United States and China. On the US side, the
best known are or have been for example Uber, SpaceX or Airbnb. As for China, we find
Bytedance, the company behind the phenomenal growth application TikTok. Bytedance has
beaten Uber as the most valued unicorn company in the world with a valuation of $140 billion
raising it to the impressive threshold of the only “hectocorn” startup in the world today. Another
 6.

example of a Chinese company and second in the ranking of the world’s most valuable unicorns
is Didi Chuxing, the largest car-sharing platform in China with an estimated value of 62 billion
dollars. On the European side, there are also some but in a lesser quantity than their American
or Asian counterparts, it is also this observation that we will also try to understand and study
the reasons behind this poorer performance in the part about the European entrepreneurial
ecosystem. However, the number of European unicorns is steadily increasing year by year to
reach a number of 87 in July 2021 (CB Insights, 2021).

This unique “club” of European unicorns includes such well-known companies as Deliveroo,
TransferWise or Spotify . For instance, in France, the amount of this type of startup is growing
with 15 French unicorns in 2021. Among the best known are Blablacar, the platform
specializing in carpooling, which reached this status in 2016 with an estimated value of 1.6
billion dollars. There is also Dataiku which focuses its activities on analytical solutions and
artificial intelligence (worth an estimated $1.4 billion) or Doctolib, a platform for scheduling
doctors' appointments (Chicheportiche,2020). On the Belgian side, the country has very few
unicorns and the first was the scale-up from Brussels, Collibra, which has reached a valuation
of 1 billion dollars after a fund raising of 100 million dollars in 2019 (Digimedia,2020). More
recently, Odoo, the Belgian enterprise software company, became the first Walloon unicorn by
seeing its valuation reach €2 billion thanks to a €180 million round of financing from Summit
Partners (Charlot, 2021).

In the following section, we will describe in more detail the internal characteristics of unicorn
companies, in particular through their growth strategy, their valuation model, the types of
investment required and finally the success and failure factors.
 7.

CHAPTER 2- INTERNAL DESCRIPTIVE FACTORS OF UNICORN STARTUPS

SECTION 2.1- GROWTH STRATEGY: BLITZSCALING

2.1.1 Definitions and origin

Nowadays, disruptive innovations lead to the launch of many multi-billion dollar start-ups,
otherwise known as unicorns. Investors target disruptive technology projects for which they
inject significant amounts of money to boost their growth rapidly. The goal is to scale very
quickly and to hope for significant returns on investment later on. A recent term today qualifies
this very aggressive growth strategy driven by a very important fund raising and focus on speed
instead of efficiency in an uncertain context and this term is called “Blitzscaling” (Kuratko et
al.,2020).

This concept was introduced by Reid Hoffman, co-founder of the professional social network
Linkedin and the online payment service system Paypal , at Stanford University during a course
called “ Technology-enabled blitzscaling” (Sullivan, 2016). He mainly wrote a book on the
subject with the author Chris Yeh called "Blitzscaling the The Lightning-Fast Path to Building
Massively Valuable Companies" in which they define this innovative approach as an
enlightened growth or "The art of creating a company to dominate a market at all costs, as
shown by Amazon, Google or Airbnb" (2018). The word “Blitzscaling” derives its origin from
the term “Blitzkrieg” which is defined as an offensive war strategy implemented by Germany
during the Second World War which was aimed at triumphing over its opponent, regardless of
the means and resources used to achieve this. This refers directly to the meaning of the
blitzscaling strategy which aims to seize as quickly as possible a market, often global, and
which is set up in such conditions that it does not take into account the notion of short-term
profits. Startups adopting this perspective are looking for a real monopoly by wishing to evolve
very quickly in strong proportions in order to dominate the industry in which they operate.

For instance, Uber, a former unicorn, started offering its customers rides at unbeatable prices,
financed by unlimited use of capital. It is therefore understood that blitzscaling is entirely
opposed to a model of organic, regular and customer-financed growth and their confidence in
the product or service offered. A growth that is built up over time, i.e. a medium-term horizon,
is then in total opposition to the very short term growth sought by the unicorns. GAFAM, an
acronym referring to these web giants such as Google, Apple, Facebook, Amazon and Microsoft,
 8.

are true unicorns at heart, even if their success in their respective markets is not only due to
blitzscaling but also, and above all, to the interest and confidence their clients have in their
products and services. It is important to note, however, that many startups that apply this
strategy of overgrowth do not necessarily succeed in becoming profitable and surviving
(Gutter,2019).

Let’s now imagine a young business that manages to get a product that works, a well-defined
market and a well-developed distribution network, then it has the opportunity to become what
we call a "scale-up". There is no clear and exact definition of this word but basically it refers to
a startup with a more advanced state of development and often operating internationally
(JDN,2019). A scale-up then has the potential to become a unicorn. But how does a start-up
company achieve scale-up status? By adopting a blitzscaling strategy (Hoffman & Yeh, 2018).
Indeed in this search for dominance, ventures often scale up to enlarge their markets and obtain
new customer targets. By way of comparison, a classic scaling tactic takes place in a predictive
context with growth techniques based on efficiency. On the other hand, by adopting
blitzscaling, a business will actually prioritize speed over efficiency in a context that is this time
uncertain (Hoffman & Yeh,2018) . In particular, Hoffman provided three different
characteristics of blitzscaling: quick growth, growing on a global scale and growing through a
first mover advantage. Young companies are not only fighting for a first-mover competitive
advantage but must achieve a certain level of growth before they lose capital. As a consequence
of this focus on speed, some entrepreneurs will not have the time necessary to carry out a
complete experiment in order to have a product that is as perfect and efficient as possible.

In contrast, Hoffman and Yeh postulate in their book that startups should “launch a product
that embarrasses them”. It means that young technology company will first offer a beta version
of its product that emphasizes the core value. The purpose is that the venture should validate
the value created by the idea and thus predict the growth potential it can generate before actually
scaling up (Hoffman & Yeh,2018). This first beta test version is also called “Minimum Viable
Product” or “MVP” (Moogk,2012).

It is then important to specify here that blitzscaling does not fit easily everywhere due to the
fact that an MVP could not be feasible in certain sectors such as pharmaceuticals or hospitals.
Software or intangible products for instance may be better appropriate because they can be
updated rapidly and with less difficulty. This development perspective usually takes place in a
global environment to enable the technology startup to maximize its valuation in a fast way,
 9.

increase the size of the available target market and gain access to additional sources of funding
(Hoffman & Yeh, 2018) . Of course, there are several different sub-levels or stages within this
scaling approach that will be explained in the following section.

2.1.2 Stages of Blitzscaling

An organization evolves in size rapidly and impressively as a result of a blitzscaling strategy.

The number of employees may increase intensively for instance. For example, companies like
Amazon grew from 151 employees in 1996 to 7,600 employees in 1999. Google on its side went
from 284 to 16,805 employees between 2001 and 2007 and finally Linkedin from 370 to 3,458
employees during the period 2008-2012 (Sullivan, 2016). Let's therefore take a look at the
different stages of blitzscaling that Reid Hoffman and Chris Yeh have divided into five groups
by number of employees (2018).

The first level is called the family stage and refers to a business consisting of 1 to 9 employees.
This stage corresponds to raising funds and designing the MVP of the product or service. Then
it moves on to the tribe stage once the company has reached 10 to 100 employees. The
blitzscaling growth perspective during these first two steps is not very present taking into
account that most ventures are looking to develop quickly from the beginning (Kuratko &
al.,2020).

The second stage corresponds to the village stage where blitzscaling is becoming increasingly
influential. A business is at this level when it has more than 100 employees, has defined its
market product and its competitive environment has developed. At this point, competing
companies may begin to want to improve their efficiency while others will continue to want to
grow at an accelerated pace. Blitzscaling will therefore enable a startup to adopt a differentiated
growth angle compared to its rivals and support its market domination more quickly (Hoffman
& Yeh, 2018).

Finally, we reach a higher level which is the city stage for a company with between 1,000 and
10,000 employees or even the nation stage for those with more than 10 000 employees. Having
reached a sufficient stage of growth, the founder is in charge of taking the structure as a whole
out of this accelerated scaling model and instead accelerate the launch of new products or
services (Kuratko & al.,2020).
 10.

2.1.3 The diffusion of Blitzscaling

Let's now look at how this scaling strategy has spread in society and the business world more
specifically. After that, we will discuss the risks that this approach can generate as well as
practical examples of companies that have implemented it successively or not.

Being in an increasingly globalized society with a constant evolution of technology especially

thanks to the intense creation of software and other digital tools in all industries, the
implementation of a blitzscaling growth strategy becomes more and more relevant and easy
even in low technology or mature sectors. The speed at which new digital platforms are being
launched in a fast-moving world also means that the gap between the arrival of new innovations
is narrowing and that the integration of such a development method is almost becoming
necessary for start-ups to achieve unicorn status. In today's society, we are witnessing the rapid
arrival of major technological innovations such as artificial intelligence, machine learning, the
cloud or virtual/augmented reality. These new technologies are having a progressively
important influence in our economy and through the companies that are being created, leading
to a world of opportunities. In practice, in the precision medicine sector, computerized tools
are created and developed to innovate the healthcare. We can also mention the smart grids
which are using software to help revolutionize power efficiency and thus enable the
development of renewable energy sources such as solar panels. All these technological
advances can therefore be facilitated and have a greater impact thanks to blitzscaling (Hoffman
& Yeh,2018).

To get a clear and complete picture of this strategy, let's compare it to other types of rapid
scaling.

2.1.4 Types of scaling

To begin with, what is the exact meaning of the word scaling?

Scaling your company refers to the fact that increasing revenues overcome the new costs
incurred. The basics of scaling refers to three major aspects : capital, speed and efficiency. The
first factor corresponding to how much available capital a business owns which will define the
ease level of scaling. This may include developing its activities, hiring new employees with the
right skills and expertise and managing better problems that arise. The second element speed is
 11.

assimilated to how rapidly a startup is able to conform to and support new growth. Finally, the
last factor, efficiency, defines to what extent an organizations stays optimized while scaling.

It seems relevant to specify that there is no single form of growth because it depends on a large
number of related variables. Typically, there are four different types of scaling: bootstrapping,
slow scaling, fast scaling and blitzscaling (Soellner, 2019).

i) Bootstrapping

Bootstrapping is a concept of scaling which aims to prioritize so-called organic growth by using
the startup's internal resources. This approach will focus on efficiency in an uncertain
environment. Creating a business can be likened to jumping off a building: being efficient in
terms of resources will allows the speed of descent to be reduced and maintained which means
for a business to have time to get to know better its market, its product and the people involved
before experiencing a potential fall. This approach of control and efficiency on growth then
leads to a reduction of uncertainty and is a good tactic to implement when a new business tries
to have more certainty around what Eric Ries calls, in his book “The Lean Startup”, the
product-market fit (2011). This means that the product offered responds to a robust market
demand for a solution to a particular problem or need (Hoffman & Yeh,2018). This form of
scaling is relatively slow because it depends on the product or service being offered, how
creatively the venture’s marketing is working and whether their business model is intrinsically
scalable (e.g. software companies) (Hoffman & Yeh,2018).

So what are the benefits of bootstrapping?

A first positive point is accessibility. Indeed, the bootstrapping growth method aims at scaling
the business via the founder's funds first. This is done by reinjecting the profit from the services
offered to the customers. Bootstrapping is the most accessible way to create and scale a
company even if some capital is potentially required. Not every entrepreneur starts a company
with a product or a market that could benefit from institutional funding, so growing organically
could be a good alternative.
 12.

A second positive element of bootstrapping is that there is more focus on customers here. As
there are no external sources of funding here, the customer is the only source of revenue so it
is necessary to prioritize the service offered to keep them as long as possible and have a full
understanding of their needs. This will create loyalty and add value to the brand.

A third and final advantage is greater freedom. Indeed, as growth strategies progress and more
investors are brought in, the entrepreneur loses more and more control. Byapplying
bootstrapping, the founders have the benefit of retaining control over operations, strategy and
branding as the business is developing. Similarly, there is also less pressure internally and
externally as there is less expectation of growth from investors. This type of pressure can have
a significant impact on the working atmosphere of the organization if key performance
indicators expected by investors are not met (Soellner,2019) . An example of bootstrapping is
GitHub. GitHub is like a Wikipedia for developers. Businesses use it to create websites or
software, while programmers use it to find new projects. The company benefited from
bootstrapping by taking advantage of its low scaling costs and its organic growth despite the
fact that it still raised funds afterwards (Linderman, 2010) .

ii) Slow Scaling

Moving on to the slow scaling stage which almost looks like bootstrapping in having similar
benefits but the contrast is that here businesses choosing to scale slowly may decide to seek
external funding to support the growth of their customer base (Soellner,2019). The focus is now
on efficiency in a more certain environment than bootstrapping. This strategy refers to classic
business management tactics such as aiming for a minimum rate of return so the return on
investment (ROI) is always higher than the cost of capital. This form of optimization is
therefore a good course of action when a company is trying to maximize its ROI in a mature
market in particular (Hoffman & Yeh,2018). External funding here often takes the form of a
bank loan which means that startups in this category often already have well-established bases
and then use this financing to meet strategic needs and not just for growth. Besides this classic
investment type, money could also be provided by a venture capital once the firm has
bootstrapped only after a certain amount of time has passed. The result is that businesses
choosing to integrate a slow scaling strategy are bootstrapped companies that have decided to
postpone financing (Soellner,2019).
 13.

So what are the benefits of slow scaling?

To start with, a first advantage is time. Startups that decide to scale slowly can then place a
higher priority on their efficiency. This leads to a number of results. As for companies that grow
too fast, they can create a gap with their first employees. People perform differently depending
on the stage of their organization's life cycle. Early staff members prefer more freedom, while
later ones prefer a more marked structure. Scaling slowly then allows the early workers to adapt
more easily as the business grows. Another element impacted by time is culture. As new people
are hired, the true corporate culture runs the risk of disappearing. Culture could be an added
value to distinguish from the competition and growing slowly could then help to maintain this
competitive advantage.

A second advantage is balance. The focus should be on the customer as many of the company's
activities still depend on the client as a source of income. An external investment could be
sought in this case which then allows the startup to retain control and still make strategic
decisions on its own. This provision of external capital then opens up the opportunity to expand
the product range or even pivot on the business model if it’s the best decision for development.
In the case of bootstrapping where external capital is not really available, such actions would
be more difficult to implement (Soellner,2019). Many businesses demonstrate the ability to
operate for a number of years before raising funds to extend their core business. For example,
we have the web design course library platform Lynda which has developed without external
resources to the point where it almost failed and was finally acquired by Linkedin for a
substantial price $1.5 billion and implemented directly into the site (Porter,2015). Another
example of slow scaling is the e-commerce platform Shopify that allows you to create an online
shop in a few clicks and sell directly to consumers. The founding entrepreneurs were able to
run the business independently for almost 6 years before looking for new investments
(Duncan,2012).

A third positive factor of slow scaling is better decision making. At this stage, every resource
consumed and money spent counts in order to grow the business in an optimal way. There is
not much security to rely on so it is important to be efficient and make the right decisions in
this case. In situations where there is plenty of capital available, this can lead to less effective
decision making such as overspending or making unnecessary investments. Creativity can also
be impacted. Companies with a large financial base may spend millions on marketing to reach
 14.

their consumers, while others with less investment may develop more creative ideas to reach
their target with their more imaginative and cheaper marketing (Soellner,2019).

iii) Fast Scaling

Fast scaling refers to the growth mode most commonly used by startups financed by venture
capital. A venture capital firm (also called "VC") is a private equity investor who provides
financial support to a growing, high-potential venture for equity in return (Ganti,2021). While
some bootstrapped businesses may experience strong customer growth due to a product that
works well, venture capital is often required at this level to ensure that the scale is well executed
and exploited to the maximum (Soellner,2019). At this point, efficiency could be sacrificed to
encourage growth. Nevertheless, fast scaling takes place in an environment that is certain, the
costs are clear and can be estimated. This is a good approach to gain market share or reach
specific revenue targets. In practice, firms in the financial services sector often privilege their
investments on this level of growth by buying equities, bonds or lending funds. The reason is
the certainty of the environment in which this financing is carried out and therefore the ability
to accurately estimate and know the returns on their investments (Hoffman & Yeh,2018).

So what are the benefits of fast scaling?

A first key point is the development of entrepreneurial skills. Scaling a business fast is a real
challenge and despite the fact that an entrepreneur has the best possible planning and
organization, there will always be obstacles. There are many internal issues that come with
growth including the added and constant pressure for the entrepreneur to reach the next
performance indicator. It is precisely these challenges that represent a real learning experience
for the founder and help to develop essential business skills. In addition to this, being supported
by investors also provides access to an important and interesting network and coaching on
strategic decisions. (Soellner,2019).

The second advantage is about competitiveness. Indeed, when there is a market opportunity,
many companies want to enter it and launch their own product. Growing fast will then give the
benefit of being able to fight against rivals. It is already difficult enough to distinguish oneself
from others and not growing fast enough could really limit the development of the business
(Soellner,2019). Let’s take for example the virtual reality hardware maker Oculus VR. They
started out on Kickstarter (the crowdfunding site for entrepreneurial projects) and were acquired
 15.

by Facebook some time later for $2 billion. They illustrate a case of fast scaling and not
blitzscaling as they only had 25% of the VR market in 2019. The fact that they sell hardware
products and that many consumers are still hesitant to buy it prevents the company from
blitzscaling (Solomon,2014).

A final advantage are the economies of scale and this is even more relevant and visible in the
production sector. The concept behind economies of scale is that as the overall production of
the business increases, the cost per unit decreases. This decrease is due to mass manufacturing,
investment savings and better supplier relations. A good illustration is the network effects in
the digital world. Bringing more people onto a platform creates more value for the users leading
to an additional revenue stream or more commissions for the business (Soellner,2019).

iv) Blitzscaling

We have now reached the growth level applied by unicorn startups: blitzscaling. As explained
previously in the definition of the concept, a business that chooses such a perspective sacrifices
efficiency in favor of speed to boost its growth. (Hoffman & Yeh,2018). It is also a complex
task to implement. Indeed, unless you are a company like Amazon or Google with expanding
recurring revenues, it will be necessary to convince investors to raise funds and it is even more
complicated to convince in a strategy that involves a lot of uncertainty. In contrary, fast scaling
involves more certainty with an easier prediction of returns. Worse still, a venture usually needs
more financial funds during a blitzscaling phase than during a fast scaling one. The reason for
this is that it will be necessary to have enough capital in reserve to cover any damage
encountered along the way. However, despite these negative points, it remains a powerful way
of development for a startup which, if it accepts the risks that this can generate, will have the
opportunity to move forward much faster than the competition. If a business succeeds in
persuading the market for capital and talent such as customers, talented employees or relevant
partners willing to invest, then it has the resources to go blitzscaling and potentially become a
unicorn (Hoffman & Yeh,2018).
 16.

So what are the benefits of blitzscaling?

Firstly, the main purpose of many companies is to achieve the quickest possible growth and
this is what blitzscaling allows. For instance, Facebook attained a market capitalization of 500
billion dollars in just 15 years after its creation (Hoffman & Yeh,2018). Another illustration of
huge growth in a very short time is the firm offering office and workspace solutions, WeWork.
Wework was founded in 2010 and reached a valuation of $17 billion in 2017 after receiving a
$300 million fundraising from the large investment group SoftBank (Delventhal, 2019). Behind
these two practical examples are solutions that can solve problems that affect everyone, such
as being able to communicate whenever you want, wherever you want, and being able to find
work spaces easily via a platform. For this type of business, the goal is to scale as much as
possible to reach a large population and thus create value as quickly as possible (Soellner,2019).

A second advantage is the possibility to create even more impact on society. Implementing
this growth strategy is impactful in itself but the service or product offered may only be useful
and not really impactful. Nevertheless, starting by developing a high revenue business through
blitzscaling can then help to create more impactful future projects with the financial funds
available (Soellner,2019). As an example, Jeff Bezos who created Amazon has grown it by
adopting a such a strategy and has thus revolutionized what is called e-commerce. Today, the
ambitious entrepreneur wants to conquer the space. In the same way, Google, the technology
services company that is a giant in the global information arrangement, is now buildind
autonomous cars (Hoffman & Yeh,2018). These two illustrations show that by developing
large ventures through blitzscaling, it is possible to use the pool of resources earned to create
more impactful projects.

A third important advantage is monopoly dominance. Indeed, the faster a company grows, the
more likely it is to dominate its market. Startups that decide to apply blitzscaling usually
become monopolies without intending it first and being the fastest player does have its benefits.
For example, seeking additional funding from investors, then providing more innovation and
protection by having the ability to acquire the competition and finally increasing its visibility
and branding which will then allow those businesses to hire the best talent and thus support its
monopoly position (Soellner,2019). A good example is the platform Slack, the market leader in
business communication software with over 10 million users per day counted in 2019. Their
value creation comes from the fact that they offer a cloud-based solution that is easy to use and
 17.

then offers multiple tools for easy communication between collaborators within the same firm.
The communication plaftform went public the same year and therefore received a price of 26
dollars per share to reach a considerable valuation of 15.7 billion dollars. Their development
has been mainly through word of mouth and a very well built business plan (Kolakowski, 2019).

To sum up, if there is anything to be learned from these scaling strategies is that it depends on
the market dynamics in which the company is present. It doesn’t matter if a startup does not
have a clear growth approach yet, the most important thing is to focus on the first and most
valuable source of revenue: the customers (Soellner,2019).

The importance of timing

It should now be pointed out that a business could integrate different types of scaling strategies
during its life cycle. Again, the social network Facebook started with bootstrapping to build its
product-market fit. The platform opted for blitzscaling afterwards to support its market power
and outperform its competitors. They switched to fast scaling once their product reached a
mature stage and finally moved down to slow scaling once they became the leader in their sector
(Hoffman & Yeh,2018) . All these steps of progression combined form what is known as the
“S-curve” formed by the growth factors (Payoff, output and result) on the y-axis and the time,
resources and efforts undertaken on the x-axis (please refer to figure 1 below). We can observe
a fairly slow start of growth, then speed up to finally reach a maximum and stabilize.

Figure 1 : Typical S-Curve

Source: Martin,R.(2016). What Goes Up… The S-Curve and its many applications. Retrieved from
https://exploitingchange.com/2016/09/08/what-goes-up-the-s-curve-and-its-many-applications/ .
 18.

Continuing with the example of Facebook, the social network started out as a perfect illustration
of blitzscaling. Year on year revenue growth since its creation was 2150%, 433% and 219%,
ranging from $0 to $153 million in revenue in only 3 years. Nonetheless, after that, they began
to struggle and its expansion decreases due to difficulties in monetizing the platform and
making the transition to mobile. To act as a response , its founder Mark Zuckerberg made two
important shifts by transforming the platform to be mobile-first and then hiring Sheryl Sandberg
as COO who then found a new source of revenue for the social network which is advertising.
Consequently, these decisions enabled the business to turn its growth around and reach over $2
billion in revenues in 2010 (Hoffman & Yeh,2018).

How does this kind of scaling work in practice? Is this a guarantee of success? This is what we
will try to understand in the following section by showing companies that have successively
applied blitzscaling on one side and others that have failed.

2.1.5 Practical examples of Blitzscaling successes and failures

Success story : Flexport

Let's start with a first example of a venture that has successfully applied blitzscaling: Flexport.
Flexport is a global freight forwarding and operating company based in Silicon Valley which
was created by founder and CEO Ryan Peterson in 2013. His goal was to digitally disrupt the
often too archaic freight-forwarding industry. In the course of the year 2015, only two years
after its creation, the startup was able to raise more and more funding from important
investment funds such as : Peter Thiel’s Founderfund , Ashton Kutcher’s A-Grade Investments,
Bloomberg Beta, Google Ventures, and Y-Combinator for a cumulative total of financial
support worth $94 million (Schubarth, 2015). A little more than 2 years after these substantial
financing rounds, the logistics business saw its revenues increase by 25% and could count on
more than 600 customers (Rogers, 2016). In contrast to most startups applying blitzscaling,
Flexport was in fact profitable. According to the man behind the project, Peterson, the idea was
to make money by focusing on volume growth and become one of the first profitable unicorn
startups (Constine, 2016). Arriving in 2017, the company was already opening its fourth place
located in North America resulting in a total of seven offices (Petersen, 2017). Within the same
year, the logistics business had more than 420 employees in all its offices and estimated a
revenue of $500 million for 2018 alone. The following year, it was then considered one of the
 19.

fastest growing private companies with an estimated growth rate of almost 16,000% over 3
years , having grown from 26 employees in 2014 to approximately 1,000 workers in 2018
(Gonzalez, 2018). These numbers show then the huge and impressive impact that this type of
scaling can bring to a startup's resources.

During the year 2019, Flexport opened once again in Seattle, an environment chosen
specifically for its logistical eminence and talent resources (Flexport, 2019). Globally, the
operating firm also has offices in San Francisco, New York, Hong Kong, Amsterdam and
Shenzhen, which all represent important and meticulously chosen trading centres where the
blizscaling strategy has proven its effectiveness. As a result of this continued overgrowth, the
business has gained more than 10,000 customers and suppliers and has more than doubled its
revenue over 2017. Taking these data into account, this places Flexport in the city stage
category. To serve as a comparison, neither Google, Facebook nor Microsoft have reached this
level of growth after only four years of existence (Johnson, 2019).

Their willingness to compete in global transport and trade exchange using technology has led
the company to raise funds from a major investment fund: Softbank Vision Fund. They
managed to raise $1 billion in funding to reach a substantial $3.2 billion worth which allowed
them to acquire the status of unicorn (Konrad, 2019). This colossal source of financing will
then enable the logistics firm to rapidly further develop its physical infrastructures and grow its
pool of engineers. These two factors refer to their operational efficacy which they had
previously neglected by focusing on speed rather than efficiency for the purpose of blitzscaling
(Kuratko & al.,2020).

Failure story: Jawbone

As we have just seen, some unicorn startups with their millions of dollars of investments raised
succeed at blitzscale, others may not be able to. Although a high valuations augurs potentially
a bright future for this kind of business and represents an important signal of its future viability,
not all unicorns manage to stay alive. This is what we are going to illustrate in this part with the
company Jawbone which decided to implement blitzscaling but failed to survive in the long
term (Kuratko & al.,2020).

Jawbone was an American company founded in 1998 by two Stanford University students and
was first called Aliph. The startup created a first product called Jawbone in 2002, a Bluetooth
 20.

headset of military quality, which allowed them to receive a contract by an American federal
agency within the same year. Soon afterwards, Aliph decided to offer its product to the general
public and estimated that it would sell 57.5 million units across the United States by year-end
(Wired, 2004).

In the years that followed, the venture continued to boost its sales figures by setting up strategic
partnerships with Apple, Best Buy and AT&T, among others. Aliph also quickly began to focus
on innovation and growth of its main product Jawbone through multi-million-dollar
investments received from venture capitalists such as Khosla Ventures and Sequoia Capital.
After a successful launch of this first product (thanks to which they changed their brand name
from Alpine to Jawbone), the venture then decided to broaden their range by launching their
own wireless speaker under the name Jambox in 2010. The objective behind such a strategy
was to revolutionize the wireless speaker industry. This new project was an immediate success
and Jawbone did not want to stop there. Soon after, they had the additional and ambitious idea
to enter the rather saturated market of fitness technologies by selling their own UP fitness
tracker (Lashinsky, 2015). Jawbone finally became a viable company after more than a decade
of blitzscaling that served mainly to boost their growth. To do so, they acquired a series of other
technology ventures such as Visere, Massive Health or BodyMedia which mainly allowed them
to expand their talent pool and IP portfolio. During 2014, massive investments worth $147
million have been raised from various venture capital firms such as Khosla Ventures, Sequoia
or Horowitz (Somerville, 2017). As a result of these significant fundraising efforts, Jawbone's
value rose to an estimated $3.2 billion, enabling them to obtain unicorn startup status at that
point in time (Kuratko & al.,2020).

However, despite these investments, problems began to arise in 2013. The venture began to
experience some serious complications with its various products, including loss of market
share. The explanation behind this decline is that they started to reimburse some of their
customers and offered them discounts due to hardware problems related to their fitness tracker
product and delays in delivery times for instance. A few years later, in 2016, those issues led to
the unfortunate ending of the company stopping production and selling their remaining stock
(Kuratko & al.,2020).

We can therefore observe here that even with investments of several million dollars raised, the
unicorn has not been able to survive in the long term and solve problems related to their
launched products.
 21.

What happened? What led to this failure when the business seemed so promising ?

After its valorization and obtaining its unicorn status, the business made too many mistakes to
be caught up by implementing the blitzscaling strategy for its different products. Unfortunately
this is what led to the outright closure. To close this example of failure , let's take up a quote
from one of the founders of Jawbone, Hosain Rahman, who said “You have to push your
product to the point where it seems like it’s going to break” (Kuang, 2009). This state of mind
is then similar to that of Hoffman (introduced at the beginning of this chapter) who stipulate
that companies should launch products that embarrass them. However, this strategy of pushing
the product to its limits or launching it without being completely finished does not apply to
hardware products. Jawbone's mistake in applying blitzscaling was to try to develop its
hardware with overfunding to eventually offer a physical good that wasn't completely
functionable. What they may not have realize is that a hardware repair is expensive as they
experienced with their fitness tracker refund and the many discounts offered. If they had opted
for a software product, for example, it would have been easier and cheaper to repair as software
may be regularly updated at a lower cost. What they should have done is therefore bring all the
finishing touches to their hardware to have something complete and then blitzscale to innovate
in terms of software updates (Kuratko & al.,2020).

Blitzscaling therefore allows organizations to be valued above the billion dollar mark
equivalent to the description of unicorns. It is this valuation that we will look at in the following
section by studying how such amounts are obtained and whether or not there is an overvaluation
in some cases.

SECTION 2.2 – UNICORN VALUATION MODEL AND CRITERIA

2.2.1 Introduction

Let's first remind ourselves the definition of a unicorn : A unicorn refers to a startup generally
active in the field of new technologies or platforms whose valuation is estimated at 1 billion
dollars or more before going public (Lee & Lin,2020). In view of these huge amounts worth
one or several billions, the question is then about what criteria are taken into account when
issuing such a valuation? Do some unicorns tend to be overvalued ?
 22.

First of all, valuation methods can be based on a number of elements such as recorded results,
market size or the composition of the management for instance. One difference that can be
made between the different rounds of funding is the valuation given as well as the level of
development of the startup (Reiff,2021).

When it comes to high-growth startups like unicorns, valuation does not seem to be an easy
task because their financial structure is actually relatively complex. According to a 2017 study
by researchers at Standford University, a small half of companies valued above $1 billion
dollars are overpriced which could then lead to a financial bubble. Valuation techniques and
processes of these unicorns would be entirely biased by their business model. The two authors
behind this research, Ilya Strebulaev and Will Gornall, analyzed 116 unicorns out of 200
existing at that time in 2017. They found that the average overvaluation was 48% and that 13
of them were even 100% overvalued. Therefore, those companies that do not reach a minimum
valuation of 1 billion should not even benefit from the status of unicorn, so coveted by investors
(Gornall & Strebulaev,2017). Indeed, the valuation of these start-ups can be arguable because
it is based on evaluations made by venture capitalists and investors who have themselves
participated in certain stages of the financing. This raises then a question about the objectivity
and reliability of these valuations. Actually, it is not related to the financial performance of the
start-up or similar data. Moreover, which is even more surprising is that some of these highly
valued businesses have not even generated any profit yet (Lee,2019).

2.2.2 The complexity of the financial structure

Why is the financial structure of a unicorn complex?

Firstly, the shares issued by this kind of start-up are completely different from the
common stocks, debt and equity securities usually issued on the financial markets. Usually
investors receive instead preferable convertible shares which have a protection against the risk
of loss called seniority and also an upside potential in the form of an option convertible into
common shares (Gornall & Strebulaev,2017) .

The second reason is that the shares issued are completely different both between
companies and especially between the different financing stages. These different shares
depending on the funding round then have different cash flows and control rights. Determining
these cash flows and rights in loss situations is essential in corporate finance. These different
 23.

groups of shares issued by these companies have drastically different sources of revenue in case
of a loss. Each category has a specific return on investment and these return guarantees are
classified according to their seniority with common shares often owned by founders and
employees in the form of stock options or shares. Those common shares are often inferior to
preferred shares and early preferred shares will be inferior to recently issued preferred shares
(Gornall & Strebulaev,2017).

2.2.3 Valuation model and example

To better understand the logic of corporate finance and the valuation model used to measure
the financial value of a unicorn, let's look at Square Inc.

Square Inc is an American company created in 2009 to facilitate and promote electronic and
mobile payments by offering a simple to use service. Almost 10 years later, the service is used
by millions of small companies to enable credit card payments, track sales and inventory figures
and receive funding. To grow and evolve in such way, Square Inc went through seven rounds
of financing before going public in 2015 (Cussen, 2021). In 2014, the US company notably
reached the Series E funding round and managed to raise $150 million by issuing 9.7 million
Series E preferred shares for a price of $15.46 per share to a multitude of investors. These
preference shares generated as much income as the common shares if Square Inc performed
well but had additional protections if in contrary the business had poor results. Series E
investors were guaranteed to receive at least $15.46 per share if the company was liquidated or
acquired and at least $18.56 per share in a public offering, in both cases with priority over all
other shareholders. These Series E shares were therefore added to the common shares issued
by Square Inc as well as the other Series A, B-1, B-2, C and D preference shares. After this
Series E financing stage, the high-potential business went through the “post-money” valuation
which is typically used in the venture capital industry. The post money valuation is then
calculated by multiplying the price per share from the most recent financing round by the
number of diluted common shares. At that time, Square Inc had 253 million common shares
and options and 135 million preference shares for a total of 388 million fully diluted shares. In
summary, if we multiply this number of shares by the Series E share price of $15.46, the
resulting post money valuation for Square Inc is $6 billion (please refer to formula below)
(Gornall & Strebulaev,2017).
 24.

Post-money valuation formula :

$𝟔 𝐛𝐢𝐥𝐥𝐢𝐨𝐧 = 𝟑𝟖𝟖 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐗 $𝟏𝟓. 𝟒𝟔

We therefore understand the complexity of such a valuation taking into account that a company
can go through so many financing rounds as in this example.

2.2.4 Reasons for overvaluation

When it comes to estimating the value of a company, it is necessary to assume that all shares
have the same value. However, start-ups issue on average eight different types of shares; each
round corresponding to a different share price. Overvaluation would be then due to the wrong
approach to calculation.

The valuation method of a start-up is not similar to that of a mature company with a more stable
situation. For instance, public businesses usually have one common class of shares, whereas
start-ups will create a new class of shares on average every 1 to 2 years when there is a new
round of funding. Moreover, the share value owned by a founder, a business angel (often during
the beginning of the launch cycle) or by an investment fund (before an IPO for example) is not
the same. The shares do not all give the same rights according to their date of issue. The more
the rounds go by, the more the investors expect additional guarantees in exchange for their
investment. Taking into account the presence of these preferred shares, which concerns a large
majority of unicorns, it is impossible to apply the classic valuation method which would give a
valuation of the company artificially inflated by the value of the shares effective at the time of
the last issue. Adopting the classical system would therefore lead to a biased estimation (Gornall
& Strebulaev,2017).

In practice, let’s give several examples of overvalued ventures. If you take Space X, the
American company specializing in astronautics and space, it would have been valued at 10.5
billion dollars in 2017 and was actually worth only 6.4 billion at that time, representing a
significant overvaluation of 65%. In the same year, WhatsApp was also overestimated by 60%,
Airbnb by 26% or Twitter by 21%. As for Uber it was overvalued by 12% in 2017 and lost then
2.8 billion dollars. The preservation of such a high valuation would be due to very high hopes
placed by investors on the business. Many actors in the entrepreneurial ecosystem such as
business angels or investment funds invest millions in young start-ups with high potential and
highly valued but not yet profitable, with the objective of receiving a significant return on
investment in the future. The question to be asked is whether this ecosystem is not now
 25.

constantly looking for a young company with the status of a unicorn, which can then fear the
appearance of a financial bubble (Chabal, 2017).

Before being able to address this issue, it will first be necessary to describe the European
entrepreneurial ecosystem in a further section of this literature review and what are all the
components and factors that influence it. But now let's see what are the different types of
investments a venture can benefit from during its life cycle and which are the most common
ones helping to reach the unicorn status.

SECTION 2.3 - INVESTMENT TYPES

Before analyzing all types of investments available today, it would be interesting to first identify
who are the different stakeholders involved. On the one hand, we have entrepreneurs looking
for financing for their project and as it becomes more developed, they progress to consecutive
rounds of financing. In this section, we will see that usually a company starts with the pre-seed
and seed capital rounds and then moves on to Series A, B and C funding rounds and others that
may follow. On the other hand, we have investors who inject capital into a project firstly
because they believe in an innovative idea and wish to support entrepreneurs but mainly
because they expect a return. That's why, in most of the fundraising in the growth cycle of a
business, the investor asks for a share of ownership in the company. This will allow him to
receive a certain amount of money once the young venture has grown and generated profits.

Above all, the main challenge for these startups wishing to achieve high growth percentages
and thus obtain the coveted unicorn status is to have first the necessary financial resources.
Indeed these small businesses do not necessarily have the direct ability to access the capital
markets, go public or borrow from large banks in the same way as more mature and stable
companies. Therefore, the goal for them is to seek a variety of funding capable of covering their
high-risk projects with no guarantee of profit in return.

Fortunately, in recent years there have been new investment alternatives for these young
companies, such as defending their project on crowdfunding platforms, receiving help from
business angels or raising funds from venture capital firms. These new opportunities have arisen
primarily as a result of the economic and financial crises (Block and Sander, 2009) and also
taking into account the evolution of the size, location/relocation and the specificities of the
market in which the business seeking financial resources operates (De Prijcket et al., 2019).
 26.

It is also relevant to specify that each type of financing will be targeted according to the phase
in which the venture is in its life cycle or in its growth phase as we have studied earlier in this
thesis. Consequently, the different investment types actually go through rounds. Indeed, we will
have for example in the concept phase the funding and/or support coming from FFF (for Family,
Friends and Fools) or grants for instance. As we move on to the start-up stage, angel investors
(which we will define later on in this part) and seed capital may be involved to bring support .
Once the company is growing and needs additional resources to develop and eventually reach
unicorn status, investments may come from venture capital or private equity firms (please refer
to Figure 2 below). As you can see from the graph, the higher the project grows, the lower the
risk for the investor and the more new types of investors join and support financially the
company.

Figure 2 : Company life cycle and investment types.

Source : Funhoff, A. Entrepreneurial Finance : Lesson 1. Louvain School of Management.

We will try to describe in this section the three different categories in terms of financing offered
to young high-potential businesses depending on the growth phase in which they are operating
: Pre-seed capital, Seed capital and Growth stage financing (Novoa,2017).

2.3.1 Pre-seed capital

In the first phase of a start-up's life where the entrepreneur is only at the idea stage or has a
prototype of his project, initial financial funds might be required and this is called pre-seed
capital. Pre-seed capital is therefore used to finance this first period of creation and is generally
composed of three financial support vehicles (Novoa,2017) :
 27.

i) FFF or Family , friends and fools : A classic source of funding that comes into
play at the beginning of an entrepreneurial project to help it grow and which refers,
as the name suggests, to friends, family or fools (generous benefactors for example)
who are willing to lend or give money to help finance the project. In some situations,
family members or friends may invest in exchange for a percentage share in the
company. The entrepreneur therefore receives funds from a group or an entourage
that often has a direct interest in the initiative. To give an idea of the proportion, 35-
40% of start-ups launched receive money from friends or family each year
(Gordon,2020). It is also easier to raise funds through an emotional channel than a
rational one with a required return on investment. This is why young founders often
turn to friends, family or fools in the early stages of launching their business (Beci,
2020).

ii) Angel investors: These could refer to experienced entrepreneurs who have, for
example, acquired enough money from their former businesses to decide to invest
in young ventures or simply refer to investors who want to finance high-potential
projects in growth markets. In comparison to venture capital, business angels often
invest their own money and moreover at one of the riskiest phases of the startup's
life cycle (Novoa,2017).

iii) Accelerators: These are structures offering capital, coaching and workspace in
exchange for a percentage equity in the business. A few years ago there were very
few of these but today they have evolved and can be found in all the major cities of
Europe. Amongst them, the best known are Seedcamp, TechStars or Startup Sauna.
(Novoa,2017) .

2.3.2 Seed capital

Seed capital is also one of the first levels of funding in the growth cycle of a startup and refers
to an equity-based investment. Simply, those who decide to invest expect a share of ownership
in the business in return. This type of investment is usually used to help finance the initial
activities of the business, such as market research, financing the first stages of product
development or paying mandatory costs (CFI,2021). It is also characterized as financial
resources that are essential to get a young company off the ground and find the right product
for the right market. The average seed capital in Europe is between €250,000 euros and
 28.

€750,000 euros or even €1 million . Common investors providing this kind of funding are angel
investors (also present at the pre-seed capital stage), super angels or even already venture capital
firms (Novoa,2017). Seed capital is also one of the riskiest investments because it requires
giving capital in the early phase of a company's development before it has even generated any
profit or revenue. That’s why other players such as banks or venture capitalists decide not to
invest at this stage. Moreover, it is also one of the most complex types of financing because
investors lack the information to make a rational decision. For their capital to be returned and
therefore successful, they need to ensure that the project is viable and that the entrepreneur
behind the idea has the aptitude and skills to make it happen. However, big technology
platforms like Google or Facebook have been founded by people who did not necessarily have
much experience in managing a company. Regardless of the fact that this type of funding
remains very risky, there is still a chance of obtaining interesting returns on investment.

As an example of seed financing success, we have the investor Peter Thiel, one of the first
individuals to believe in and inject money into Facebook. He was actually the first external
investor in the social network and in 2004 he provided $500,000 for a 10% stake in return. He
then sold most of his shares in the business a few years later between 2012 and 2017 and
received a whopping $1 billion (CFI,2021). Nonetheless, more innovative financing vehicles
have enhanced this seed capital phase in recent years and thus the entrepreneurial ecosystem in
general. This is what we will illustrate now with the example of crowdfunding platforms.

i) Crowdfunding platforms

The problem today is to link entrepreneurs who have a project idea with investors who have the
resources to finance it and who are therefore searching for innovative solutions (Kaplan and
Lerner, 2010). To turn the idea into a business, the founders have to defend it to potential
investors, even before venture capitalists or private equity (which we will describe next). Many
platforms or events have been therefore created nowadays to facilitate this meeting between the
two parties and thus give entrepreneurs more opportunities to finance their project. That’s how
crowdfunding platforms came into being. Crowdfunding gives project owners the chance to
finance their idea by receiving a multitude of small contributions from a large number of people
on an online platform (Mollick, 2014). This avoids all the traditional and more formal financial
intermediaries and does not require the help of investors with real expectations of return on
investment (Belleflamme et al. 2014). These new digital solutions allow not only to receive
money for a business idea but also for a charitable cause or simply a personal project, so it is
 29.

not only related to business. In terms of numbers, to date more than $34 billion has been raised
through crowdfunding using simple and user-friendly platforms (Kearl,2021).

Usually there are two type of crowdfunding platforms related to investment in startup projects.
On one hand, we have what is called "reward-based" crowdfunding that often gathers hardware
products or creative initiatives. Platforms like Kickstarter and Indiegogo are the market
dominators. Any individual can support the project they wish and then receive a material reward
in return such as physical or digital products but do not get an equity share in the company. On
the other hand, we have equity-based crowdfunding which, as the name suggests, allows
financial backers to receive equity in the organization and thus expect potential returns when
the startup is able to generate revenues. This type of financing is therefore managed by the
platform, which acts as an intermediary by choosing the projects and the investors interested in
supporting them, while taking a percentage fee on each transaction made. There are a multitude
of equity-based platforms on the European continent and the best known are for example
Companisto , Seedrs or FundedByMe. It should also be noted that the legislation related to this
specific type of crowdfunding varies from country to country and can therefore create barriers
between financial backers and business ideas wishing to raise funds (Novoa,2017).

2.3.3 Growth stage Capital

By this stage, the venture has usually proven the value of its product or service and has already
raised financial backing either from the founders' own capital directly or from people around
them such as family, friends or business angels (pre-seed and seed capital). As time goes by,
the company sees its number of clients growing and aims to expand its activities. The business
has then reached a certain level to be at the same stage or above its competitors with their highly
valued and recognized product or service. New ambitions are born to develop further, for
example by hiring new staff, investing in new work spaces or even preparing an IPO (initial
public offering). Of course, this whole cycle of growth and fundraising remains an ideal and
sometimes only hypothetical scheme as many startups simply do not manage to obtain sufficient
financial resources to get to this stage. The small number of businesses that manage to scale
and are lucky enough to have the ambition to expand and thus qualify for further fundraising
have had to go through a lot of obstacles and work first. Now that we are entering the next
rounds of funding, this gives investors the chance to inject capital in return for percentage shares
or equity. What are then called Series A, B and C funding rounds refer to a series of progressive
 30.

actions to grow a business through external fundraising after having started by raising pre-seed
and seed capital (Reiff,2021).

i) Series A Funding

When a startup gets to the point of having shown improvement in constructing its business
model and having achieved good results such as an established customer base, stable revenues
or other relevant performance indicators, it has the opportunity to access the Series A funding
round to grow and reach new and more ambitious goals. It is therefore usually the level of
investment that follows the seed capital round as explained before (Chen, 2020). At this stage,
it is possible for the company to offer its product or service to additional markets and this is
why it is important to have a well-established plan at this point to generate revenue in the long
term. Indeed, most of the time young ventures come up with an idea with great potential that
gathers a large number of users but have not yet necessarily thought about a plan to monetize
the project. Generally, Series A investments range from $2 million to $15 million but these
amounts have even increased because of the technology valuation industry and in particular the
unicorns. For instance, the average amount was about $15.6 million in 2020. At this level,
financial backers are not only looking for innovative ideas, but above all for a startup with an
innovative idea and specially a solid strategy to monetize it in the long term and thus guarantee
them returns on investment in the future. Companies going through the Series A round reach a
valuation of up to $23 million. We are already at a fairly high stage of financing but not yet at
the billion-dollar level of unicorn status. Those who provide capital to these high-potential
businesses come from large venture capital firms, the best known of which are for example
Sequoia Capital, Benchmark Capital or Greylock (Fundz,2020b). What is interesting at this
stage is that once an investor has injected capital, it is easier to attract others and so on. Business
angels might also be present in Series A but have less impact than in the seed capital round.
Unfortunately, the reality is that less than half of seed-funded companies manage to generate
funds in Series A (Reiff,2021).

ii) Series B Funding

Now we reach the Series B round, the second round of fundraising through financing coming
from venture capital firms and/or private equity backers (Smith, 2020). This stage aims to take
companies to the next level after the development phase. The main purpose is to consolidate
and increase market share. This type of financing provides more opportunities for a business to
grow and thus meet the needs of a growing number of users/customers. Usually, the biggest
 31.

costs are then in improving and strengthening different departments of the company such as
sales, advertising, technology support and especially in hiring new employees. As a result,
companies are increasingly in need of financial funding so the average fundraising in Series B
is measured at $33 million. To sum up, startups arriving at this investment round are already
very well developed and built. This is reflected in their valuation which averages $58 million
(Fundz,2020a). Series B funding is therefore very similar to Series A in terms of the
stakeholders involved with some investors attracting others. The difference is that a new pool
of venture capital firms targeting larger investments join the fundraising (Reiff,2021).

iii) Series C Funding and subsequent rounds (Unicorn level)

At this stage, businesses reaching the Series C funding round have performed very well and
have demonstrated that they can succeed in the long term without doubts. They are now looking
to raise additional funds to develop new products or services, enter a new market or even
acquire other businesses. Series C investors inject a lot of money into young successful ventures
in order to receive more than double their initial investment. This type of funding targets the
fastest and largest growth possible. To become a unicorn, it would be ideal for a startup to reach
this funding round while having an effective scale (Reiff,2021).

Let's take the example of a startup selling vegetarian products and having managed to reach the
Series C funding stage. Having attained this level, it has already achieved many good results
and convinced a number of investors. Selling very well in the US, its goal is now to attack the
European market. However, another competitor has already large market share and therefore a
significant competitive advantage. Faced with this threat, the founders and investors of the
startup want to acquire the competitor to become a true market leader. It is therefore in this type
of acquisition that a Series C fundraising could serve as financial support. As the business
becomes less risky, a new pool of investors come to the table (please refer to figure 2 in the
section about investment types). Consequently, in this funding round, key players such as
investment banks, hedge funds or other private equity firms can then join the venture capitalists
already mentioned. This is due to the fact that these new financial backers want to confirm their
leading position and thus invest significant amounts in successful startups that have already
generated revenues as at this stage (Reiff,2021).
 32.

Most of the time, a company will stop raising funds from external investors at the Series C
round. However, some startups could still continue to Series D and Series E funding. For others
, having raised hundreds of millions of dollars in Series C, these startups are already ready to
expand globally and no longer need to seek new capital. Many seize the opportunity of Series
C to increase their valuation in preparation for an IPO. Having reached this level, these startups
return an average valuation of $118 million for most of them but some reach much greater
valuations and can thus claim to obtain the famous unicorn status (Fundz,2020a).

To sum up, from the Figure 3 below, we can get a clear idea of the average investment amounts
raised in the different rounds. Valuation methods are now based more and more on concrete
data rather than on expectations of the startup's success. However, as we have seen in the
previous section on valuation, some of these businesses are overvalued because the estimation
model is still quite complex.

Figure 3 : 2020: Average Round Sizes

Source: Fundz (2020). Series A, B, C Funding: Averages, Investors, Valuations. Retrieved from
https://www.fundz.net/what-is-series-a-funding-series-b-funding-and-more#c on 06/06/2021.
 33.

SECTION 2.4 - SUCCESS AND FAILURE FACTORS

2.4.1 Introduction

Unfortunately, not all entrepreneurial projects manage to raise funds and succeed from start to
finish. That is why it seems relevant to know what factors influence the success of a start-up to
become ultimately a unicorn. But above all, to understand how to build a high potential
company and survive on the long term, it is interesting to analyse what are the elements leading
to the failure of these ventures to anticipate and avoid them when they occur.

Today more than 100 million start-ups are created every year, which makes three every second.
The problem is that 92% of them will already stop after three years and this remains avoidable.
Entrepreneurial failure has unfortunately become the norm and something completely accepted
without really questioning the model. Sadly, it is fully integrated in the ecosystem and the
impact is not only financial but much more. Indeed, the classic mindset of a venture capital firm
,when faced with failure, is to say that despite all those companies that do not succeed, all those
that become unicorns will generate huge profits and could therefore compensate for the losses
recorded. This remains a very limited vision because the human and mental impact on failed
entrepreneurs can be significant. The human aspect is therefore much less considered than the
financial aspect when a business breaks down. Many entrepreneurs report having suffered from
depression, stress, high anxiety and other mental concerns as a result. Today's social culture
mainly shows successful founders by showing in the press those who have raised huge amounts
of money for instance because failure sells less, even though it remains very common in many
start-up launches (Pride,2018). We will then analyse in this part what are the factors of failure
and how it remains preventable for most companies to better understand how a young venture
can succeed in the long run.

According to Jamie Pride, a multi-business entrepreneur and investor (which allows him to
have both approaches), entrepreneurs are people who do not want to conform to the system.
They don't want to work for someone else or for a big company and prefer to make their own
contribution to society but many suffer from this and fail to succeed. Starting your own
company should be one of the proudest, appealing and exciting projects in the life of a born
person and not the other way around (Pride,2018). Paul Graham, the famous author,
entrepreneur, investor and creator of a startup accelerator called Y Combinator, made the
difference in an article between startups that are by default dead and those that are by default
 34.

alive. What he means by this is that those that are dead by default are companies that if they
continue to operate in the same way by keeping for instance the amount of expenses constant
or by no longer increasing revenues and sales, they will not have enough financial resources to
survive in the long term. The problem is that most ventures in the early stages of their life cycle
are by default dead and ask the question too late to hope to save themselves. Entrepreneurs and
project creators are under the illusion that raising funds is enough to keep them going but they
are mistaken. Fundraising and reaching the different rounds of financing is not easy, as we saw
in the previous section. It requires a well thought-out strategy, a well-constructed business
model and, as a company advances in the rounds of investments, investors are expecting even
more important results. Moreover, it is important to point out that once a startup has raised a
lot of capital it does not mean its future success especially if it is by default dead. On the other
side, a business that is alive by default means that it has reached or is close to reaching break-
even point and is able to endure with its existing cash. These startups are then in a position to
raise funds and think about new ambitions to scale because their business model works well
(Graham, 2015).

2.4.2 Success factors

An entrepreneurial success does not come all at once, it requires a lot of efforts and sacrifices
such as working hours and hours, not seeing family, friends or relatives, not being sure of your
future and taking a lot of professional risks. It is not a long and quiet road, but a road made of
obstacles. However, the rewards can be even greater and many start their own business to make
an impact, to stop working for someone else, to fulfill a personal need or to control all aspects
of a business for example (Feinleib,2011). The goal here will be therefore to give a list of tips
and questions to ask yourself to give the best chance to entrepreneurs to succeed in developing
their startup and potentially achieve unicorn status in the long term. It is not a guarantee of
success but it will provide the best tools and processes to potentially succeed in its market and
eventually grow to avoid maximum failure.

i) Minimum Viable Product (MVP)

First and foremost, the startup must have identified a problem that people are facing and thus
offer a solution to that problem. The aim is to develop a product that is easy to use, readily
available and that generates the lowest possible costs. An important point is also to identify and
know a target market that is large enough to gather a lot of users and thus generate more revenue
to grow (Embroker,2021) .Then, which is necessary to ensure success and thus avoid a quick
 35.

failure, is to develop, what Eric Ries described in his book and concept The Lean Startup, what
is called a minimum viable product (MVP) or a first version of the product that represents a
very low cost. It is a structured perspective in the development of a startup and a way to confirm
the product-market fit. The goal is to test this MVP and to collect a maximum of feedback from
potential users. Based on those feedbacks, the young venture will be able to improve its first
version by making the necessary corrections and then offer it to consumers again. This forms a
cycle and an iteration by testing, correcting, testing and correcting. At the end, thanks to
constant innovations, the venture will be able to propose a final version of its product and
calculate the real costs associated with it (Ries, 2011).

ii) Business Model Development

The second step to ensure the success of a young venture is the construction of a complete
business model. This will confirm that the product or service solves a real problem based on
the feedback received and on the first results observed (Embroker,2021). It is often interpreted
as a business model canvas which is a tool that is used to transcribe the economic model of a
company in a simple way. It is perfectly adapted to the creation phase, and can also be used for
the launch of a new product or a new service. A business model provides for key insights on
the value proposition, targeted customer segment, the revenue or the cost structure for instance.
However, before moving to this stage, the startup must have analyzed its ecosystem, have in
mind its mission and vision and have defined a complete business strategy (Carre,2020).

iii) Obtain funding

As we analyzed in the previous section, a startup has several ways to receive investments
depending on the life and growth cycle it is in. First, it can bootstrap first by using the financial
resources of the founders themselves or from friends and family. Then, in order to develop
further, the company can ask for help from external investors via seed capital and the following
serial rounds. There are also new financing alternatives such as crowdfunding campaigns that
will allow to raise funds from a community of people willing to support the project as we have
also seen previously (please refer to sub-section about Seed Capital). Finally, there are the
classic methods of funding such as banks, venture capital or credit unions. Nevertheless, it will
be more difficult to raise money from them as a young startup that does not yet generate any
income and therefore presents a high risk of loss (Embroker,2021).
 36.

iv) Make your startup scale

A business has several growth strategy options depending on its goals and life stage
(bootstrapping, slow scaling, fast scaling and blitzscaling). Founders should first make sure
they have reached a product market-fit before thinking about growth. Good examples of growth
are expanding into new markets or countries, building a bigger team by hiring new talent or
attracting new investors. Automating business processes (sales, marketing or finance aspects)
could also be a good way to be more efficient and grow faster (Embroker,2021). The
blitzscaling strategy being the most adapted to reach a unicorn startup status because it allows
the fastest growth in spite of the uncertainties and the risks that it can generate.

v) Common features of a Unicorn

Let's now describe what are the general characteristics of a unicorn that can then serve as
success factors for a startup aiming to reach such a status (please refer to Appendix 1). Unicorns
often start with a desire to revolutionize, to disrupt the market. Disruption means transforming
the already established processes of an industry and bringing a new innovation. Disruptive
businesses often offer products that are simpler and less expensive than their higher-end
competitors (Hottenstein,2021). Moreover, they are often very attractive to users due to their
availability and low price which then allows a young venture to gradually dominate the market
with the ambition of becoming the leader. As an example of disruptive services, we have Uber
which has disrupted the taxi industry by offering an easy to use service, available anywhere and
anytime and at an affordable price. Another illustration is Netflix which revolutionized the
video, movie and TV industry by offering an easily accessible streaming service also at a price
affordable to all (Embroker,2021).

A second common feature of unicorn startups is their reliance on new technologies. They use
advanced technologies and software to boost their growth. In particular, the use of software
such as CRM (Customer Relationship Management), automated management software or AI
(Artificial Intelligence) has become common for companies wishing to increase their efficiency
to save time and money (Embroker,2021) .

Unicorns are also predominantly consumer-oriented. On average, more than 60% of unicorns
have B2C business models, offering products or services available all categories of population
at an attractive price . They provide a robust value proposition and a guarantee of how and why
their business will deliver value to individuals (Desjardins, 2018).
 37.

Finally, unicorn startups are growth-oriented. As we saw in the section on growth strategies,
they need to scale as fast and as strong as possible. These companies choose therefore an
ambitious goal called Massive Transformation Purpose (MTP) for their project like Google that
wants to “arrange the world information”. An MTP will carry the whole team and motivates
them to think outside their comfort zone to be able to achieve it (Ismail et al.,2014).

2.4.3 Failure Factors

What makes so many startups fail? Why is it that 90% of the startups created stop after only 3
years? Many entrepreneurs think that this is due to external factors that have impacted the
business but the reality is quite different.

Often, entrepreneurial failure comes from an internal source such as self-destruction and not by
an external influence. Indeed, most young businesses are disruptive, especially unicorns. They
threaten the competition with their innovation and not the opposite. Ventures that are
unsuccessful are not usually challenged by another company but explode on their own. The
mistakes often made in pitches to investors are the lack of a well-constructed business model
and no real value proposition that stands out and that potential users would pay for. For instance,
they have not yet thought about how to monetize their product or service. Many project creators
think they have a great idea but do not realize the difficulty and effort involved with it. Before
understanding the failure factors it is then necessary to remember the definition of what a startup
is. It is defined as a “temporary organization in search of a business model that is scalable,
repeatable and profitable” (Blank & Dorf,2012) . After a startup has discovered and built a
business model that is effective, it converts into a structured company and gives up some of its
DNA. This DNA is made up of three factors: founders, funding and business model (please
refer to Appendix 2) . The failure of an entrepreneurial project can therefore be linked to these
three main causes (Pride, 2018).

In conclusion, creating a startup is a real challenge and reaching unicorn status even more so
and there are many elements to take into account to optimize the chances of success. It doesn't
come overnight and being an entrepreneur is not a talent that you were born with. By taking a
structured view and analyzing what the risk factors for failure are, a business owner increases
his or her chances of succeeding, of also raising funds more easily from investors and of finally
 38.

standing out from the competition. It is also important not to forget the personal impact that a
business failure can have on the founders, not just the financial effect it can create.

CHAPTER 3 – THE EUROPEAN ENTREPRENEURIAL ECOSYSTEM

SECTION 3.1 - DEFINITIONS AND ACTUAL CONTEXT

First of all, let’s give a clear explanation of what an entrepreneurial ecosystem means. A first
definition describes the concept as the interaction of systemic and framing conditions. In the
same sense, just as all living beings are considered in the center of our biological ecosystem,
from an entrepreneurial point of view, systemic conditions such as entrepreneurial networks,
leadership skills, financial funds, talent, knowledge and support measures are at the heart of the
entrepreneurial ecosystem. To continue with this analogy, as far as the biological ecosystem is
concerned, a fruitful cycle can be generated between the systemic elements and those which
are not material but carry some influence which are considered to be linked together by nutrient
cycles and energy flows. Similarly, for the entrepreneurial ecosystem, these energy flows can
be represented by successful start-ups with a well-constructed business model that can be scaled
globally (Cavallo & al., 2019). Let us now provide a second, more complete and more precise
definition of this concept: “The Entrepreneurial Ecosystem is a set of different
individuals who can be potential or existing Entrepreneurs, organizations that support
Entrepreneurship that can be businesses, venture capitalist, business angels, and
banks, as well as institutions like universities, public sector agencies, and the
entrepreneurial processes that occur inside the ecosystem such as the business birth
rate, the number of high potential growth firms, the serial entrepreneurs and their
Entrepreneurial ambition ” (Mason & Brown 2014). It is then inferred that an entrepreneurial
ecosystem is a set of social, economic, cultural and political factors within a certain area and is
improved and developed with the help of different supports that will be useful for growing
newly started startups. From these definitions and explanations, we understand that unicorns
are part of and define a specific entrepreneurial ecosystem and its different factors mentioned
(social, economic, cultural and political) have a considerable impact on the creation of such
high-growth and high-value startups.

In the last few years, Europe has seen an exponential increase in the number of its unicorns
and the speed at which they are created. Well-known examples include the online marketplace
for selling used clothing and accessories Vinted from Lithuania, the neo-bank N26 from
Germany and finally the medical consultation booking service Doctolib from France. In spite
 39.

of this rise in the creation of highly valued businesses, the European continent remains behind
other entrepreneurial ecosystems. Although Europe produces 36% of all formally funded
startups, it generates only 14% of unicorns globally (please refer to figure 4 below) compared
to 50% in the US and 33% in Asia. Moreover, the number of seed-stage ventures in Europe
represents only 40% of the total number launched in the United States as proportion of
population and GDP (Baroudy,2020).

Figure 4 : Europe’s start-up ecosystem

Source : Baroudy,K.(2020). Europe’s start-up ecosystem: Heating up, but still facing challenges. McKinsey. Retrieved from
https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/europes-start-up-ecosystem-
heating-up-but-still-facing-challenges on 10/06/2021.

The European ecosystem has always been less successful than the United States in moving
companies from seed status to more advanced stages of funding. To illustrate this, McKinsey
conducted an analysis between 2009 and 2014 of ventures that received seed capital or business
angel funding. It has been found that young European businesses were 30% less likely to
progress from seed status to later stages. However, it should be made clear that not advancing
to further funding does not mean that companies set up in Europe are straightforward failures.
Indeed, looking at the liquidation rates for each round of financing, European startups do not
fail more than their American counterparts. Nonetheless, these are therefore more likely to stop
after one round of funding and not move on to the next one or fail to get out of it by being
acquired or via an IPO. This could have the impact of reducing the attraction of venture
 40.

capitalists to invest as they generally look for startups with higher revenues or that are able to
do an IPO in order to expect to earn higher financial returns (Baroudy et al., 2020).

Let's now look at the reasons for this European lag in terms of entrepreneurial development and
unicorn creation.

SECTION 3.2 - REASONS FOR EUROPEAN DELAY

3.2.1 Markets fragmentation

As Europe is not a single market, this may have negative consequences for the early stages of
a startup's growth. Even though the continent has open borders and markets, it is still made up
of a multitude of countries with different cultures, languages and governments. For instance,
consumer needs and behaviors then vary between nations which may require companies to
develop different branding for each. Distribution and marketing processes may also be
impacted. The development costs of a European platform are therefore potentially higher than
in the United States if we take into account the different payment methods and the different
languages to be included. A more complex issue is the set of laws and standards that exist in
Europe, which, although fair and clear, are more strict and divided than in the United States,
which forms a uniform set. Regulations for setting up a business and all the processes involved
vary therefore greatly between European countries. Consequently, the internationalization of
European startups is necessary to reach valuations as high as those of American ventures and
thus have more opportunities of becoming a unicorn. They will need to develop and grow as
quickly as possible. This means that a young European business wishing to attack a target of
the same size as the US market would have to develop in 28 countries which are all different
from each other in terms of culture and language (please refer to Appendix 3). It was observed
that 70% of ventures in Europe needed to have a global online presence to be able to achieve
unicorn status, whereas in the US only 50% did. Indeed, most European unicorns have to
internationalize not just outside their own country but outside Europe as well to achieve this
level, whereas in the US it’s less than half (Baroudy et al., 2020).
 41.

3.2.2 Major fundraising harder to achieve

Over time, companies in Europe have always found it more difficult to reach more advanced
stages of fundraising and therefore to grow more due to a lack of capital supply. This is
particularly evident in the Seed D and E funding stages. Therefore, it is quite complicated to
compete with the financially favored American startups. The reason for this would be partly
due to the risk aversion of European investors. However, the good news is that venture
capitalists on the continent have managed to generate more money and bring more support in
recent years. American ventures coming from the same sector and with the same results still
manage to raise more financial resources and reach higher valuations than their European
colleagues though. Another element that could explain this lack of available capital in Europe
is the origin of the funds provided to venture capitalist (VC). European VCs generally receive
money from governments and corporate investors, whereas in the US the money often comes
from pension funds which typically contribute larger amounts. This lack of funds may therefore
result in entrepreneurs limiting their risks and not wanting to expand further for fear of not
being able to raise sufficient funds. For instance, some European start-ups full of potential and
growth might decide to be acquired by a rival instead of trying to grow by their own resources
because of fear of risk (Baroudy et al., 2020).

3.2.3 Cultural influence on success

In Europe, businesses are under much more pressure to succeed than those launching in the US,
where failure is seen as proof of having tried to launch a project and as a necessary learning
lesson. An observation was made that 17% of the German press described entrepreneurship as
something positive compared to 39% in the US media (Jacobi,2018). This European risk-averse
culture then leads entrepreneurs to apply more conservative strategies while missing out on
growth opportunities. They would then be reduced to building a company that is viable but
would not have the ambition to grow to a large scale or unicorn level. An explanatory factor
could be this culture of blame for entrepreneurial failures and bankruptcies in some European
countries, which leads entrepreneurs to take fewer risks. However, successful start-ups are
contradicting this culture now by focusing on maximum growth rather than short-term profits
which may inspire others to do the same. Examples include the German platforms Delivery
Hero, which delivers ready-made meals or Auto1 the used car platform (Baroudy et al., 2020).
 42.

3.2.4 Bringing in talent remains a challenge

On the one hand the cost of human capital related to technology is cheaper in Europe with
developers costing on average 50% less compared to those working in San Francisco or New
York for instance (Startup Genome,2019). On the other hand, the continent has problems in
bringing in talent. Especially in many European nations, equity and stock options in startups
are less attractive to employees. There is also a smaller number of successful, high-growth
technology ventures in Europe, which reduces the chances of generating talent and leaders
capable of developing companies that can reach unicorn status (Baroudy et al., 2020).

So how does this work in practice? What are the ecosystems that encourage and raise awareness
of entrepreneurship in Europe? This is what we will show in the next section by giving a
concrete example.

SECTION 3.3 - PRACTICAL EXAMPLE : STOCKHOLM

To illustrate the European entrepreneurial ecosystem, let's take the example of a European city
that is considered as super-hub for startups, i.e. area that have a strong presence of
entrepreneurs, investors, technology-related talent and other structures or infrastructure for
launching new businesses : Stockholm. Today Stockholm is considered a factory for creating
unicorn startups and among the most competitive cities in the world. The Swedish city has a
reputation as a strong area for attracting talent, entrepreneurs and capital. It is also an attractive
and innovative city offering a very good quality of life, a dense intellectual capital and a lot of
safety. This success is no accident, as it is the result of a deliberate branding strategy driven by
a smart urbanization. It is the local and political authorities that have decided on a joint action
plan to develop the future Stockholm. It was therefore necessary to create this brand strategy
for the city and to bring together under one umbrella all the people who are working on these
issues. This is how the Stockholm Business Region (SBR) infrastructure was created. The aim
of SBR is to develop and promote Stockholm as a business and tourism destination, with the
ultimate goal of creating growth in the region. In 2006, there was also the foundation of the
Stockholm Business Alliance, an association between more than 50 municipalities. Its primary
mission is to promote the region under a common brand: "Stockholm - The Capital of
Scandinavia" to attract foreign investment and talent. Perhaps Stockholm's most important
investment was launched in 1995 when the Swedish capital established a company called
Stokab to build a fibre-optic network. Since then, the firm has been able to provide businesses
with an open network, low prices, operational security and high speed, which is one of the main
 43.

reasons why so many successful technology companies have been set up in Stockholm in recent
years. Sweden is also a technology-driven country. Many innovations have led to the launch of
Swedish companies and unicorns that shine on the world stage. These include for example:
Spotify, which is the number one streaming service today, Skype with over 300 million users
and which was sold for $8.5 billion or the Candy Crush application and its 500 million players.
The Swedish and especially the people of Stockholm, are also very curious about new
technologies. They are about to become a cashless society, for instance. Sweden is also a
country driven by innovation, with many great names in research and science since the 18th
century. Nevertheless, there is also much more to explain the technological achievements of
the past decade. The country also receives support from the European Investment Bank, having
received for example SEK 15 million in funding for the Swedish investment fund Luminar
Ventures. In addition to being of great benefit to existing companies, this kind of support and
ecosystem provides then an ideal framework for unicorns to flourish (Björner &
Zetterberg,2019) .

SECTION 3.4 - SUMMARY

In summary, the European entrepreneurial ecosystem is developing positively but there are still
some aspects to improve. There are actually three specific elements to focus on. Firstly, the
standardization of legislation. The European continent should make the legal framework
clearer for processes related to entrepreneurial activities. The reason is that many companies
want to expand outside their national borders to scale as fast as possible. Laws and standards
should be re-evaluated in order to attract new talent capable of building and developing high
potential businesses. Secondly, Europe should take advantage of its existing assets, notably
the public sector and its power in B2B sectors, to boost its ecosystem. As a key player,
governments should use their influence to encourage entrepreneurship and innovation. B2B
activities are indeed well developed in Europe with a strong digitalization on the continent.
Moreover, with the Coronavirus, more and more businesses should go digital as well. Finally,
Europe should help provide more funding to startups to boost its ecosystem even more. This
would then help founders to be more ambitious and to become leaders in their market. To do
this, governments could support startups by providing more venture capital either through semi-
public financing or by encouraging collaboration between companies, universities and the
sector (Baroudy et al., 2020).
 44.

In the next part and chapter, we will explain the methodology we will adopt to carry out our
research and practical analysis in order to derive distinctive criteria to facilitate the development
of unicorns especially in Europe.

PART 3 – METHODOLOGY

CHAPTER 4 - RESEARCH APPROACH

SECTION 4.1 – ANALYSIS PLAN

In order to explore and verify what has been found theoretically in the first part, which is the
literature review, it will now be a question of observing and analyzing in practice what is the
actual situation regarding European unicorn startups and the entrepreneurial ecosystem
revolving around them. A global and systematic analysis will be carried out quantitatively
through descriptive statistical analysis on Excel on one hand and on the other hand, qualitatively
through interviews with unicorn founders, entrepreneurs and experienced executives. The idea
is to bring out potentially characteristic features of these unicorns and thus discover what factors
in the European ecosystem favor their development, thus answering the main research question
of this thesis.

First of all, we will describe the chosen database and provide a current overview of global and
European unicorn startups, thus providing general facts and observations from this database.

Secondly, we will focus and perform our analysis on a specific sample which will also be
described in detail in the next section and the reasons for its selection. Three aspects of these
unicorns will then be analyzed in a relevant and profound way : financial , strategic and
organizational.

Finally, we will put our results and observations into perspective by developing a case study of
the first and one of the few Belgian tech unicorns : Collibra. We will use theoretical research
and conduct real interviews with people involved in the creation and evolution of the company.

At the end, the results of our analysis will be discussed to provide a clear and comprehensive
summary and make initial conclusions.
 45.

SECTION 4.2 - SELECTED DATABASE AND SAMPLE

For this analysis, we will select the 2021 CB Insights database of all the unicorns in the world.
At the time of writing, July 2021, there are now more than 700 unicorns worldwide with a total
cumulative value of more than $2 trillion (CB Insights,2021). The aim here will be to analyze
the current state of the European ecosystem, which is why we have reduced the list to the 87
European unicorns in existence today. In order to provide a realistic and complete analysis
taking into account the time constraints of this thesis, we will reduce the sample to the United
Kingdom, Germany and France, which together represent more than 70% of European unicorns
(61 in total out of 87) and so are the three largest markets. Finally, we will select the startups
that had achieved unicorn status at least two years ago (before 2020) in order to understand the
success criteria that enable them to survive in the long term. Taking these criteria into account,
we obtain a sample of 33 European unicorns and we will analyze each of them from a financial,
strategic and organizational perspective.
 46.

PART 4 – ANALYSIS AND DISCUSSION

CHAPTER 5 - GLOBAL OBSERVATIONS AND FACTS ABOUT UNICORNS

Before focusing on this specific selected sample, let’s take an overview of the world and
European situation. As already mentioned at the very beginning of this thesis, the best known
examples of former unicorns are for example Airbnb, Facebook or Google. The three most
highly valued unicorns worlwide today are ByteDance (the Chinese company specializing in
artificial intelligence, which is notably behind TikTok) with a value of $140 billion, Stripe, an
American fintech valued at $95 billion, and SpaceX, the space company of the famous
entrepreneur Elon Musk, which is now valued at $74 billion (CB Insights,2021).

A first general analysis of this global database shows that the top 5 countries that have created
the most unicorns are the US in first place with 374 unicorns representing more than 50% of
the total number (which confirms what was said in the literature review), China in second place
with a total of 145 (about 20%), followed by India with 34 unicorns then the European leader,
the UK, with 29 and finally Israel with 18 (please refer to Figure 5 below). These initial results
confirm therefore what we already found in the literature review.

Figure 5 : Top 5 countries in the world by number of unicorns created.

Source: Extracted by the author from the CB Insights 2021 database
 47.

The United States remains therefore the undisputed leader thanks to its large population and
its technological power, but this lead is not only due to these two elements. Their strong
entrepreneurial spirit and flexible government laws are advantages that make their model
difficult to imitate. It was also observed that 10 of the 25 largest entrepreneurial ecosystems
come from the US with for example : Los Angeles area with the well-known industrial pole
Silicon Valley, New-York, San Francisco, Chicago or Boston. Lately, the country has also
been a leader in creating innovative tech solutions in the fight against the Covid-19 pandemic
(David & Mitcham, 2020).

The second highest number of unicorns created is in China. This high position of one of the
world's largest is not very surprising and is explained in particular by their evolution into an
economic superpower in recent years. The country also plans to become the world's largest
economy by 2027 by nominal GDP. Their success also comes from a strong transition from an
industry-based economy to an environment that favors the creation of innovative technological
projects thanks to new government policies. What also helped was the association between
industry and academic community, particularly in Zhongguancun, China's silicon valley, a
breeding ground for start-ups. According to Sébastien Deletaille, an experienced Belgian
entrepreneur interviewed in the context of this thesis, China has nothing to do with the
ecosystem or the level of resources, it is exclusively linked to the structure of their market, their
protectionism and their ability to create successful companies. It's an incredibly strong
economy, and therefore, according to him, China is certainly a country that is threatening to
Europe, but it's not threatening because we're missing the boat. It is threatening because they
are aligning a whole series of new markets, they are very serious and there is a very great
alignment between the centralizing state and the business actors (please refer to Appendix 4 for
interview transcript).

This entrepreneurial dominance of these two great countries is not only justified by the fact that
they are the world's two greatest powers, but is due above all to years of effort and collaboration
on the part of government authorities, major companies, investors, universities and many others
involved in the creation of innovations (Yoon,2021). We can therefore highlight once again
that unlike Europe, which remains a fragmented market, the US and China are two huge and
uniform markets in terms of regulation and language and where competition is seen as a
motivating and positive factor, which facilitates the high-growth of all these startups and the
 48.

evolution towards a valuation of at least 1 billion dollars also known as unicorn. From this
database, it is also observed that globally the categories most represented by these unicorns are
in first place the Fintech sector with 127 startups (17.42% of the total number), in second we
have Internet software and services with 113 (15.50%) and then E-commerce and direct-to-
consumer with 84 unicorns present in this category (11.52%) (please refer to Table 1 in
Appendix 4). Other categories that follow closely behind are artificial intelligence, the health
industry or supply chain/logistics. From these observed figures, we can easily assume and
confirm what was mentioned at the beginning of the literature review by saying that a unicorn
is generally a technology platform.

Let's take the case of the most represented sector, Fintech. Its success is due to the fact that it
offers something drastically different from what a traditional bank does by managing to
transform the traditional distribution channels, which then makes it possible to reach a larger
number of people easily and in a short time. Another advantage of fintech is that it can affect
all sectors. In terms of payment methods, finance is essentially transactional in nature and the
main role of these new platforms is to make transactions easier and faster whether for individual
consumers or businesses (PwC,2017). The FinTech industry's ability to disrupt an already well-
established traditional banking market and reach a large number of people or businesses
globally and quickly makes it an ideal sector to hope to scale massively and become a unicorn
startup as a result.

Now that we have looked at the global statistics, let's focus on the European ecosystem. As
mentioned before, there are now more than 87 unicorns in Europe and this number is growing
day by day despite the fact that the US and China remain the undisputed leaders. Among them,
it is observed that 29 unicorns come from the United Kingdom, which is the European leader
(if we consider the country as economic member of the European Union without taking Brexit
into account) accounting for 33.33% of all European unicorns, Germany is in second place with
a total number of 17 startups (19.54%) and finally France with 15 unicorns (17.24%). If we add
these three countries together, they account for 70% of the total number of European unicorns,
which is why we will concentrate our analysis on these three countries in the following section.
Those are followed by countries such as Switzerland (5), Sweden (4) (which we used as an
example in the theoretical section above, a real start-up factory) and the Netherlands with 4
unicorns (please refer to Table 2 in Appendix 4). Concerning the most represented sectors, we
can observe almost similar statistics to those worldwide with FinTech being the most common
category with 26 unicorns (29.89%). The others are classified in E-commerce and direct-to-
 49.

consumer with a number of 8 (9.20%) or the healthcare and internet software sectors with 7
unicorns each (8.05%) (please refer to Table 3 in Appendix 4).

In terms of valuation, according to our database, Klarna, a Swedish FinTech, is the most
valuable unicorn in Europe today with a value of $46 billion. The e-commerce payments
solution has gone through impressive fundraising rounds, raising for instance over $650 million
in September 2020 via a private equity round, doubling its valuation from $5.5 billion to $10.6
billion at this time and just recently raised a further $639 million in June 2021 from SoftBank
Vision Fund, a major Japanese technology investment fund (Crunchbase,2021b). This investor
appeal and valuation comes from the fact that Klarna is one of the most disruptive and
promising fintech companies transforming the e-commerce experience for millions of
consumers and retailers around the world. The added value of the Swedish unicorn is its "buy
now, pay later" business model, which allows consumers to have interest-free financing for
their purchases in the form of several installments. This means that Klarna first pays the seller
once a client has purchased something from the platform who will be able to pay in instalments
afterwards. The company has 12 million users in the world with 55,000 downloads daily. It
should also be noted that the growing platform has benefited from the Covid-19 pandemic. As
a result of this crisis, consumer needs have changed and commerce is now increasingly
conducted online. This is one of the reasons for the emergence of numerous online platforms
and services capable of adapting quickly to such crises and addressing a large mass of the
population easily. As a result, Klarna has experienced impressive growth and obtained 35,000
new merchants and 200,000 new merchant partners in 2020, including giants like Sephora,
Ralph Lauren or Groupon. To give figures of this hyper growth, a typical characteristic of a
unicorn, the Swedish startup saw its volume and revenue grow by 44% in the first part of 2020
and a 36% growth in its year over year which corresponds to $22 billion and $466 million
dollars respectively. However, this significant growth in volume and revenue did not transform
into net profits. Indeed, during 2020, the platform invested heavily to expand internationally
and to keep funds available in case of credit losses as a result of the pandemic (De Léon,2020).
This is also an observation of the growth strategy adopted by unicorns which means growing
as much as possible (often by expanding internationally) despite making profits in the shorter
term.
 50.

According to the CB Insights database, Checkout.com, the FinTech from the UK (competitor
to Klarna) is the second most valuable unicorn in Europe with a valuation of $15 billion and in
third place are Global Switch, a hardware startup also from the UK, and Celonis, the German
unicorn operating in the data management and analytics category with a valuation of $11 billion
each. However, this is not observed in the database but it is worth noting that at the time of
writing in July 2021, UK digital bank Revolut (also a competitor to Klarna) has seen its
valuation increase sixfold to a value of $33 billion after an impressive $800 million fundraising
from SoftBank and Tiger Global . The neo-bank is now the most valuable private technology
startup in the UK and the second in Europe. This strong fundraising and value increase
illustrates the growing attraction of investors to high-growth technology startups, which could
raise concerns about possible speculation or overpricing in the technology market as discussed
in the literature review. Indeed, investors have put in as much money in the first semester of
2021 as they have given out of all of 2020 (Megaw,2021).

Now that we have provided a general overview of the state of unicorn startups globally and in
Europe, we can focus on the selected sample which is composed of the three countries
representing the majority of European unicorns: the UK, Germany and France.

CHAPTER 6 – TOP THREE EUROPEAN MARKETS

As reiterated above, the aim of this section will be to focus on the three European leaders in
terms of the number of unicorns created and thus understand what factors in Europe could favor
the creation of startups valued at over $1 billion. The analysis will be done by first providing a
brief description of each ecosystem and then, based on the selected data sample, describing the
distinctive criteria of the respective unicorns on three aspects: financial, strategic and
organizational.

SECTION 6.1 - THE UNITED KINGDOM

6.1.2 The Ecosystem

Let's start with the country with the highest number of unicorns created (with a number of 29
out of 87 in total on the European continent): the United Kingdom. The UK is now a worldwide
leader in supporting startups by having many development structures and offering all possible
 51.

support in the right environment. One of the main assets of the nation is the quality of its
workforce. One of the reasons for their dominance on the European continent is that the country
has a technology sector that is growing 2.6 times faster than the nation's economy. Startups in
this category receive millions of pounds of investment from venture capital every year. This
shows that the tech industry has not been really impacted by the COVID-19 crisis, but rather
the opposite. From our analysis of the database, focusing on UK unicorns that achieved unicorn
status more than 2 years ago, we can see that of the 17 companies selected, 8 are again mainly
from the Fintech sector (corresponding to 47.05%), 3 are from Artificial Intelligence (17.64%)
and 2 are in the health category (11.76%). The country offers a number of favorable
circumstances for young companies by having a technology-oriented system that can easily
adapt to transformations. Many technology and innovation businesses are therefore attracted to
the UK due to the fact that a lot of cities have specialized in establishing technology hubs in all
sectors which are further supported by the government. This has led to many international
companies establishing their headquarters in the country (Tremglobal,2021).

For instance, London is one of the most entrepreneurial areas for the creation of successful
start-ups worldwide. In 2019, the British city ranked second with New York and behind the
undisputed leader Silicon Valley. Other ecosystems such as Beijing and Boston rank 4th and
5th respectively (Startup Genome, 2020). Among the keys to the UK capital's success are the
availability of capital and investment and the emerging talent pool. Indeed, London has a large
talent base, particularly in the tech sector known for its easy access and high quality. It is
therefore one of the best cities globally to grow a venture into a dominant international business
thanks to its many connections to other entrepreneurial ecosystems around the world and the
influx of knowledge in the city (London & Partners, 2020). Another of the country's largest
cities, Manchester, has also become a true tech entrepreneurial ecosystem thanks in particular
to the help of the British government with a series of investments and public/private
partnerships with the support in research of giants such as Google or Facebook. It is also a
nation where it seems easier to start a business because the professional environment does not
generally have a dominant bureaucratic aspect and companies benefit from additional tax
advantages with a corporate tax rate of only 19% (Pfeilstetter,2017).

To sum up, the numerous structures helping the creation of startups supported by the
government, the technological and innovative nature of the market offering plenty of chances
to develop a project and finally the presence of international investors makes the United
Kingdom an ideal country for the development of unicorns (Tremglobal, 2021).
 52.

6.1.3 Financial Aspects

Let us now turn to the financial side of UK unicorn startups by first providing a brief description
of the financial landscape. London currently has the most investment in technology projects
after the Silicon Valley. For example, tech startups from United Kingdom raised nearly £11
billion in venture capital funding in 2020 alone. To achieve such figures and to receive so much
investment, partnerships have been set up in particular with UK consulates in some 50 countries
to raise awareness and encourage investment in the country (Tremglobal,2021). London is an
ecosystem with mainly easy access and a certain quality of investment. This availability of
capital is a crucial asset to grow a startup and reach unicorn status later on. As an illustration,
the average investment in the seed stage is $650K in the city compared to $494K globally. The
very large metropolis is still attracting the attention of many foreign investors and almost half
of its Foreign Direct Investment (FDI) between 2015 and 2019 was in IT and software services.
This proves London's power as a technology hub and a real creator of high-potential businesses.
For instance, over the past 30 years, the UK capital has created 38 unicorns, dominating any
other city in Europe (London & Partners,2020).

What emerges from our analysis of the selected sample of the 17 UK unicorn ventures
(combined with data from Crunchbase) is that firstly it takes almost 9 years on average (8.71
to be precise) for these companies to reach unicorn status since their founding date (please refer
to Table 4 in Appendix 4). This is in line with our definition of a unicorn as a startup reaching
a valuation of at least $1 billion before 10 years. In terms of the total amount of investment
raised since the creation of unicorns to present day, the calculated average is $1028.937 million,
or approximately $1 billion which is significant and could illustrate the fact that a very rapid
growth strategy, such as the one chosen by unicorns, requires definitely a substantial amount
of capital. The average valuation is then $5.88 billion and all those startups analyzed have been
financed either by private equity investment or by venture capital, most of which have gone at
least to Series C rounds (please refer to Table 5 in Appendix 4). It should be noted that this data
is regularly updated for the simple reason that many of these companies will potentially receive
further funding and thus increase their valuation over time. The top three unicorns that stand
out in the most valuable startup rankings of the UK are fintech and hardware platforms Revolut,
Checkout.com and GlobalSwitch with valuations of $33bn, $15bn and $11bn respectively.
 53.

We also traced and analyzed the country of origin of investors in UK unicorns to identify trends
in the sources of investment in European unicorns. Our results show that 53% of these unicorns
(total number of 9 out of 17 companies) received financial support from UK investment firms,
41% received resources from US investors and 24% received Japanese financial funds (please
refer to Table 6 in Appendix 4). For the rest, we have mainly China and Singapore (which
supported 12% of these unicorns) and other European and non-European countries. We can
therefore observe that the United Kingdom does indeed offer a certain availability and
potentially easy access to capital. As for the US and Japan, this seems logical because these are
two countries with the largest venture capital firms in the world (notably the US firm Tiger
Global Management or the Japanese SoftBank Group) which can then inject hundreds of
millions of dollars into high potential businesses. It is also noticeable that the higher the
financing rounds and the more funds are raised, the more investors come from outside Europe,
including these large economic powers.

6.1.3 Strategic and Organizational Aspects

Let's now analyze the strategic and organizational aspects of these UK unicorns behind these
multi-hundred million raises and multi-billion valuations to highlight some distinctive
elements. Like any company that wants to grow rapidly on a large scale, its ambition is to
expand into more markets and reach as many people as possible while satisfying investors or
stakeholders. After analyzing each of the UK startups in the sample, more than 12 of the
companies are targeting these investments for international expansion particularly in larger
markets such as the US or Asian countries. These territories are indeed economically powerful,
have large populations and offer favorable conditions for technology companies (the sector of
choice for unicorns). In order to scale as much as possible in a short period of time, it is essential
to reach a maximum number of people or customers and this is why geographical development
seems to be a logical and effective strategy. Another strategic reason behind these large
fundraisings for four of these UK unicorns is to make an IPO or go public. By definition, an
Initial Public Offering (or IPO) is a way for a private company to raise capital by offering shares
to the public. The more a startup wants to grow, the more capital it will need and that is why an
IPO also seems to be an efficient solution because the shares will then be sold publicly for more
than the initial investors put in. However, this is a not a strategy chosen by all small businesses
as some prefer to remain private in order to retain ownership control, have less exposure and
fewer disclosure obligations (Wertz, 2020). A final strategic use of these million dollar amounts
is, as many young companies do, to focus on internal business development. This is illustrated
 54.

by injecting capital into technology evolution (R&D), launching new products quickly,
acquiring other competing companies to support market dominance or improving the
company's financial statements to achieve profitability. For example, we observe that 8 of these
17 highly valued ventures (almost half of them) want to focus the investments they receive on
internal business development. We also see that 41% of these UK unicorns (i.e. 7 out of 17)
have chosen to acquire other organizations to scale for an average of 3 companies acquired.

On an organizational aspect now, according to our analysis, the average number of investors
backing a UK unicorn is 12. Indeed, this number seems high but realistic given the amount of
capital needed to scale to a maximum and reach unicorn status. Of course, it is possible that
some receive sufficient funding from only a few investors. Most of these high-potential
ventures usually have a board consisting of the founders and very experienced industry experts
or entrepreneurs. The UK digital bank Revolut, for instance, has the former international CEO
of Goldman Sachs, Michael Sherwood, as a board member and who can serve as a true advisor
and guide in their strategic and organizational decisions (Faridi,2021). Nevertheless, there is a
risk for the founders to lose control of their business because of the loss of ownership shares
with each arrival of a new investor, who will provide financial support in exchange for a
percentage of equity and a return on investment in the long term. There could also be pressure
on results and targets to be achieved. It therefore depends on the founders' desired vision for
the control of their company. As an example, Revolut is backed by almost 42 investors while
the financial services company BGL Group is supported only by one main financial backer
(please refer to Table 7 in Appendix 4).

Regarding the number of employees working in these British unicorns, let’s first recall the
example we cited in the literature review in the section on the Blitzscaling growth strategy. A
former unicorn that has become a tech giant today, Google, for example, has gone from 284 to
16,805 employees in just 6 years (Sullivan, 2016) . Such an illustration refers to the
overdeveloped growth strategy of unicorns. Putting this into practice and analyzing our sample
of English startups now, it is found that the average number of employees in an English unicorn
is 1635 (please refer to Table 8 in Appendix 4) . This amount seems very large but reflects the
fact that to grow very fast, a startup needs human resources and a pool of talent to reach the
next goals and be even better.
 55.

However, by recruiting so many people to keep up with growth, isn't there a risk of losing
the real company culture that was established at the start?

To retake the example of Revolut, many limits have been met and exceeded as a result of their
hyper growth. Indeed, former employees spoke of work without pay, unfeasible goals or a huge
employee turnover. In particular, there were cases where the startup asked candidates interested
in working for them to find dozens of new clients in order to “test” them for the recruitment
process. For these candidates, this demonstrated the company's mindset of achieving all its
goals no matter what the cost. In particular, many cases of burnout, bullying or wrongful
dismissals have been reported as a result. A Revolut representative even mentioned that their
culture was growing as fast as their organization. What is shocking is that, on average, a person
working in a startup stays between 18 months and 4 years while in this digital bank, more than
half of the former employees stayed less than 6 months and over 80% less than one year
(Mellino, 2019). On the organizational side of British unicorns, it would therefore be interesting
to study the impact of overgrowth on the corporate culture and working environment.

SECTION 6.2 – GERMANY

6.2.1 The Ecosystem

Let’s look at the second largest entrepreneurial ecosystem in Europe after the UK: Germany.
In this section, we will then analyze German unicorns on financial, strategic and organizational
aspects as we have just done with the UK and that obtained the status at least 2 years ago, which
comes to a total of 9 unicorns.

Firstly, let’s talk about the German ecosystem and what factors make it a favorable environment
for the creation of unicorns. The country is a leader in the development of innovative and high
potential companies and it represents one of the most entrepreneurial nations in Europe,
standing out for encouraging and raising awareness of innovation and research across the
continent (Ardoxso,2020). One of the primary reasons for a startup to launch in Germany is the
country's position at the center of Europe. The continent is made up of 28 countries so being
located there allows therefore easier access to a market of over 500 million people. The nation
alone also represents a market of 83 million people and a gross domestic product of $4 trillion
making it the largest European economy. It is simply a powerful entrepreneurial ecosystem
providing a range of financial support and advice from private and public structures (German
 56.

Startup,2021). According to Startupblink, and its ranking of startup ecosystems, Germany is

in 5th position out of 125 states (behind countries like the US, China or the UK) and taking into
account the Brexit, the Germans will be at the top of the startup ecosystems in Europe (David
& Mitcham, 2020).

The business environment is very organized and offers good start-up facilities, good installation
structures and many possibilities for financial support thanks to its stable local economy.
Germany has a number of venture capital firms such as Earlybird which is an international
venture capital firm and one of the most experienced in Europe with facilities in Berlin and
Munich. The VC is present in Seed, Series A and Series B funding rounds and invests mainly
in European tech startups such as one of the biggest German unicorns N26. RocketInternet,
being based in Berlin, is also one of the largest VCs in Germany and has shares in a number of
high potential startups. The country also has many experienced business angels and
entrepreneurs who can help young ventures get off the ground, such as Christian Vollmann who
is known for investing in the early stages of a startup and is an advisor to the German Ministry
of Economics on startup policies. The nation provides a number of financial aids through the
Berlin Investment Bank which provides venture capital financing, loans and grants. There is
also the Federal Ministry of Labor and Social Affairs which has launched a micro-credit
platform for young ventures. Finally, there are accelerators and incubators such as Grant4apps,
which promotes innovation in the medical sector, and the Berlin Startup Academy, which
provides support for startups through its network of experienced investors and entrepreneurs.
Concerning Berlin, the country's first city and 8th in the world in the ranking of business
ecosystems, the most profitable ventures in Germany are located there. This is proven in
practice, as an analysis of our sample of nine German unicorns shows that four of them or 44%
are based in Berlin (please refer to Table 9 in Appendix 4). Other interesting cities with
successful startups are Munich, Hamburg, Frankfurt or Leipzig. Berlin mainly attracts
entrepreneurs from the technological and creative sectors especially greentech and proptech
(which means property tech or technology related to real estate) businesses (Ardoxso,2020).
As far as German unicorns are concerned, according to our observation results, the most
represented sector is again Fintech with 33.33% of these startups, followed by the travel
category with 22.22% and then other sectors such as data management, transport or health
(please refer to Figure 6 below ).
 57.

Figure 6 : Percentage of sectors represented by German unicorns

Source: Extracted by the author as per data from 2021 CB Insights Database

It is also interesting to note the very international side of the country, with more than ten percent
of its entrepreneurs coming from abroad and one fifth of its employees. This is even more
striking in the German capital, with 34% of its workers coming from outside the nation. Berlin's
ambition is to reach the level of big start-up centers like the Silicon Valley, New York or Tel
Aviv and it seems realistic. The more the city welcomes a pool of tech talent into its ranks, the
more dynamic and growing their entrepreneurial ecosystem will be (Ardoxso,2020). Finally,
another positive and favorable point of Germany for the creation of successful startups such as
unicorns is the fact that it is one of the most innovative countries in the world according to
Bloomberg, especially in terms of manufacturing, high-tech and patenting. Other benefits of
the nation include a stable political situation, well qualified workers and a culture of quality
that is well known to Germans (German Startup,2021).

6.2.2 Financial Aspects

Let us now analyze the financial aspect of German unicorns in order to potentially identify
distinctive criteria and thus see if we can already find commonalities with UK unicorns. Before
doing so, let us give a brief description of the German financial environment.

In the year 2020, startups from Germany received an impressive €6.4 billion in venture capital
investments (that's about $7.5 billion) accounting for an increase of almost 20% compared to
the previous year even though there is a reduction in the number of transactions. This growth
is explained by the fact that there has been a rise in late stage capital, corresponding to about
2/3 of all VC funding in the country in the past year. However, as most venture capital firms in
 58.

Germany invest in the early stages of a startup, many did not attend. The evidence is that the
biggest fundraisers in the nation were not supported by local investors. According to a partner
at Picus Capital, a German-based venture capital firm, this is because the entrepreneurial
ecosystem is still quite young there compared to markets such as the United States, which is
why many of the local financial backers remain focused on the early stages of startup
development and the big investments come from outside the country (Hodgson,2021). This
presence of foreign investors during large fundraising rounds is confirmed by analyzing our
results for German unicorns.

According to the CB Insights database and by tracing the country of origin of the investors, we
observe that 100% of the German unicorns selected here (i.e. 9) are financially backed by a US
investment firm, 44% by a German VC and 22% by UK investors. For the rest, they come from
Asian countries such as China and Singapore, from Canada and from European countries such
as Denmark and Switzerland. We can then conclude that the funds needed for the growth of a
German unicorn startup come mainly from outside Germany and Europe, here from the USA.
On the positive side, like the UK, there is still a significant presence of local backers and
investors as almost half of these unicorns are backed by German investment firms (please refer
to Table 10 in Appendix 4) . As far as the average number of years to reach unicorn status from
the date of launch in Germany is concerned, it is equivalent to 16 years because one of the
German unicorns, Otto Bock Healthcare, a high-tech prosthesis company, existing since 1919,
took 98 years to reach the famous status (making it the oldest unicorn in Europe) . This is due
to the fact that the founder had a vision of stable and slow growth. It is therefore a counter-
example to the classic unicorn definition of a business that grows very fast and reaches coveted
status in less than 10 years. However, removing this company from the calculation shows that
the other 8 startups took on average 6 years to become a unicorn (please refer to Table 11 in
Appendix 4). If we now look at the average number of total financial funds raised by these high
potential ventures it is measured at 798 million dollars for an average of 6 rounds of investment.
As with the UK, it can be said that substantial funds and a number of rounds of financing are
constantly required in Germany to support a hyper-growth strategy, characteristic of unicorns,
and thus remain the leader in its market. The average financial valuation of a German unicorn
is equivalent to $3.33 billion and the top 3 most valued are Celonis with a value of $11 billion,
Otto Bock Healthcare and N26 with a similar value of $4 billion (please refer to Table 12 in
Appendix 4).
 59.

6.2.3 Strategic and Organizational Aspects

So what about the strategic and organizational aspects of these German unicorns?

First of all, on the strategic side, as we mentioned for the UK ecosystem, unicorn startups have
the ambition to dominate their market at all costs and to grow by reaching the maximum number
of people possible. We observed that the majority of the use of fundraising was for international
expansion into other markets, a potential IPO or internal development on technology and
innovation.

If we take the example of Germany, we observe that once again the majority of the country's
unicorns aim to use their investment and millions of dollars in fundraising to expand
internationally into other markets, 67% of these startups to be exact. The goal is always to be
able to reach as many people as possible quickly in order to be the leader in their sector and
scale even more. In practice, the unicorn Wefox is using their $650 million in new financial
funds to expand across the European continent first and then target the US and Asia next year
(Busvine,2021). Expanding to as many international markets as possible therefore seems to be
the primary ambition for growth then. Another strategy used by these German unicorns is to
use the large amount of capital available for internal company development, by investing in
innovation and technology. This is the case for 33% of them. For example, concerning the
unicorn Otto Bock Healthcare, their wish in raising millions of dollars is to innovate first in
research and partner with health tech startups and universities (Knowles,2019). Another
example of an internal development strategy is the German data analytics business also unicorn
Celonis, which aims to use the new financial resources to develop their marketing and sales and
to grow their platform in general (Ohr,2019). Another ambition of 33% of these ventures is to
expand their product offerings. This is the case of FlixMobility wishing to expand its means of
transport (Burtin,2021) or the German unicorn GetYourGuide, which aims to develop its
number of travel experiences (Shead,2019). Finally, other growth strategies targeted by 22% of
these unicorns are to acquire other organizations to increase their domination or to aim for a
potential IPO, as in the case of those in the UK (please refer to Table 13 in Appendix 4).

As for the organizational aspect, let's focus again on analyzing the composition of the board
and the shareholding of these unicorns by looking at the average number of investors per
startup. The average per German unicorn is 17 with Wefox reaching the maximum number of
38 investors and NuCom Group only 1. This is therefore higher than the UK unicorns, which
 60.

had an average number of 12 investors. The link can be made with the number of funding
rounds these unicorns have had to go through and the diversity of support they want to have.
The composition of the board is again usually made up of highly experienced and recognized
sector executives and/or entrepreneurs who usually provide key advice to help build a real
strategy and grow the business. Germany's most valuable unicorn Celonis has a board
consisting of Ryan Smith, founder and CEO of Qualtrics and Tooey Courtemanche, CEO of
the management software business Procure. Smith acts as an advisor and collaborating with
another Celonis board representative and founder of the German tech company Hybris, Carsten
Thoma (Ohr,2019). As we have seen in the literature review and as the UK example, to scale
quickly and widely, a unicorn needs human resources and a pool of talent. This is why we
typically see hundreds of people being hired every year in such high potential ventures. Putting
this into practice and using Crunchbase data, we observe in the sample of these selected German
unicorns that there are on average 1967 employees in each one. The maximum is Otto Bock
Healthcare with approximately 8,000 employees due to the fact that the company has been in
existence for almost 100 years and the minimum is Deposit Solutions with 221 workers (please
refer to Table 14 in Appendix 4).

As we have seen with the example of the UK unicorn Revolut, hiring so many people constantly
could create the risk of pressure on the results of each employee and distort the true corporate
culture intended by the founders at the launch of the startup.

SECTION 6.3 – FRANCE

6.3.1 The Ecosystem

Let us now turn to the third largest market in terms of unicorn creation, France. For our analysis,
we focus on startups that obtained the famous status at least 2 years ago. Of the 15 French
unicorns in existence today, our sample, again taken from the CB Insights database, is therefore
reduced to 7 companies (which also means that the amount has doubled in just 2 years).

The French entrepreneurial ecosystem is very dynamic and was composed of more than 10,000
startups in 2019 and could rise to 13,000 by 2022 of which almost 1/3 are located in the Ile-de-
France department. This is directly confirmed with our database as the 7 selected unicorns all
have their headquarters (HQ) in Paris. France is therefore a truly attractive nation because of
its tech ecosystem that creates both jobs and growth, which they also call the “French Tech”. It
 61.

is a real environment that encourages innovation and attracts more and more entrepreneurs. As
Sebastien Lebbe, founder of the Belgian education platform Wooclap and who has many French
clients, says in one of our interviews for this thesis: "You can feel that there is a lot of noise
and marketing about the startup world in Paris and you can see that it works. It's this dynamic
that makes young people want to create a company." (please refer to Appendix 4 for interview
transcript). In particular, it has been observed that 15.7% of the French population aged between
18 and 64 has the ambition to create a company in the next three years. This is 30% more than
the European average or the United States (with 11.9% and 11.7% respectively). The country
is therefore a true Startup Nation that they proudly assume. It is also one of the territories in
Europe that has the largest number of incubators and accelerators to best support young
companies with high potential, they would have no less than 270 support structures. France has
also more than 11,000 business angels, including 5,000 active ones who invest an average of
€16,000 including the well-known Xavier Niel founder of the telecommunications company
Free. Between 2001 and 2019, they have invested nearly €550 million and today there are
currently more than 3,500 French companies supported by a business angel (Chaltiel,2019).
The promising startup and marketplace solutions provider Mirakl is today the French unicorn
(status obtained in 2020 and therefore not part of our analysis) having received the largest
amount of investment in 2020 with 255 million euros raised. The development of tech startups
is undergoing impressive growth as three new French unicorns were born in 2020 and five
already in 2021, bringing the total to 15 and even more every day since. All this positive
entrepreneurial development and the ever-increasing number of startups is due in particular to
the policy of French President Emmanuel Macron, who announced in 2019 that he wanted to
release an amount of €5 billion in end-stage financing in order to reach a minimum of 25
Unicorns by 2025. This ambition therefore seems quite achievable and on track. In 2020, the
Secretary of State for Digital Transition and Electronic Communications, Cédric O, showed his
optimism about the number of 25 French unicorns and also the creation of decacorns (valued
at more than 10 billion dollars) thanks in particular to the increase in the number and size of
fund-raisings (Chaltiel,2021).

6.3.2 Financial Aspects

Let's now take a closer look at the distinctive financial criteria of French unicorns, always
putting this in perspective with our findings for those from the UK and Germany. Despite the
health crisis and economic and financial uncertainty, 2020 was a record year for venture capital
activity. A considerable €5.4 billion was raised by French ventures, representing 3% more than
 62.

in 2019. However, there were fewer rounds of funding as investors sought to focus their
investment on more established startups rather than those in the seed stage. At the European
level, there was almost €37.9 billion raised (Moulinier & Richard, 2021).

As we did with the other two countries, let's now focus on our data sample, starting with the
number of years it took these seven French startups to reach a valuation of $1 billion and thus
reach unicorn status. According to our results, the average number is 9 years, which corresponds
well to the description of a unicorn, with a maximum at OVHcloud, which took 17 years to
become a unicorn, and a minimum at Meero, which took only 3 years from its creation date
(please refer to Table 15 in Appendix 4). This meteoric growth of this photo and video agency
working with artificial intelligence is due in particular to the fact that the startup raised funds
very quickly, having received 1 year after its creation in 2016 nearly 4.1 million euros from
Kima Ventures (Xavier Niel's investment fund) and from Bernard Arnault, the boss of LVMH.
In 2018, the startup had already raised more than €45 million. Their added value comes from
the fact that they delivers photos and videos around the world in a matter of hours, after editing
them with AI for immediate use afterwards (Samama,2019). The average total amount of
funding raised by these French unicorns is $451 million which is lower than Germany and
almost half the total amount raised by those in the United Kingdom. Despite this, according to
the EY venture capital barometer, French Tech has become one of the leading ecosystems in
the European Union in terms of fundraising in 2020, even surpassing Germany for the first time
but still behind the UK (Fournier,2021).

The average number of funding rounds is 6 and the average valuation of a French unicorn is $1
billion with a maximum value of over $2 billion for the car-sharing platform BlaBlaCar (please
refer to Table 16 in Appendix 4). Finally, as we have analyzed for the UK and Germany, we
have traced the origin of investors in French unicorns using CB Insights data. Our results show
that once again the 7 startups selected here are 100% backed by at least one US investor and
57% by a French investor. This seems logical given that the United States is one of the countries
with the largest investment funds but France is still doing well and proving its support to its
high potential startups. For the rest, we find financial supporters from countries like Saudi
Arabia, the United Arab Emirates, Sweden, the UK and Belgium (please refer to Table 17 in
Appendix 4).
 63.

6.3.3 Strategic and Organizational Aspects

Let's now look at the strategic and organizational criteria of French unicorns and put this into
perspective with the results found for the UK and Germany to see if there are any similarities.
In terms of the growth strategy chosen and the use of fundraising, we find the same objectives
as in the UK and Germany: internal development (R&D), international expansion,
diversification or launch of new products, recruiting new talent or aiming for a potential IPO.
In our sample, we found that 71% have a strategy of using new capital for internal company
development. For example, Meero had the strategic ambition to use the funds raised to further
develop its services dedicated to the photography community. This will be done through new
Mymeero tools in marketing, accounting or CRM, helping these photographers to improve the
management of their activities (Chicheportiche,2019). The second most common strategy for
57% of these French unicorns (4 out of a total of 7) is to expand internationally, which is again
an objective pursued as in the other two countries, as it is an effective way to grow even more
and reach as many people as possible. For example, BlaBlacar, the transport platform, wants
to double its bus network by 2022 by tackling new markets such as India, Brazil and Mexico
(Make a move, 2021). Other strategic objectives for 22% of these highly valued startups is to
use the new financial funds to diversify its offer and propose new products or to hire new people
each year (please refer to Table 18 in Appendix 4) .

On the organizational side, let's look again at the average number of investors backing French
unicorns. From our analysis and according to data from Crunchbase, it appears that the average
amount is 12 with a maximum of 21 for the Ynsect venture and 2 for Veepee. It will depend on
the company's management objective regarding ownership shares and the number of financing
rounds it goes through. Regarding the composition of the board, it is also generally composed
of executives or experienced entrepreneurs whose role is to make the unicorn scale and to have
an ambition to dominate the whole world. In practice, we have the French music streaming
pioneer and unicorn Deezer that is managed by Hans-Holger Albrecht the brother of European
Commission President Ursula von der Leyen. Although he failed to bring the company to an
IPO in 2015 due to poor market conditions and investor complexity, he did manage to take the
startup to unicorn status (de Laubier,2020). The background and personality of the founders
can also have a real impact on the success and growth strategy of a young business. In particular,
Stanislas Niox-Chateau, a former tennis champion who is obsessed with performance, founded
one of the few French start-ups valued at more than 1 billion euros : the medical consultation
booking platform Doctolib. From the very beginning of his company's launch, he had set
 64.

himself very ambitious objectives in his business plan, with detailed figures, which he has since
achieved with total determination. What is also astonishing is that the young 33-year-old boss,
despite his thousand employees, continues to cultivate a direct link with practitioners. One day
a week, he resumes his role as a salesman to go prospecting in France or Germany
(Lecluse,2020). Finally, the average number of employees observed is 1783, which is very
similar to the amount found in the part about Germany with 1967 workers and the UK with
1635 on average. This shows therefore that it is necessary to hire hundreds of people in a few
years to support the growth of a unicorn startup (please refer to Figure 7 below).

Figure 7 : Number of employees per French unicorn .

Source: Results extracted by the author from Crunchbase data (2021).
 65.

CHAPTER 7 - CASE STUDY : COLLIBRA

To put all this analysis of the three largest European markets in terms of unicorn creation into
practice and before discussing the results, it seems relevant to put it into perspective with
Belgium by making a case study on the first and one of the few Belgian unicorns : Collibra.
The analysis will be supported by interviews conducted for the purpose of this thesis with
representatives of the Belgian unicorn (please refer to Appendix 5 for interview transcripts).

SECTION 7.1 - COMPANY PRESENTATION AND HISTORY

First and foremost, Collibra is a company specializing in data intelligence and was founded in
2008 as a spin-off from the Vrije Universiteit Brussel (VUB), the Flemish university based in
Brussels, where the four founders were researchers (Biseul,2019). According to the current
chairman of the board of Collibra, Tony Mary, interviewed in the context of this case study,
the idea was originally born in 2006 when these four young master and doctoral students were
working on the subject of data which did not yet have the attraction and impact of today. They
just thought that they could and should create a project around it. The four founders just said
without pretension and with confidence: "We will conquer the world". It is probably this
ambition that has led to the growth they have experienced and the unicorn status. After the
financial crisis of 2008 and the application of data protection laws such as the General Data
Protection Regulation (GDPR) during the year 2016 or in 2018 with the California Consumer
Privacy Act (CCPA), supervisory bodies began to put pressure on large companies and
governments which were forced to refine their data processing controls in order to avoid a new
crisis (Applegate et al.,2019). This is how Collibra came about and took advantage of this
opportunity to support its positioning. However, in the early years after their creation, according
to one of the founders interviewed, they took a few years to find their product market fit and
came to the market too early as they were literally one of the first ventures in the data
governance sector. They even threw away the product they developed twice. To be successful,
you have to listen to your customers and the market and sometimes it takes time to meet their
exact needs. They rejected it twice because it was not what the market wanted. This brings us
back to the chapter 2 of the literature review on the success criteria of a startup and a unicorn.
It is important to develop a first model of your product or service, also called MVP, and to
collect feedback from users as soon as possible in order to make improvements directly.
 66.

Currently the venture is mainly based in Brussels, Belgium, where the engineering teams work
on the company's main product, but also has offices in Poland for its R&D (Applegate et
al.,2019). However, in 2019, as one of Collibra's co-founder and former CSO (Chief Science
Officer) interviewed, Pieter de Leenher, explains, he and the other three founders quickly
realized that they needed to move their headquarters to New York. The reason is that if they
wanted their business to succeed and grow, they had to move their operations quickly there
simply because their software would sell better in a big market like the US where all the big
companies, banks and investment funds are present. According to him, the United States is also
a single, uniform and huge market, unlike Europe where regulation is different in each country
and it is more difficult to scale rapidly and widely (please refer to Appendix 5 for interview
transcripts). During the same year of 2019, Collibra was valued at over $1 billion through a
$100 million fundraising. This was the first time a Belgian tech startup has achieved the famous
unicorn status (S.F,2019). In the next sections, we will therefore study in more detail what led
to their success, both through a precise definition of their product and, as we have also done in
the analysis of the three biggest European markets, describe their financial, strategic and
organizational aspects as well as the success factors that led to their unicorn status.

SECTION 7.2 - THE PRODUCT

The company offers a wide range of software to manage, develop and analyze data more
efficiently. Today they are present in all sectors and their clients are mainly big banks or
multinationals. According to the CEO and co-founder, Felix Van de Maele, data has become a
key issue for companies. In recent years almost all businesses have become aware of the
importance of their data (S.F,2019). Collibra originally specialized in data governance, with
the primary aim of bringing data into compliance with regulations. In addition to the
international regulations applicable to all companies, already mentioned in the previous section
(such as the GDPR or IFRS), banks and insurance companies are also targeted (Biseul, 2019).
According to the startup's chairman of the board, they are now the market leader in data
governance and data management. Being a global market leader is by the way a criterion for
being a unicorn. But what exactly is data governance?

According to Datashift, data governance is defined as a set of standards used by companies to

ensure the quality and integrity of their data. Data governance is no longer an alternative for
businesses that must constantly base their decisions on their data. This includes people, all sets
of actions and technologies related to business data management. Collibra becomes therefore
 67.

one of the best tools on the market for this purpose and comes as a package that can be
customized to the needs of their client, especially to fit their specific culture and business
conditions (Huybrechts, 2020).

Since then, the Belgian unicorn has moved on to another challenge: the valorization of data.
They have expanded their offer with features that make it easier to use data and analyze it,
notably through AI. Then more and more customers were accessing databases hosted in public
or private clouds. In 2019, Collibra decided to make the transition from a company that sells
business management software to a software-as-a-service (SaaS) model. This has resulted in
half of their customers moving to the SaaS model next (Applegate et al.,2019) . According to
the CEO, this SaaS business model is efficient because it generates recurring revenues and all
stakeholders share common interests. Their customers can unsubscribe whenever they want, so
they need to be constantly convinced that the software allows them to be more efficient in order
to retain them. With this extended proposal, Collibra is now a leader in data processing
software. Of course, the great potential of this market attracts large and well-known companies
like IBM or SAP but according to the startup representatives interviewed, they clearly stand out
from the competition and offer a unique product. Their biggest rival for them is not doing
nothing and there are still many companies that do not use specialized data software like what
they provide (S.F,2019). If you look at their website, the main product is the Collibra Data
Intelligence Cloud. The potential benefits for the customer are increased revenue (via customer
acquisition or product innovation for example), operational efficiency (supply chain
optimization), improved risk management (data privacy) and data modernization. Now they
insist more on being an expert in data intelligence which covers a range of areas in data rather
than just data governance as they started out (Collibra,2021).

SECTION 7.3 – INVESTMENT TIMELINE AND STRATEGIC CHOICES

In this section we now turn to the types of investments that Collibra has gone through,
describing the timeline of funding received in detail and explaining how their strategic choices
have evolved over time as a result.

First of all, from the beginning, according to one of the co-founders interviewed, they told
themselves that they and the other three were not going to pay themselves to invest as much as
possible in the development of their company and innovation. They had no children to feed or
mortgage to pay so it was a good time to invest in their project and it showed the confidence
 68.

they had in their idea (please refer to Appendix 5 for interview transcripts) . Nonetheless, to
scale their business, they necessarily needed financial resources. As Collibra is a spin-off of
the VUB, the support and guidance from the beginning was brought by the university. This is
how the investment fund of the VUB, the BI 3 fund (for Brussels Imagination, Innovation and
Incubation) supported with €800,000 convertible loan to help launch the company. The
university has been a real help to them because its research laboratory, STARLab , often works
on international projects which has allowed the tech company to collaborate with companies
from many different sectors. As the founders all started out in research and taking into account
these funds from academic sources, they invested primarily in R&D during the first years of
activity. According to De Leenheer, many young companies do not invest enough in research
or innovation because they do not have enough experience. Their ability to write reports, obtain
patents and public funding has enabled them to raise over $1.5 million in public investment
(Applegate et al.,2019). We will see later that this complementarity and knowledge background
of the founding team has been a real success factor in their growth and evolution to unicorn
status.

A few years and several development phases later, in 2012, Collibra was on the 4th version of
their software and close to bankruptcy. That's why they managed to receive €1 million from
Newion Investments in a Series A round because of their desire to become a true data
governance platform which allowed them to survive. During 2013, the venture started to really
scale and reach hyper growth. They even managed to confirm their first contract worth $1
million with a large US financial services client. Over the next two following years, the number
of employees grew from 30 to 100. The Belgian startup also launched a real online community
during this period, calling Collibra's users "Data Citizens", allowing them to post and answer
questions about the different products, a real forum basically (Applegate et al.,2019).

Arriving in 2015, so only 7 years after the launching, they managed to raise a much higher
amount worth $23 million at Index Ventures with the help of Dawn Capital matching their
Series B funding round. To justify this investment, one of the Index Ventures partners
described Collibra as a new market category and the size of the problem to be solved was large
enough for a solution that did not yet exist (Collibra,2015). This is even confirmed by one of
the co-founders interviewed who said that a unicorn must be the leader in its market and define
it. The strategic use of this new funding was the decision for the team to move their headquarters
to New York, United States. As mentioned in the presentation in the section about the company
presentation, the aim was to expand their client base and attract large companies.
 69.

It was after this stage of their funding timeline that they shifted their business model to the SaaS
licensing model guaranteeing them a larger revenue stream. However, this transition was not
all positive for the company, which was generating less revenue in the short term in advance to
ensure long-term viability. Such a transition in the sales model therefore takes time. As a result,
this led Collibra to raise new funds in the Series C round only one year after the Series B
funding. The company has continued to scale by strengthening and expanding its management
team by hiring new experienced executives (such as a CMO, CFO or CPO) who have previously
worked in large, high-growth companies. To support this growth, in 2017 they therefore entered
the Series C round by raising nearly $50 million from a pool of investors managed mainly by
ICONIQ Capital, an investment fund and wealth manager for Silicon Valley figures such as
Mark Zuckerberg (S.F,2019). The investment was made as a result of the investors’ confidence
in the new licensing model and the successful transition of Collibra’s strategy (Martin, 2017).

In early 2018, things got even more serious as the Belgian data specialist raised nearly $58
million from mainly ICONIQ Capital and Battery Ventures again in the Series D round
(Applegate et al.,2019). Only a year later, in 2019, the company finally raised more than $100
million in the Series E round, bringing their valuation above $1 billion and assuming their
coveted unicorn status. The financing was managed mainly by Capital G, the investment fund
subsidiary of Google (S.F,2019). Finally, in 2020, still aiming to maintain its market leadership,
they reached the Series F round and received more than $112 million in funding from Durable
Capital Partners, ICONIQ Capital and Index Ventures for instance. This leads to a total of
around 346 million dollars raised for the Collibra in only ten years (Crunchbase, 2021a).
Another financial distinguishing feature is year-on-year revenue growth. The CEO mentioned
in 2019 that they wanted to reach a turnover of 100 million euros this year and two or three
years later double that (Biseul,2019). This was confirmed by Tony Mary, the chairman of the
board, in our interview when he said that they were able to reach a revenue of about 120 million
euros in 2020 and that they should reach a revenue of 200 million by the end of 2021 (please
refer to Appendix 5 for interview transcripts) . Doubling its turnover, measured in hundreds of
millions of euros, in just two years seems to characterize the growth that a unicorn venture
experiences.

In summary, when analyzing this investment timeline, Collibra is a perfect example of a

unicorn surpassing the 1 billion valuation in 10 years of creation. Starting with public research
funds, the venture tech company managed to gain the trust of large investors by first moving
 70.

their HQ to the US, evolving their management team but most importantly developing several
versions of their product and changing their revenue strategy by choosing the SaaS model. This
has allowed them to grow again and again and to have a sustainable business model.

SECTION 7.4 – ORGANIZATIONAL D ESCRIPTION

In this section we will look at the organizational aspects of Collibra , analyzing in particular
how the personalities of the four founders have played a role in the company's success.

We will go into more depth on the success criteria that led the startup to reach unicorn status
but having interviewed the chairman of the board and one of the co-founders for this case study,
both mentioned that a crucial success criterion in their growth was the founding team. What
convinced Tony Mary to join the board was the fact that the team was really complementary in
terms of their research, their dynamism and above all their ambition. They didn't hesitate to say
that they would conquer and dominate the world. The co-founder also adds that they were really
looking for opportunities and did not take into account whether they had the resources to do it
or not. They just went for it and had the necessary confidence and ambition to do it. According
to the chairman of the board still, they didn't really have any conflict either on the choice of
positions, whether to be CEO or CTO, everything was done very naturally and automatically.
They have experienced so much growth in recent years that as a result they have had to change
and adapt their business model 4 or 5 times. From an organizational point of view, up to 20
employees is one type of business, up to 50 employees another, and up to 100 another and then
you need a more experienced management team. It is always a question of adaptation and
adjustment. The profile of executives needed to run a $200 million company operating in four
continents is different from the type of executives needed to run a $10 million company
operating in two continents. This is why today Collibra's 8-person board includes the CEO,
highly experienced and qualified executives and investors to manage the almost 750 employees
they employ. They are even aiming for 1,000 people by the end of the year. This number of
employees and growth in terms of recruitment is necessary to follow the growth of a unicorn.
Their main objective today is still to get more and more market share without necessarily aiming
for profitability. Their sales department is therefore composed of approximately 300 people.
With such strong growth, it is also important for them to review strictly how they operate at
least every 2 years and if you don't, you die, you'll never become a unicorn. It came down to
the fact that three of the co-founders left the company at an operational level, not because they
 71.

were no good but because they were no longer suited to the very rapid development (please
refer to Appendix 5 for interview transcripts).

SECTION 7.5 - HOW DID THEY BECOME A UNICORN ? : SUCCESS FACTORS

According to the chairman of Collibra interviewed, it is an ongoing story. With this kind of
business, the goal is not to make a profit and the plan is that despite their strong growth they
will not make a profit for another 5 years. The goal is to dominate and gain market share.
Becoming a unicorn is not an ambition, it is the result of strong growth. You don't decide if you
are a unicorn, the market decides it once the valuation exceeds 1 billion dollars and that’s it.
The founders’ goal was actually to be a world leader and this ambition was one of the crucial
factor in their success because they never hesitated to say from the beginning, "We want to be
the global leader in this industry and we want to play the world”. The purpose is to acquire the
market and that is why investors believed in them. Without a certain amount of ambition it's
very complicated to become a unicorn. The founders’ background in data research and the board
composition filled with experienced people from the sector also played a role in the success
they experienced. A company’s team should always focus on quality, hard work spirit, drive,
understanding of other members, having a certain discipline and focus on execution. These are
the ingredients for them to become a unicorn. According to one of the co-founder, they had a
truly visionary idea even if they arrived too early. They knew they could and should do
something with their idea. The financial crisis of 2008 was also a key point as they took
advantage of the stricter data protection regulations to become a real pioneer and leader in data
governance (please refer to Appendix 5 for interview transcripts).

Above all, another aspect that has allowed them to grow and gain the confidence of investors
is of course having a product that works and that people like. The fact that they have changed
their product and business model several times to adapt to customer needs and have an effective
business model has led them to success. The shift to a SaaS model that generates more recurring
revenues was decisive and gave them credibility with larger and larger financial backers to
become a unicorn.
 72.

CHAPTER 8 – DISCUSSION

Now that we have conducted a complete analysis of our sample data gathering unicorns from
the three largest European markets which are the UK, Germany and France, let's discuss and
make a general summary of the observed results. These results will be put into perspective with
the case study on Collibra that we have just seen and completed with interviews of
entrepreneurs and startup experts.

First of all, why are these three countries home to the most unicorns in Europe? The reasons
are that they are ecosystems that favor and encourage the creation of start-ups by having a large
number of support structures. Support can be provided from the very beginning of a company's
launch by the government which sets up unicorn creation policies as the French President
Macron does in France via business angels, accelerators or incubators. Three of the world's
most entrepreneurial cities and technology hubs are present such as London, Berlin and Paris.
They are also environments that encourage the creation of technological projects, innovation
and research, which is favorable to the creation of higher growth ventures and therefore
unicorns. As Sébastien Lebbe, entrepreneur and founder of the Wooclap platform interviewed
for this thesis, says, there is for instance a real entrepreneurial dynamic in Paris and in France
in general, with many initiatives launched such as the French Tech, the support of business
angels such as Xavier Niel and more and more investment funds that are developing . Two
factors that also stand out in these three markets are the high availability of capital and talent
with the necessary skills to help develop high potential businesses. This is confirmed by
Baudouin de Troostembergh in one of our interviews, who is the creator of a Belgian startup
studio, saying that our strengths in Europe are that we have a lot of tech and operational talent,
we have very good universities with very qualified people coming out of there. The European
cultural mix can also be a strength to play on to help a startup expand internationally (please
refer to Appendix 5 for interview transcripts).

Other European countries wishing to develop their number of unicorns must therefore first
create a real ecosystem bringing together a number of support structures helping at financial,
strategic and organizational level. The sector most represented by unicorns in these three
European markets is, as we have seen globally, FinTech. The reason is that this sector is
completely disrupting the traditional model of big banks by transforming the traditional
distribution channels by focusing on easy-to-use online accessibility. It is therefore easier for a
startup to grow quickly and greatly in this sector because FinTech allows to reach a very large
 73.

number of people in a very short time and everyone needs to make transactions, whether they
are individuals or businesses, in the easiest and fastest way possible. This benefit of accessibility
to a very large number of people is also applicable to other sectors in which we find the most
unicorns, such as internet software, data management or e-commerce.

Furthermore, let's focus on the distinctive financial aspects of these three European markets
and its respective unicorns. What we have observed is that the average total amount of funds
raised is in the hundreds of millions of dollars, a capital needed to follow the strategy of
overgrowth of these companies. It shows the growing interest of investors in high growth tech
startups. As we have seen, they have invested as much money in the first half of 2021 as they
did in the whole of 2020 (Megaw,2021). According to Sebastien Deletaille, a successful
Belgian tech serial entrepreneur interviewed, there is too much cash in the market today and
there are not enough opportunities to deploy investments. So there is competition today from
investors to deploy their money. It’s therefore a good time to be an entrepreneur today because,
according to him, it's the investors that are chasing the entrepreneurs and not the other way
around (please refer to Appendix 5 for interview transcripts) . In the United Kingdom, the
European leader, we observe that startups manage to raise the most money thanks to the greater
presence of British investment funds. For the other two countries, more and more local venture
capital firms are being developed. However, for the majority of European unicorns, when it
comes to raising several tens or hundreds of millions of dollars and thus reaching the billion-
dollar valuation, we have observed that the very large amounts of capital raised come from the
US , where there are the largest investment funds. This was also proven in practice with the
case study on Collibra when they decided to move their HQ to the United States because their
product would sell better there and most of the big investors are there. Regarding the number
of years to reach unicorn status, it was found that in the three European markets the average is
under 10 years. This length of time confirms again our theoretical definition of a unicorn.

On a strategic level, what we have observed from European unicorns is that they all have the
goal of becoming the leader in their market and reaching as many people as possible no matter
what the cost and sacrifice is. Collibra has become a global leader in the data governance and
data management market and according to its chairman, it is necessary to be a pioneer and
leader in your market to be a unicorn. Of all the ventures analyzed from the UK, Germany and
France, and also through the case study, we observed that the strategic objectives for growth
and use of fundraising are similar. These are: international expansion, internal business
development (R&D), diversification or new product launches, acquiring other companies or
 74.

targeting a potential IPO. These are all ways to scale as much as possible, to reach as many
people as possible and to get as much market share as possible. The result of these growth
strategies can therefore lead to a unicorn status.

Finally, from an organizational point of view, what has been observed in these unicorns is first
of all the composition of the board. This is generally made up of the founders, the investors but
also experienced independents in the sector who are there to advise and help the company to
grow to a maximum and achieve its ambitions by bringing their experience and their network.
The personality and background of the founders may also explain why some startups manage
to become unicorns. We observed this in the case study on Collibra and its four founders who
are very ambitious and share common interests or the founder of the French unicorn, Doctolib,
who is a former professional tennis player and always focus on performance. The average total
number of investors in Europe is also generally high, exceeding ten. Why ? Because unicorn
ventures need more and more financial resources as they grow and the more they develop, the
more they attract larger and foreign investors. At the last, we finally observed that the average
number of employees found in the unicorns of these three large European markets generally
exceeds 1500 people. This proves that to grow at unicorn speed, it is necessary for a startup to
hire tens and hundreds of talents every year to hope to reach their goals and dominate the market
even more.
 75.

PART 5 – CONCLUSIONS

CHAPTER 9 - LIMITS OF THE RESEARCH

Before making a general conclusion of this thesis, it seems important to note the limitations of
the research carried out and how it could have been improved.

The first limitation of this research is the length limit imposed on this master thesis and the
deadline for submission, preventing further development of the literature review and analysis
conducted. For instance, it would also have been interesting to provide more relevant
information on the American or Chinese ecosystems, which are the two biggest producers of
unicorns worldwide and to carry out additional statistical analyses and interviews as a result.

Secondly, another constraint concerns the data sample selected. The number of startups and
therefore unicorns is evolving more and more every day, so it was necessary to make a stop in
time to select the number of unicorns to analyze. However, this results in not having the most
recent data and therefore the most relevant and complete analysis possible. Another limitation
of this database is the number of companies selected. As we decided to reduce our sample to
33 unicorns in order to focus on the three largest European markets and those that obtained
status at least 2 years ago, our statistical analysis is therefore reduced and less significant
because there are fewer observations to exploit.

A final limitation of our analysis could be related to the interviews conducted and the time limit
imposed by the people interviewed. It reduced the scope of our questions and thus the amount
of useful insights to be used in our research. Some of them also did not dare to answer all the
questions asked because of the risk of revealing confidential or compromising information.

CHAPTER 10 - CONCLUSION AND RECOMMENDATIONS

We have now arrived at the general conclusion of this research thesis on the subject: "Why and
how are some startups able to achieve the status of Unicorn? What factors in the European
Entrepreneurial ecosystem facilitate the rise of this type of company?”. In order to provide a
complete and relevant conclusion, it seems logical to now provide an answer to these two
questions in a clear and summarized way thanks to all the research carried out.
 76.

First of all, to answer the "Why" a startup becomes a unicorn, we can now assume that a startup
does not have the specific goal of becoming a unicorn. As a representative of a unicorn
interviewed for this thesis said, being a unicorn is the result of a broad and rapid growth strategy
and of extreme ambition brought by the founders from the beginning of the company's launch.
You don't decide to be a unicorn, the market does once the startup reaches a valuation of over
$1 billion. However, attaining this status is a synonym of success and could give more
credibility to potential future investors. It is also worth remembering that the term unicorn refers
to the rarity and miraculous nature of these mythical animals. The success of businesses in an
ultra-competitive tech market is rare and the very rapid growth in important proportions is
somewhat miraculous.

Regarding the "How" to become a unicorn, there are of course many answers to this question
and there is no magic bullet. It is the result of many success factors that favor the evolution of
a startup towards unicorn status but do not guarantee it either. A first criterion for business
success and growth, as many of our interviewees confirm, is the choice of product and market.
The technology sector seems to be therefore the preferred choice for a young venture to become
a unicorn. The reasons are that firstly the technology has fixed costs and the marginal cost is
almost zero. The cost structure of a tech platform is then extremely favorable to growth. The
second element is that technology responds to socio-demographic trends such as for instance
the need in the financial sector to transform the traditional banking model, to automate the
management of a business through software or to digitalize a number of sectors in response to
the COVID crisis for example. Starting a tech venture also allows you to reach a large number
of people very quickly and thus grow to significant proportions and potentially have more
chances of becoming a unicorn. Factors such as founders, funding and board composition are
things that can amplify market choice but will not guarantee growth. In summary, developing
a product in a growing market and having the right resources to scale the company, whether at
the human level by hiring the necessary talent or at the financial level by raising large amounts
of capital to become the market leader, are all elements that will facilitate the evolution towards
unicorn status.

With regard to the factors that boost the development of unicorns in Europe, it would be first
relevant to recall why the continent is behind the United States and China in terms of successful
startups creation. European markets are fragmented with different cultures, languages and
currencies, which makes it difficult for ventures to expand internationally. It is also more
complex to raise larger amounts of money because the biggest investment funds are in the US
 77.

and the regulatory framework is stricter and more complicated in Europe. The European culture
about success in some countries is also completely different due to the higher risk aversion and
the fear of failure which is socially sanctioned more severely than in the US where
entrepreneurial failure is seen as positive and a proof of having tried to launch a project. The
strengths we have in Europe are , for example, the presence of real entrepreneurial ecosystems
and technology hubs like London, Berlin and Paris. Thanks to the presence of support structures
like accelerators, incubators, recognized business angels, investment funds and state and
government support, these environments make it easier to create high-growth startups and
potentially unicorns.

To conclude all this research and the answer to our problem, it is important to remember that
unicorn status is ultimately only an indicator of valuation and the result of significant growth
(thus similar to a successful start-up if we equate growth with success). It’s essential for
founders to have the ambition to dominate an entire market with their company and constantly
growing without necessarily making a profit. To provide recommendations, Europe should
therefore standardize its legal framework to facilitate the international development and growth
of its startups but also to facilitate fundraising. The European continent should also leverage on
its existing strengths and assets, especially in the public and B2B sectors, to expand its power.
Europe has many good universities and talents so a strengthened and improved collaboration
between the academic and entrepreneurial world could increase the commitment to research
and the creation of innovative projects. It would therefore be interesting to study in greater
depth the question of the role and impact of the academic world in the creation of start-ups and
the entrepreneurial ecosystem. A unicorn is not only a high-growth startup but above all a
company that can change and facilitate the lives of a huge number of people and improve
society in a global and positive way. The ultimate goal is to invent or revolutionize a sector by
creating a solution to a problem that affects everyone and thus have a global impact.

Let's end with this quote from Brian Chesky, co-founder of the former unicorn and housing
rental service Airbnb : “ If we tried to think of a good idea, we wouldn’t have been able to think
of a good idea. You just have to find the solution for a problem in your own life." (Curtin,2018).
 78.

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 I.

PART 7 - APPENDICES

APPENDIX 1: C HECKLIST: HOW TO BECOME A UNICORN STARTUP IN 2021.

Source: Embroker. (2021).Retrieved from https://www.embroker.com/blog/unicorn-startup-checklist/ on

09/06/2021.
 II.

APPENDIX 2 : THE DNA OF A STARTUP

Source : Pride, J. (2018). Unicorn tears: Why startups fail and how to avoid it. John Wiley & Sons.
 III.

APPENDIX 3 : GDP DISTRIBUTION BY REGION (%) : EUROPE VS THE US.

Source : Baroudy, K.Janmark,J. Strålin, T. Satyavarapu,A & Ziemke,Z. Europe’s start-up ecosystem: Heating up,
but still facing challenges. McKinsey. Retrieved from https://www.mckinsey.com/industries/technology-media-
and-telecommunications/our-insights/europes-start-up-ecosystem-heating-up-but-still-facing-challenges on
10/06/2021.
 IV.

APPENDIX 4 : R ESULTS TABLES FOR 3 EUROPEAN MARKETS : THE UK, GERMANY &
FRANCE.

Table 1 : Percentage and number of unicorns per sector worldwide.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 2 : Number and percentage of unicorns by European country.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).
 IV.

Table 3 : Number and percentage of European unicorns by sector/category.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).

Table 4 : Average number of years to reach unicorn status since creation in the UK.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).
 IV.

Table 5 : Average total amount of funding raised and average valuation of UK unicorns.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).

Table 6 : Country of origin of UK unicorn investors

.
Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).
 IV.

Table 7 : Average number of investors per UK unicorn.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).

Table 8 : Average number of employees per UK unicorn.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).
 IV.

Table 9 : Location of the HQs of German unicorns

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 10 : Origin of investors in German unicorns and number of them supported.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 11 : Average number of years to reach unicorn status since creation in Germany.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).
 IV.

Table 12 : Average total amount of funding raised, number of funding rounds average
valuation of German unicorns.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 13 : Strategic objectives and use of investments by German unicorns.

Source: Extracted by the author on Excel as per data from companies.

 IV.

Table 14: Average number of investors and employees per German unicorn.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 15:. Average number of years to reach unicorn status since creation in France.

Source: Extracted by the author on Excel as per data from CB Insights & Crunchbase (2021).

Table 16: Average total amount of funding raised, number of funding rounds average
valuation of French unicorns.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).
 IV.

Table 17 : Origin of investors in French unicorns and number of them supported.

Source: Extracted by the author as per data from CB Insights & Crunchbase (2021).

Table 18 : Strategic objectives and use of investments by French unicorns.

Source: Extracted by the author as per data from companies.

 V.

APPENDIX 5 : TRANSCRIPT OF INTERVIEWS

Interview n°1- Interview about the Belgian unicorn Collibra and the startup ecosystem with Tony Mary,
Chairman of the Board at Collibra (09/07/2021)

AK: Could you introduce yourself and explain your background?

TM: I am 71 years old now so I try to do as little as possible now. In terms of my technology career, I worked for
IBM for 20 years, where I was the Country General Manager for Belgium and Luxembourg. I also started my own
company and discovered that I am not an entrepreneur. I am a very good executive but not an entrepreneur. I then
moved to Belgacom as many IT people did at that time by going to work in the telecommunication sector. Then I
worked at Bull, which was a small company at the time. Finally, I worked for the broadcast company VRT for
which I was President and CEO. Since 2006, I am no longer an employer but my own employer. I always also say
that I am the only IT executive who has been in IT, telecommunications and media.

AK: What is your connection with the Collibra unicorn today?

TM: I am the chairman of the board which means that once a month I organize with the board what we call the
board call which means just updating what happened the month before. Then we analyze 4 times during the year
the quarters and at those quarter meetings we choose on subject on which we go deep and see what is happening.
For the rest of my activities, it is in social cultural environment, I am the board member of several organizations
like the Ommegang Festival.

AK: How can you explain Collibra's business?

TM: I will do it with one word and if you want to have more insights you can go on the website and you will find
what they are doing. I think I can say that Collibra is the market leader in what is called data management, data
governance and everything that goes behind it. You need a little bit a luck when you start a company and that’s
they were going to do. We are in fact “happy” that the 2008 financial crisis came because it obliged the national
banks to much better manager their data. That was really the major change that happened and suddenly, our sales
cycle became a little bit easier because we didn’t need to convince that data management and governance was
important. That was the start and that brings me to who are the customers of Collibra? Well, today any sector;
Banks and the financial sector is still the main one but the pharma is also a regulated industry that needs to be able
to explain what their data are. Anybody linked with data needs that kind of software.

AK: Was the 2008 financial crisis an opportunity to launch the company?

TM: No, the company was already launched, the story started in 2006 with four graduates from the VUB who
were working on data governance which at that time was unknown because today as one my friend says : “data is
the new gold”. I can tell you that in 2006 nobody cared about data as an asset. If you did IT , you had to care about
data but that was it. Now the data is one of the most important thing that happen. Those four people had then the
idea that they should do and could do something while writing their master thesis or PHD about the subject. They
said “ We are going to conquer the world”.
AK: So were they showing a lot of ambition?

TM: If you are not ambitious, you will never become a unicorn. Too many people you meet don’t have the idea
that the world is their marketplace. The CEO of Collibra is still the same than the one that was there at the start.
He is 37 years old and is the youngest of the four founders. There is only two left at the moment. There was also
a fifth founder who joined when they just started the corporation. They were all graduate students and they rapidly
knew that they will need a business development guy. Somebody was then hired out of Microsoft and was the
oldest when he joined and he did as a fifth founder the initial business development.

AK: How did Collibra become a unicorn? What were the key points that led to their growth?

TM: There is no key point, it’s an ongoing story. In this type of company, it’s not about making a profit because
Collibra does not make a profit for the moment and we are not going to make profit for the next five years we
think. We are just taking the marketplace and that’s why people invest in Collibra. Become a unicorn is not an
ambition it’s the result of your growth, of your desire to grow and this desire to grow is the ambition. Becoming a
unicorn is the result of it. You don’t decide what a unicorn is , the market decides once you have 1 billion dollars
 V.

value period. We didn’t have the goal the become a unicorn but to be the world leader. Since the beginning the
people from Collibra said “We want to be the world leader of this industry and we want to play the world”. That
brings me to your question about the difference of Europe with the US and China. In comparison , we are in Europe
a very fragmented market. We speak 15 different languages and a very few are big enough to really become a big
company. Collibra is present worldwide now. If we had not move in the US 3 years after the incorporation we
would still be very small. You have to go to a big market and the US is the biggest. Again, you don’t have the goal
to become a unicorn but you have the ambition to be the leader in the industry. I am only the chairman of the board
even if I am in Collibra since the beginning but the ambition of the founders was from the start “We want to be a
global company and to be the leader”. Collibra invented, even if that sounds a little bit arrogant, the industry of
data management and data governance.

AK: How was the Collibra valuation done?

TM : I can't exactly answer that because the valuation of Collibra was not done by Collibra but by those who have
invested in the company. They started with the seed money which was given by la Société Régionale
d’Investissement de Bruxelles. Collibra is a spin-off of the VUB, the Brussels University so we also went to them
and they invested as well. All of this money was about 1 million but there was no valuation at that time. The goal
was just to get the money and convince those seed investors that you have something that might eventually become
something. The first time there is a valuation is when the Series A funding round goes on. You don’t how much
you are worth, that’s the guys from the other side who do, the investors, who analyze your product, your market
and the most important thing your talent. You first of all need a product, you need to have somebody who says the
product is good otherwise you should not start a company. The best indicator is when someone is giving you
money to do proof of concept. If this last person says “I am going to pay you to see if you can work” and if you
have that, the product side has an indication that it might succeed. The second most important thing to have to
succeed as a startup is people, the team. The team has to focus on quality, working spirit, drive, understanding of
the team and the moving on by having discipline and concentrate on execution. That’s the success factors to
ultimately become a unicorn. But if you are not a unicorn because there are not too many unicorns, those success
factors are the same. You need a product, you need a market, you need people who want to buy from you therefore
you need a business development department or sales.

AK: This means that when Collibra hired a business developer, it was an important point in their
development?

TM: That was not a real hiring because he joined 3 months after the incorporation because the board convinced
the founders to do so. None of the founders had any experience in business at that time. Another crucial point then
to become eventually a successful company and maybe a unicorn is to have a very dedicated and a very good
board. They had the board from which most of the startups can only dream of because I had my network and in
the board there was a former CEO of a big organization, a top professor in data management from the University
of Leuven (even if the VUB does not have very good relationships with the KUL) but he was one of my good
friends so he joined.

AK: Why did you believe in Collibra?

TM: I can tell you a little story when I had a just left the VRT at the time. I had a friend of mine who called me
and said “ Tony now that you don’t have anything to do any longer, I have this future son-in-law who keeps telling
me about a company that he will create and I have to think a bit about my daughter and if this guy does not have
a decent job it’s risky you know”. Then he told me “ Could you look to it because I don’t understand anything
about ICT?”. I said ok and I met the four founders at that time and not the fifth who by the way could not get paid
by the others at the beginning as business developer so they made him co-founder of Collibra. There was only
€800K for the first 2 or 3 years and the guy was former Senior Business Developer of Microsoft who was paid 3
times the salary the Collibra could give I can tell you. So I met the four guys, they explained what they were going
to do, I think I understood them but what I saw, and I always people are the most important thing, I have never
seen four so dynamic, voluntary people than those four. I understood a little bit the subject but remember data was
not a primary industry at that time so even I was an industry veteran, data management or data governance I did
not know much about it. They convinced but they clearly explained but they were going to do and as my friend
said, I had nothing to do anymore. I was impressed by them so I helped them to develop their business plan. They
developed the business plan and I just brought them my experience then we went to the people who could give
money and the was the investment company of the VUB. They invested in 2008 therefore and what happened is
that they asked me to be the chairman of the board afterwards. Thirteen years later, I am still the chairman of the
board which I am very surprised of given the other investors today.
 V.

AK: What is the value proposition of Collibra?

TM: Simply data management, they are the leader of the market. Seventeen out of the 20 largest banks of the world
are customers of Collibra. Value proposition is data governance and they are adjusting and adapting the product
to the needs of the customer which, as they are very dedicated, they really respond in data governance what client
needand what businesses need. You have the regulatory bodies that are constantly adding requirements and
requests to what is due and they provide it. That’s their value proposition. Today, no large company can today
work without data governance or data quality software.

AK: How does Collibra generate revenue?

TM: First of all, you should know that we threw away the product we had developed twice. One of the critical
success factors is listening to your customers and listening to the market. When the regulators started to request to
banks. If you want to be a bank, you had to respond to those regulators on all subjects for your data. The financial
crisis in 2008 was also largely due to the fact that data was not available and everybody told everything was fine
but it was not the case. The regulators asked the banks and needed to see what is happening with their data. Collibra
responded to that need. That’s one thing. The product has been thrown away twice because it was not what the
market wanted. The third time was the right time. The founders started from scratch again and started by selling
licenses. Licenses have the advantage to be paid upfront and very quickly, the first capital increase besides the
seed money was in 2010. It was very difficult to find somebody, we didn’t find anybody in Belgium who wanted
to invest so finally we found a company in the Netherlands. This company did the valuation of the company. We
pushed as high as possible, they pushed as low as possible, that’s how it works. At the end, the company was worth
€5 million. They gave 1 million so they got 20%. For the record, this 1 million is actually worth 1 billion now.

AK: Through which investments does the company went?

TM: In the bank capitalist world, you also have levels. This company from Netherlands came in very quickly after
the seed money round. We kept growing and for this kind of company the goal is not to be profitable. The goal is
to get market share and grow, grow, grow. Today the revenue at the end of 2020 was €120 million and by the end
of this year €200 million. There are 750 people working in the company and we think we will have almost 1000
employees also by the end of the year. The ambition is to get market share and the only way to do it is to hire sales
people. For instance, I think that today the sales department is 300 people.

AK: Do you think that Collibra has put aside efficiency in favor of speed by having such growth?

TM: No, never ever. We grew so fast that during those last 12 years of existence we adjusted the business model
4 or 5 times already. If you read organizations theories, up to 20 employees its one type of company, up to 50 its
another type of company and up to 100 its again something else and for the first time you get second level
management team. You then have to adapt and adjust. The type of executives you need to run a 200 million worth
company present in 4 continents is different than the types of executives you need to run a 10 million worth
business active in 2 continents. When we did the Series B funding round, don’t ask me how much they put in
because I don’t remember, they said that the business model was not good and that they will bring the money to
change it. The business model from now should be based on annual recurrent revenue. Instead of licenses where
you get the money upfront, you do a 3 years contract with annual revenue that comes in. The value of the company
is based on the number of the customers, new customers that you succeed to have in resulting year and revenue
growth. That’s how investors valuate.

AK: What are the costs incurred by Collibra?

TM: More than the revenue for sure. There is only one main cost and that’s the people. To go forwards, you need
more salesman. At the beginning during 3 to twelve months they bring 0 and only costs and we think that after 6
months they should be productive. Therefore, if you have 600 people and get up to 1000 by the end of the year,
you have 200 people of cost. The rest of the costs come from a bit from the buildings. We found out then that with
the COVID those people can also work from home. We opened a new office on the 1 st of April and it has been
empty until 3 weeks ago. Since 3 weeks now, people can come and work once a week. There are about 200 people
in Brussels. Brussels is one development site, another is in the making in Poland and a last one in Atlanta.
 V.

AK: How would you describe the structure of the board?

TM: You have the chairman so myself then the representatives of some of the shareholders . The real board is 7
people. We have been strengthening the board with independent board members as well who we hired for their
competences and knowledge. We have people from the marketing and financial world and then a CEO who twice
in a his career scaled up venture capital companies. He has then all the experience what you should not do.

AK: A final question: Why do you think Europe is still behind the US and China for example in terms of
startups and unicorns?

TM: Maybe it’s better to put it from the other side. You get the United States as one big market with 300 million
consumers, a lot of the largest companies are still American. One of the success of Collibra is that we very quickly
understood that if we didn’t move to the US we would never have succeed. The company always said “We want
to be number one”. This mindset is very important. The CEO also says “ We want to be the Salesforce of data
management” as you probably know the company Salesforces and on the same time, one thing successful thing of
Collibra is that they have a very strong values system. They will do anything to succeed except not following their
own values system. Their values are for example : people is the most important and everything is explained during
our meetings: “That’s what we stand for”. I think one the crucial success factors as well is that we get the new
employees hired very quickly into our values system. Having said that, I have never found investors in Belgium
because of these regulations systems where Collibra was a spin-off of the VUB so the flamish investment
companies could not invest in the startup or we should have opened an office in Gent. Concerning Europe, it’s not
a market we are very local. In the US, you take the market, you write your business plan, you write your marketing
plan and you are there. Here, every single place is different. It’s very difficult if you are a small company to be
active in the marketplace. If you want to win Europe, you should be in the UK, Germany, France, Spain or Italy.
That’s 5 different languages, 5 different legal systems. Fortunately, only two different currencies, it’s too difficult.
Very quickly, the business development of Collibra moved to NY and now the CEO is in NY because that’s where
the action and where the money is. The big investors of Collibra today are Capital G, the fund of Google and the
fund of Zuckerberg. Those people sit there. We were very lucky because they accepted to give us only 80 million
because normally its 200 million. It’s a different world. One of the success of Collibra is then also the investors
because those people also in the board of several other companies in different levels of development. We are very
severe in the company not because the people are not working good but it’s the fifth time we have to change our
organization structure which means that we had to let go half of our executives because they are no longer adapted
not because they are not good. As you grow so fast, every two years you need to rethink how you operate and if
you don’t do that you die. You’ll never become a unicorn. Quality of people even if that’s the major cost but that’s
80% of your success and 20% if your product that is also developed by people who know the market. We even
had to let go 3 of the founders because they were not adapted to this very fast development.

Interview n°2 - Interview about growth strategies and startup ecosystem with Baudouin de Troostembergh,
CEO & Founder at Startup Factory (22/07/2021)

AK: Could you introduce yourself and explain your background?

BD: So I studied Business Engineering, starting at the University of Saint-Louis and then the Louvain School of
Management. Very quickly, I became self-employed and I have been a freelancer for the past 15 years, having
already created a few companies and sold some of them, and 5 years ago I founded Startup Factory. Startup Factory
is a startup studio, so in simple terms it is a company that creates companies. In 5 years we have created 30 startups
and of these 30, 1/3 are working very well, 1/3 are a bit more complicated and 1/3 have stopped.

AK: What criteria do you think a startup should have in order to grow like a unicorn?

BD: The first parameter for the success of a company, in my opinion, is the management, i.e. the people. This is
the most important thing. So yes, there has to be a market and a demand, but even if this demand is very large, if
the team is not good it will be very complicated. Moreover, even if you have a lot of money, this is no guarantee
of success. After that, market demand is still of course important, in the digital age if you decide for example to
start a CD shop tomorrow it will be harder to succeed. The team remains the most important criterion, the
complementarity of the team. It must be resilient but above all ambitious. Once this is in place, yes, you need
money, but when you have a good team in a promising market, capital is not very difficult to find. Today there is
a lot of money in the markets and when there are good projects, they attract financial resources very easily and
very quickly. Afterwards, to grow, it will also depend on the ambition of the team. There are less ambitious people
who may or may not create a favorable climate for hypergrowth. In short, when you have a good team, financial
means and a certain ambition, you can go very far.
 V.

AK: Does the founding team need to be accompanied by experienced people in the sector to be more
successful?

BD: So it is advisable at the beginning to have business angels/investors who have an added value in relation to
the business. When aiming at a big growth, it will be more investment funds specialized in a particular sector (for
example in the marketplace). So you need several types of investors at each stage of maturity of a company but I
would say that at the beginning it is interesting to have business angels who bring a real added value to the project
what we call “smart money” in the startup jargon.

AK: Do you think that the overgrowth strategy followed by unicorns can have an impact on efficiency?

BD: Yes, yes, certainly. When you want to go very fast, you necessarily put in a lot of resources and the more
resources you put in, the more complicated it is to spend them well. So yes, there is a loss of efficiency, the secret
is to find the right balance between the right amount of financial resources and growth. Pushing for growth is fine,
but it has to be structured and managed, otherwise the project will be damaged and go off in all directions.

AK: Regarding the European entrepreneurial ecosystem, what are for you the success factors that would
lead to the creation of more unicorns and what are the reasons why the continent lags behind the US or
China?

BD: So the reasons for our backwardness, I don't think it's related to the fact that people are less capable, no. The
reasons are twofold. Firstly, the fact that the markets are much larger, as in the US, where it's a homogeneous
market of more or less 300 million inhabitants. So the successful entrepreneurs are often there and the money is
also there as the big investors are often there, so it's all a bit linked. What explains why there are more big funds
and investors in France than in Belgium, for example, is that in France there are more people who have succeeded
again and again because the size of the markets is greater. In China, it's the same thing, the market is gigantic, it's
one and a half billion people, so it gives a lot of leverage. Besides all that, it's also a question of mentality with a
slightly greater aversion to risk in Europe and a lack of ambition. In Belgium for instance, it's a rather bourgeois
country with sometimes a little less ambition and a different relationship to work than the Chinese for example.

AK: What would be the strengths to build on in Europe?

BD: One of the big advantages that we have is the multicultural aspect in Europe and even in some countries where
several languages are spoken like Belgium or Switzerland. So when a company has the ambition to go international
and expand to other markets, having this multicultural mindset can be a benefit then. We also have a lot of tech
and operational talent, we have a lot of very good universities with very educated people coming out of there. But
maybe that's the problem too, because these well-qualified people might be less inventive and more likely to want
to join a project that's going on. The advantages of Europe are therefore in terms of skills and the ability to adapt
to different cultures and markets.

AK: Why is the tech sector privileged to become a unicorn and why does it attract investors?

BD: For me it is only technology projects that can have hypergrowth. You can't replicate this model in more
traditional businesses or products. You can have your platform translated into 40 languages quickly, for example,
and you have a global reach. The advantage of tech is that you can reach the whole world through the internet.
This is not the case for physical products, so meteoric growth can only come from this area. Fintech is also a
privileged sector because it has long been dominated by the big banking institutions that were just asking to be
digitized and simplified and this is what is happening now. Finance also touches absolutely everyone, like food,
so the markets are huge, so the potential is huge.

AK: Do you think that unicorn valuations are sometimes overestimated?

BD: If the unicorn is not yet listed on the stock exchange, there may be a risk of overbidding. As soon as it is on
the stock exchange, there is more liquidity and therefore more stability. The valuation is then more credible for
me once the company is listed.
 V.

Interview n°3- Interview about the Belgian unicorn Collibra and the startup ecosystem with Pieter de
Leenher, Co-Founder and Chief Science Officer at Collibra (29/07/2021)

AK: Could you introduce yourself and explain your background?

PdL: Well I did computer science at VUB in Brussels where I specialized in Artificial Intelligence, data was not
there yet that was in 2000. Afterwards I did my PHD at the Start Lab VUB on data semantics and semantic web.
Therefore, the idea of Collibra came out of my PHD lab, my research lab. The co-founders were actually students
and Felix was 4 years younger than us. He was a master student when I was a PDH student. So Collibra is a true
clean spin-off. It’s like a very clean story of a spin-off that the Harvard Business School described as a research
spin-off. When we started the company, the first year we were actively looking for subsidies and research funding
specially in Brussels. The European Comission research money helped a lot. We didn’t really have a product
market fit yet, it takes a couple of years to find that. I spent some time in Amsterdam also teaching because
somebody needed to pay the bills. Then in 2012 actually I stepped down from my academic roles, sometimes I
was working on how you deploy a software in a large organization so this was about training, implementation,
working with technology partners, consulting partners. Actually at the same time, I wanted to make it repeatable,
teachable therefore we could actually build an ecosystem. We, as a software company, could focus on building a
software then and rely on this ecosystem to do large implementation basically. At Collibra, I was mostly focused
on the product as a Chief Science Officer which is a sort of a CTO role and I’m always looking at emerging
technologies as well. Collibra University for example, if you go there you can check it out by yourself. I was
always involved with academia and I still am. In July, I stepped down from my role at Collibra and I spent some
time building my family and I was at the Harvard Business School at the same time. They told me “ you can come
to us” so I spent a year at the school during COVID. Last month I actually joined Zenoptics which is a B2B
Enterprise Software in the data space and they based in San José. I am based in NY and they are based on the west
coast.

AK: So from what I understand, you are no longer part of Collibra?

PdL: Not an executive anymore but I am still of course a major shareholder.

AK: What is the definition of a unicorn startup for you?

PdL: It’s a private enterprise that is valued at over 1 billion dollars and that’s why we call it a unicorn. It’s actually
at an early stage so definitely not older than 10 years old of existence. That’s the definition for me and of course
with a huge growth potential with a year on year growth, it’s basically a flagging system. Usually, unicorns are
companies that become leaders in their space. That will always be a cloud of competitors that are in a race and the
unicorn is considered to be on pole position. To be on pole position means that investors will continue to take you
as a preference for investment even though your competitors may become important. You’re not going to have
two unicorns in the same category.

AK: To be a unicorn, you have to be leader of your market then?

PdL: Absolutely. You have to define the market.

AK: Why is the tech sector privileged to become a unicorn?

PdL: Everything is tech now, right? So if you look back at the age of the worldwide web, e-commerce came out
after the 2008 crisis and Amazon survived, Google survived. Then of course tech, software-as-a-service, the model
is interesting for the tech companies themselves because it guarantees more revenues, its good for investors. Of
course there is a huge margin of profit with software , with data. Now every sector stepped into that. The
revolutionary aspect of technology is also visible in retail, in supply chain, in healthcare, it’s everywhere. You
take the COVID, our RNA is basically a software. That’s a different type of vaccine because it’s based on the idea
that they inject a piece of software into you that will find ways to neutralize the virus. That will also be
revolutionary to resolve cancer, aids in the next years so the acceleration of innovation is just tremendous that’s
why tech is so important.

AK: What are the success factors of Collibra and how did the company manage to grow so fast?

PdL: What you have to know is first we started in 2008 and we actually didn't really grow the first 4 years, we
were too early. The success factor here is that we were really ahead in our idea, that was a visionary idea. Secondly,
 V.

we had a great team. We had a team that was relentlessly looking for opportunities and we didn’t care about having
resources to execute it. We just went for it and it was of course easy because we were all bachelors and we didn’t
have any responsibilities. If you have a family that’s different . I know now and its very difficult. So the
relentlessness is important, the “ go get it” culture even if you bang your head against the wall all the time. Of
course, there is also the execution aspect and hiring the right people. You know Steve Jobs has this quote “A
players hire A players and B players hire C players” because B players they find themselves threatened by B
players that’s why they hire players that are less good. However, if you always hire players better than you, you
build a better company. None of the founders worked in a company before Collibra. None of us had seen the
insights of a corporation before we launched.

AK: Does the Collibra's founding team was the key to its success at launch?

PdL: The founding team, for sure. The complementarity of our interest that nicely came together. We didn’t have
conflict like everybody wants to be the CEO, the CTO. Everybody found their sweet spot. I also find very powerful
the European landscape as access to subsidies and research money. That allows you as a company and a startup to
really invest in innovation early on, to put you in front.

AK: Do you think that the academic world has played a role in your success and should help more startups
to develop in Belgium for example?

PdL: Absolutely. The VUB is one of the most beautiful examples of efficient spin-off activities, it has the highest
output of spin-offs in Belgium despite its size that is small if you compare with the KUL. So yeah, of course
because when you are in a research lab, you see the future, things that people are writing about. If you go on
Google Scholar and search “computer science literature” you will find things that will develop in the next years.
Not now but in 3 years or 5 years. It also gives you a lot of comfort as a venture working together with research,
academia and give the software to students. That helps to create trust and credibility.

AK: Did you feel the need to raise money quickly or did it come later?

PdL: Well, talking about 2008, as founders we could easily say “ we are not going to pay ourselves out” because
we all invested in this company, I didn’t have children to feed or a mortgage to pay. The worst case that can happen
to me is that I don’t pay my rent. So that was an advantageous position. Secondly, Belgium taught is specifically
good because of our top universities in IT and in the same time, it’s an affordable taught. I don’t know what are
the salaries now in Belgium 12 years later but here in the US, for less than 250K a year you don’t find an engineer.
However, once you get employees its different they need to get paid right? Because you have a payroll. As founders
you always to pay your employees or you are going to get in trouble. That’s when the money is really needed and
getting access to money in 2009,2010,2011 or 2012 for enterprise software did not exist because all the venture
capitals went to B2C companies like Google and the apps all that stuff. There were some few companies like IBM
but that was it. Collibra was one of the first that actually elaborated enterprise software with a few other.
Concerning data governance, we were probably the first that actually broke the rule of IBM. Now today, you come
with this kind of company without revenue and they give you like $10 million that’s a different story, there is too
much cash.

AK: What types of financing rounds has the company gone through?

PdL: That was typical, the timeline was a bit different that it would be now. It would be faster today. So it started
with a convertible loan which was facilitated by BI three fund that was specially designated spin-off of the VUB
to bring private equity if you could find it in Belgium.
In Belgium, rich people didn’t invest in things like tech so far but invested in cookies, biscuits and beers to sell it
around the world. Convertible loan we call it private equity. It’s a loan that you can convert in stocks when there
is a price.

AK: When Collibra raised millions of dollars in funding and became a unicorn, what was the intended
strategic goal afterwards?

PdL: To dominate the world. The ambition and the potential was there. The goal was to create a category by itself,
I am talking about data governance which was usually a word used by consultants that would charge you $2000 a
day by going to a company and spread an expensive slideck and explain how to govern data that was always like
that. We actually, throughout our data governance software, had the opportunity to become owned by the business
not the IT. You elaborate the data, analytics and the ownership of the data was mainly in IT. The focus of the CIO
 V.

also changed a lot in the last 10 years. I always say to startup founders today that you seed to sit together every
quarter somewhere in the mountain, in the desert, going outside. That’s we did and we went to Normandie or
Ostende and we were in NY we did the same here. We sit together and we say: “Ok, let’s think strategically” with
the founding team like what do you want to do? Build something and sell it? Or do you really want become a
category defining companies ultimately becoming public companies?. It’s the mindset that is important. If
everybody believes something will happen, you can do it. But if you don’t seek on this expectation then you don’t
have a team. If the Red Devils don’t think we are going to win the world cup, we are not going to do it.

AK: So was the idea after receiving so much funding to go after new markets or to develop the company
internally first? Or both?

PdL: Well, we always focused on keeping Brussels and Poland as the basis for R&D where there is still a
considerable amount of engineers there. However, we quickly saw that software are easily sold in the United
States because you have bigger companies and you have just this curious drive and exploration here in the US.
I’ve been living here, my wife is American and my family as well. I’ve been living the American Dream. The
mindset here is all about : “Ok let’s listen” whether you are a big startup or a small startup, you are innovating so
people will listen to you and support you in any way they can because they find it fascinating and cannot do it
themselves. They see somebody trying to build something and our software could solve their problems but not
only the company but also support people career. If a director buys the software and shows its performance he can
eventually become a CIO and its good for his career.
Also because of this relentless experimentation here in the US. The problem of data governance is huge because
of you have so much gathered data today and European companies are much more considered for their investments
in new technologies and you also have more regulations in general of course. US is also one single market, Europe
you have France, Germany, UK, all different markets.

AK: This brings me to the subject of Europe's position and why it is falling behind other continents in terms
of unicorn creation?

PdL: People are different. In Europe, you can’t just fire somebody like that. I mean in NY it’s also hard to fire
someone, it’s very strict but instead of letting you stay for 2 months in Europe, here they give you a big cheque to
leave, some people they just get a year salary to just leave the company. Many Americans find it difficult to hire
people in Europe because of the slow process. They can’t start immediately because they have to leave their
previous company and they can’t just leave like that. It takes 6 weeks to 3 months for example and here it takes
like 1 week to move from one job to another. In France, it’s even harder than in Belgium.

AK: What are the strengths to build on in Europe to create more high potential startups? What should be
improved?

PdL: Well, there a couple of things I would wish to be different and it’s very hard to change culture. For example
in Belgium there is this indifference sometimes to success. In my generation, the generation X, there is this
indifference and I have a lot of friends that went to university for 8 years and have two master degrees and then
they don’t really do anything significant. They just want to do their hobbies or whatever. So there is indifference
about success and if you are successful then, people will talk a lot about you. Look what the media do with Marc
Coucke for example, if they see success, they try to undermine the whole story instead of looking him as an
example and I think we need more examples in Belgium. You can’t change people but you can at least change the
media. I sometime look at the newspaper and how they still focus on CEO’s. The CEO matters but look at the
team and the dynamics between founders and management for instance. They should share more the stories of
inspirational leaders and I don’t see that in the media. You know it’s not only about money, but if I talk with VC’s
now they will say Europe is hot now, it’s the “kitchen” of unicorns. The money is flowing to this direction today
and that’’s coming good. In Belgium, we are still pulling each other apart. For example, we have some support
structures from Flanders and some other from Brussels-Wallonia but don’t we have organizations for the whole
country? Why are not we unified like the Red Devils? In Belgium, we are unified around beers and football.

AK: Should we develop more European VC’s then?

PdL: Well, they are working a lot, I think there are more and more money flowing today. If you have for example
Marc Coucke who invested in Pairi Daiza and Durbuy few years ago. The money is changing its direction to tech
now. You have also Sofina the company that invested in Collibra last year a large amount of money. It’s still more
late stage capital but that’s coming. I am not worried about that and I am certain that your generation is totally
different and much more entrepreneurial than my generation. You guys are less like ok I’m going to get a job and
I will work there for 30 years then retire.
 V.

AK: Do you think the profile of your investors is important and how do you choose them?

PdL: You know when you have someone coming with a lot of money to you, you are not going to say “ Oh you
don’t know what we do so I refuse” and of course you have smaller checks that can serve as advisors. Investors
can give you also a lot of financial advice which is important when you have to deal with balance sheet, cashflows
or else. It’s hard to be a good CEO because you have a lot of stuff to do. I always invest for example in companies
that I understand. You want to have an investor that gets along with you. You have to take an helicopter view.
Look at the pages of these investors, their portfolios. Investors can invest in companies that are competitors so
they invest in ecosystems and portfolios. They want to make sure that by investing there is not something missing
for them to stay in pole position so they invest in other companies to share customers. That’s why Google flipped
its model by separating a lot of stuff from their real business Google cloud. I always ask to investors why they
woud like to invest in our companies and if they share our vision but that’s difficult to know it sometimes.

AK: Do you think that with all these huge fundraisings this can lead to speculation and a potential bubble?

PdL: Of course. There was an article last week about the extraordinary rates at which banks lend money to the
superrich now. Superrich use their networks to lend money for free. Usually network has a significant value. That’s
the risk of course. I would not put everything on one pile. If you look at true enterprise software like Collibra, they
really bring true value to a company. You can really measure it and it’s not like inflated products. Concerning a
potential bubble, I don’t know but you’re right there is too much cash but where does the cash come from? With
COVID now, there are accelerated transformation and we started to look at things differently. You have to look
at the history of the US 100 years ago with JP Morgan and the Morgan Family. What happened there is very
similar to what is happening now. You have the whole Big Depression was a disaster and if you have the example
of Boeing. Everybody didn’t have money anymore to buy cars and did not travel anymore. People were sending
more mail and therefore they needed airplanes to transport mail so Boeing said “Ok I’m going to start United
Airlines and I am going to just all the US mail”. It’s a similar story to what is happening now with COVID now,
people are home and have different needs, the virtual transformation is accelerating. We will also see tremendous
innovations in the biotech sector as well with the mRNA that is going to resolve a lot of virus probably or
explorations in the space.

AK: What is the risk for a startup to integrate new investors in its shares?

PdL: It’s a trade-off between wealth and control. If you want to have wealth you have to give away control to
others. You want to build something bigger, of course you need to invite investors and allow them to have their
stake. Many VCs don’t want to have board control necessarily because it also a lot of liability involved and they
get suit for instance. A good VC trusts you and believes in the founders/management team.

Interview n°4 - Interview about tech platforms, growth strategies and startup ecosystem with Sebastien
Lebbe, CEO & Co-founder at Wooclap (31/07/2021).

AK: As the creator of the Wooclap platform, what were the factors that led to its success?

SL: The first thing that comes to mind is the speed and ease of use of the platform. I think this is the case for many
tech platforms but especially for us because Wooclap is mostly used by teachers who don't have much time. The
second criterion is that it's hyper-integrated (on the product side) and it can be used everywhere. Then what made
us get so much traction was the relationship with our users and our customers, i.e. the universities. We co-built the
platform with the schools and professors so we really have a product that meets their needs. It was really done as
a partnership and not something purely commercial. The fact that the UCLouvain did several press releases that
were a hit brought us many customers in Belgium and then in France. Usually what companies do is sell license
packs and then upsell. For example if you sell licenses to 10 teachers and when those licenses are over, you renew
them and increase like that. The goal is to sell as many licenses per university as possible. We didn't proceed like
that and instead we give access to all the teachers and students of the university who have a high volume of use
and who will pay less in the end than if they had bought by licenses. Basically what Wooclap does is to invoice 1
year in advance and this allows us to be breakeven directly. This gives us the ability to grow with positive cash
flow. This allows the university to be much more comfortable and to communicate more easily on the platform.
We are sure to meet their needs than selling by individual licenses and this proves because the net retention rate is
130%. So to sum up, having a fast and easy to use platform that is focused on customer satisfaction is a criterion
for success.
 V.

AK: Do you think that academic structures like universities can participate in the success of startups and
make them evolve towards a unicorn status?

SL: So we sell mainly to universities, that's our main customer so it's different. After that, I'm not sure that going
through university is an essential step to success. When I finished my studies 7 years ago, I realised that university
didn't help me much. I wanted to start my own business during my studies and I didn't have the opportunity. On
the other hand, what is positive is that today this has changed a lot and in particular at UCLouvain with the CPME
master or student associations like UStart and other universities are also more active in entrepreneurship now than
before.

AK: According to you, what are the positive and negative impacts of having hyper growth like unicorns?

SL: The positive impact I would say is that the more growth you have, the easier it is to access capital. So it allows
you to innovate more and have a stronger impact on society. Another positive impact is that it allows you to attract
talent more easily because growth is more attractive. On the other hand, the disadvantage is that having such
growth can lead to chaos. Internally, if you start recruiting a lot you have to know how to organize it. The fact that
you're going very fast also means that you have to make decisions very quickly and humanly speaking it's not
always easy. Going to a new market, you see that it doesn't work, you go to other markets, all this can have an
impact on some people and this is not to be neglected. For example, we have a very healthy financial situation, we
are cash flow positive, we don't spend too much cash. On the other hand, you have companies that need a lot of
financial funds and by raising a lot of money, for example, this can create a lot of pressure if the results do not
follow. For example, shareholders and investors often put clauses like preferential liquidations where they say that
at a certain level the amounts received must be shared. Let's say you raise money and if you sell, the first 40 million
is for them. This means that even if you think you have a lot of money at first, later on you may find out that this
is not the case because that means you have to sell for almost 200 million to expect to get a real reward. What I
was getting at with growth and its drawbacks is that some companies can be cash hungry and want to raise more
and more money. The more a company grows, the more it will make investments which are more and more
important and as you have to go fast, you ask yourself less questions but the mistakes you make cost you much
more. In the end, you have companies that do not manage to reach a financial balance because their cost structure
is too high. These startups are therefore obliged to raise funds to hope to be profitable. As an illustration, for a
SaaS (Software as a service), the CAC Payback period can be significant (ideally less than 12 months). This means
that the faster you go, the more cash you need. Then you have companies like Odoo, for example, which are
much healthier companies and have not raised much money to get where they are. However, it took almost 20
years to get to a level like this

AK: What were your strategic objectives after raising a lot of money?

SL: What we said to ourselves was that we were going to accelerate on new markets, we already had very good
traction on the Belgian and French markets and therefore by raising money we could go much faster. We also
wanted to launch new products to capture more value from our existing customers. In the end we had the growth
but we spent less than expected so in the end we have more cash today than when we raised the money.

AK: Why do you think Europe is still behind the US and China for example in terms of startups and
unicorns?

SL: The main factor is market size. In the US, it's simple, if you want to start a business equivalent to Europe,
there you have a much larger and more homogeneous market. So your ability to scale and raise money to do that
is much greater. In Europe, the market is fragmented, it's several languages, several different cultures. A second
reason, which is more structural, is that in the US, for example, it's not too serious to fail, you have to get up and
move on, and there are fewer regulations. Whereas in Europe, there are many different legal structures between
countries, as we can see with the GDPR. Americans have the means to develop more easily than Europeans, who
will have many more constraints and will already suffer before being profitable. So in summary for me the factors
are really market size, culture and regulation.

AK: What would be the strengths to build on in Europe to develop the entrepreneurial ecosystem and thus
foster the creation of startups/unicorns?
 V.

SL: For example, if we look at France, the dynamics have been crazy in the last 5 years, especially since Macron
came in. The number of unicorns has exploded, I think there were 3 five years ago and now there are about 15.
When you go to Paris for example, it's impressive the difference compared to Brussels, when you go there you see
that things are happening. You have personalities like Xavier Niel , a French entrepreneur who has started to invest
in a lot of startups, you have a lot of investment funds that have developed, President Macron who has launched a
lot of initiatives etc. You feel that there is a lot more marketing and noise about the startup world and we see that
it works. Moreover, France remains a large market, even if small compared to the US, it is still large. Initiatives
that have been launched like Station F are working well and we must continue to capitalize on this. The French
Tech has also been launched in France which is a network in many countries helping French startups to develop
in other territories and to bring in foreign startups.

Interview n°5 - Interview about growth strategies, fundraising and startups ecosystem with Sebastien
Deletaille , Co-founder and CEO at Rosa (04/08/2021)

AK: Pourriez-vous vous présenter en expliquant votre background et ce que vous faites actuellement ?

SD : Ce que je te conseille, c’est de trouver cette information sur mon profil Linkedin mais globalement je suis
entrepreneur dans la tech depuis maintenant 12 ans et notamment avec ma première entreprise Riaktr, j’ai fondé
une des 10 grandes boites tech belge. Maintenant je suis dans la santé digitale avec l’entreprise Rosa.

AK : Quels sont pour les critères de succès principaux d’une startup ?

SD : Alors pour moi, le critère principal c’est le choix du marché. Un marché c’est quoi ? C’est une combinaison
d’un problème et d’une solution et d’un set de concurrents donc ça pour moi c’est le critère déterminant. Le choix
du marché est en fait le choix qui va déterminer jusqu’où une boite va aller, quel va être son niveau de croissance,
quelle va être sa capacité à capturer une très bonne part de marché. Ce critère là il est amplifié en fonction des
ressources et des équipes. Contrairement à ce que plein de gens clament en disant que le tout c’est l’importance
des cofondateurs, des équipes, du financement. Non ce n’est pas vrai, ce sont des choses qui peuvent amplifier le
choix du marché mais c’est vraiment ce choix-là qui déterminera le succès.
Tu peux avoir une excellente équipe mais dans un mauvais marché tu n’iras nulle part. Alors que d’être dans un
très bon marché avec une mauvaise équipe, tu pourras quand même réussir.
Le point qui est hyper intéressant est qu’il y avait une étude que j’ai lu qui montrait la différence entre la perception
des critères de réussite entre les entrepreneurs de la première fois et les serial entrepreneurs. Les « first
time entrepreneurs » ont tendance à dire que ce qui est hyper important c’est l’équipe en disant généralement que
les critères réussite sont dans cet ordre-là : 1) équipe 2) idée et 3) financement. Les serial entrepreneurs quant à
eux vont dire : 1) marché, 2) investisseurs et 3) équipe.

AK : Pourquoi pensez-vous que la technologie est un secteur privilégié pour devenir une licorne ? Pourquoi
cette catégorie attire autant les investisseurs ?

SD : Il y a deux dynamiques. La première c’est que la technologie a des coûts fixes donnés et un coût marginal
quasiment nul donc en fait la structure de couts d’une entreprise tech est extrêmement propice a de la croissance
donc ça pour moi c’est le point de départ. Le deuxième élément c’est que la tech est une solution qui plait
énormément à des nouvelles générations de clients donc c’est un type de solution qui répond à des tendances
sociodémographiques donc en fait ces changements font qu’il y a toute une série de marchés qui sont en train
d’être changés donc ça c’est la deuxième partie de la réponse. La troisième partie de la réponse c’est qu’en fait
souvent en tech tu es souvent à un concurrent qui est non tech donc tu as tendance à casser tous les codes du
marché et à faire mal à tes concurrents là où ils ont du mal à te suivre. Donc pour ces 3 raisons là en fait les
investisseurs ont tendance à parier sur le modèle de profitabilité futur des boites où c’est vraiment une course à
celui qui est non pas le « first mover » mais le « first established » donc celui qui arrive à se placer vraiment
comme leader d’une catégorie. Une fois que tu es leader dans ta catégorie, tu vas pouvoir délivrer une rente sur le
long terme et Google en est le meilleur exemple. Il ne faut jamais oublier qu’un investisseur il ne change pas sa
manière de réfléchir en fonction que ce soit une boite tech ou non tech. Il analyse en fait les opportunités de la
même manière et il va poser des questions comme quelle est la taille de marché, quelle est la croissance, quelle est
la structure de revenus, quelle est la structure de coûts, quelle est la capacité de l’entreprise à créer des marges qui
ne vont pas s’éroder et donc en fait tout sa manière d’analyser reste la même. C’est juste qu’ils appliquent des
règles de valorisation qui sont différentes parce qu’eux ont des croyances différentes sur la structures des marges
de boites tech et effectivement Amazon, par exemple, n’a aucun besoin de profitabilité aujourd’hui mais le jour où
ils iront un objectif de profitabilité, ils auront une structure de marges qui sera inattaquable et qui va produire un
volume de profitabilité tel qu’ils seront valorisés à une centaine de fois leur revenus.
 V.

AK : Pensez-vous qu’il y a de la spéculation dans les levées de fonds et les valorisations des startups
aujourd’hui ?

SD : Il y a toujours de la spéculation mais il y a deux réalités aujourd’hui. Il y a une réalité qu’il y a trop de cash
dans le marché et donc les gens n’ont pas assez d’opportunités d’investissement et de l’argent sur un compte en
banque. D’une part donc tu as énormément de capitaux et pas assez d’opportunités pour les déployer donc tu as
une concurrence absolument féroce des investisseurs pour pouvoir déployer leur argent. Aujourd’hui c’est donc
un bon moment pour être entrepreneur car c’est les investisseurs qui courent après les entrepreneurs et pas
l’inverse. Le deuxième point c’est que dans un même marché à équipe égale, celui qui a le plus de financement a
tendance à gagner. Par exemple, Uber, c’est pas comme s’ils avaient un produit qui est particulièrement unique
ou pas de barrières à l’entrée. Celui qui arrive donc à lever le plus d’argent, à capter le plus de marchés peut
potentiellement le « first established player » donc c’est lui qui captera les rentes sur le long terme.

AK : Comment une startup se prépare stratégiquement pour lever des fonds ?

SD : Il y a deux approches de financement des startups. Tu as l’approche « bootstrap » et l’approche

« fundraising ». Au passage, en fonction de ton idée, une approche est plus désirable que l’autre. Parfois les gens
disent par défaut vont vers l’approche bootstrap et par défaut vers le fundraising mais en fait ils n’ont pas analysé
quels étaient les besoins de financement de leur startup compte tenu de leur marché. Donc dans l’hypothèse où le
fundraising est la bonne approche, donc en fait en Belgique on a cette naïveté par rapport aux US ou à l’Asie où
les attentes des investisseurs vont être différentes en fonction du stage de l’entreprise. Si tu es au stade du « pre
product-market fit » cela se situe généralement entre le seed funding et le Series A ( tu peux être au round de Series
A avec un pre product-market fit par exemple). Globalement dans ces étapes là, ça va surtout se concentrer sur la
croyance du marché, sur la croyance de l’attraction, sur la croyance de tes premiers signaux. Donc le Series A,
c’est la croyance dans les fondateurs, dans ce qu’ils ont déjà réalisé, dans le potentiel. Si tu vas plus loin, vers le
Series B, c’est essentiellement sur base de tes metrics. Les metrics c’est ta capacité à dire « voilà où j’en suis, de
semaine en semaine ou de mois en mois je grandis de plus en plus vite ». En fait avec ces metrics là, c’est là que
les investisseurs peuvent se dire qu’ils sont face à une boite qui peut devenir une licorne sur 5 ans parce qu’elle
arrive à faire 100% de croissance et que quarter en quarter cette croissance faiblit à hauteur de 10% et non pas à
hauteur de 30%. C’est un travail de metrics, c’est un travail de créer des systèmes qui font que tu continues à faire
de la croissance et ça c’est le travail le plus dur du fondateur, qu’en haute croissance, d’être constamment capable
d’étendre ton marché, de stretcher ton produit pour avoir une valeur propre qui est claire mais qui en même temps
capte d’autre segments de clients.

AK : Quels sont les objectifs stratégiques après une levée de fonds ?

SD : En gros, une licorne c’est doubler de taille pendant une décennie. Dire ça c’est facile, délivrer c’est
incroyablement difficile. Moi je suis arrivé à doubler de taille pendant une demi décennie et j’y suis pas arrivé
après c’était trop chaud. Je pense que c’est plus lié au fait que j’étais pas dans un bon marché mais on a
certainement fait des erreurs avec les gens qu’on a recruté. A nouveau, à chaque stage de l’entreprise tu as des
besoins différents et la difficulté de l’entrepreneur fondateur c’est quand il s’accroche au rôle de CEO alors qu’il
a n’a pas forcément l’expérience pour amener sa boite au stade suivant et ce stade suivant a lieu approximativement
tous les 18 mois. Un moment donné, tu dois accepter que tu deviens incompétent par rapport aux besoins de
l’entreprise, par rapport à ce qu’elle doit délivrer.

AK : Quels sont les aspects organisationnels qui changent quand une startup devient une licorne ou lève
autant de fonds ?

SD : Le stade licorne cela n’a plus aucune importance, les structures absorbent les fonds sans problèmes. Ton
problème n’est jamais « quand tu es déjà licorne » , ton problème c’est que tu as plein de stades où ça peut casser.
En gros, ton premier stade : 0 à 15 personnes c’est là où t’as l’essentiel des échecs, c’est l’enchainement des
conflits fondateurs. Entre 15 et 50, c’est une phase de structuration de la boite, c’est une question de mettre en
place les process. Tout le monde ne peut partir en vacances quand il le souhaite, il faut qu’on mette en place un
comité de direction, il y a une délégation des responsabilités. Entre 15 et 50 c’est donc un deuxieme seuil. Entre
50 et 100, là c’est la partie où tu commences à avoir les premiers égards en termes de culture. Moi je me suis arrêté
à 130 donc je ne peux pas juger pour les étapes suivantes mais on m’a dit que la prochaine étape c’était 250 et
après 250 c’était assez régulier. Il y a moins de choses nouvelles. Généralement quand tu passes le seuil des 250
c’est que tu ne seras plus dans le même pays donc là tu vas avoir d’autres types de difficultés comme l’extension
géographique qui revient à presque lancer une nouvelle boite donc tu as toutes les difficultés de différence
culturelle, de trouver les bonnes personnes, etc… Au stade où tu commences à être dans des Series B, ta formule
de revenus et de coûts elle est déjà connue et extrêmement prévisible. Tu es donc capable de dire que pour que je
grandisse le revenu d’autant, j’ai besoin d’autant de leads et pour avoir autant de leads, j’ai besoin d’autant de
 V.

sales guy et pour avoir autant de sales guy j’ai besoin d’autant de sales development reps. Tout ça c’est des
formules, c’est du reverse engineering de dire « pour atteindre un tel objectif, j’ai besoin de ça ».

AK : Quels sont les risques et impacts négatifs d’une levée de fonds ?

SD : Lever des fonds , c’est toujours la même chose : de la dilution d’une part, c’est des changements de
gouvernance et c’est aussi assumer qu’à partir du moment où tu rentres dans cette cour , tu délivres tu restes et si
tu ne délivres pas tu pars. Il y a un bon article dans le Harvard Business Review sur le « Founders dilemma » et
sur la question « do you want to be rich or do you want to be powerful ? ». Les deux vont très rarement ensemble
et donc avec le fundraising, très probablement tu seras riche mais pas powerful. Très vite, tu seras amené à laisser
la main à des investisseurs qui sauront mieux que toi.

AK : Comment se compose le board d’une startup se compose-t-il ?

SD : Tu as trois profils dans un board d’une entreprise tech : tu as les fondateurs, les indépendants et les
investisseurs. Si tu es en contrôle total de ton board , tu peux décider de l’ensemble des personnes qui sont dans
ton board en disant par exemple « je veux que des personnes représentants fondateurs et des indépendants qui
sont favorables aux fondateurs » c’est comme tu veux. Tout cela c’est de la négociation. Généralement les
investisseurs vont exiger d’avoir des protections, des droits de veto pour défendre leurs intérêts et c’est en échange
de ça qu’ils te donnent de l’argent. Chez Riatkr, on était dans une configuration habituelle, les fondateurs avaient
autant de position dans le board que les investisseurs et les fondateurs avaient la possibilité de nommer. Donc
d’une certaine manière, on avait la majorité des voix dans le board.

AK : Comment décrire l’écosystème entrepreneurial européen aujourd’hui ? Pourquoi le continent est-il

en retard face aux US ou la Chine ?

SD : Il y a deux raisons en réalité. La Chine pour moi cela n’a rien à voir avec l’écosystème ou le niveau des
moyens c’est exclusivement lié à la structure de leur marché, à leur protectionnisme et qu’ils ont la capacité de
créer des mastodontes. C’est incroyablement soutenue comme économie et donc pour moi la Chine c’est
certainement un pays qui est menaçant pour l’Europe mais ce n’est pas menaçant parce qu’on loupe le coche. C’est
menaçant car ils sont en train d’aligner tout une série de marchés, ils sont très sérieux et il y a un très grand
alignement entre l’état centralisateur et les acteurs de l’entreprise. Si tu compares l’Europe avec les US, il y a
essentiellement deux difficultés. La première c’est que les États-Unis ils ont connu les premières vagues, ils sont
déjà donc dans la 4ème génération des boites technologiques à haute vitesse donc en fait des gens qui ont grandi
dans une scale-up sont beaucoup plus aptes à recréer des scale-up. L’Europe est en train de créer sa première vague
de scale-up donc on va avoir notre deuxième et troisième vague d’ici 5 à 10 ans. Comme je te l’ai dit, pour créer
une scale-up, il faut doubler de taille pendant 10 ans donc les gens qui vont sortir maintenant de licornes comme
Doctolib, Alan, Odoo, ce sont des gens qui vont capter des idées et lancer peut-être des licornes dans 10 ans.
Aujourd’hui, le plus désavantage concurrentiel entre l’Europe et les États-Unis est que les US ont vraiment été les
premiers à mettre cet écosystème en place donc ils savent comment faire grandir donc eux sont déjà dans des
générations suivantes par rapport à nous. Le corollaire de ça c’est que la qualité des investisseurs, des équipes, du
recrutement est supérieur à l’Europe. Aux US si tu as besoin d’un VP Growth tu as énormément de candidats et
ces candidats très liés aux investisseurs américains qui vont eux-mêmes dire « à ce stade, tu as besoin d’un nouveau
Chief Product Officer je peux te mettre en contact avec celui qui a fait booking.com parce que j’ai investi dans sa
boite » donc en fait cette maturité elle existe aux États-Unis et pas encore en Europe. Elle existe dans certains
endroits d’Europe comme Londres, Paris, Berlin ou Amsterdam mais pas avec la même profondeur qu’aux États-
Unis.

AK : Sur quelles forces l’Europe doit jouer pour booster son écosystème ? Quels sont ses avantages ?

SD : Pour moi, ce sont les européens qui sont aux États-Unis. Il y a un truc qui me dépasse qu’on ne fait pas et
que l’Italie a commencé à faire c’est de dire « tous ces entrepreneurs européens qui ont été dans la Silicon Valley
et qui ont créé des belle choses, revenez en Europe vous ne paierez pas de taxes ». On a pas de problèmes de
financement en Europe c’est faux. Par contre, c’est très compliqué d’avoir des gens de qualité, qui savent le faire
et il faut leur donner les ressources nécessaires pour que ces entrepreneurs européens pour qu’ils le fassent chez
nous et pas depuis les États-Unis. Quand tu prends la French Tech, par exemple, c’est du branding mais ce n’est
pas avec ça qu’on crée Doctolib, Alan ou les autres boites qui réussissent en France. Par contre, ce qui est bien
c’est que Macron dise voici les éléments de politique pour favoriser l’émergence de licornes en France, on se
donne un objectif. La plateforme d’investissement en France elle était déjà active avant que la French Tech soit
lancée. Ce n’est pas dans les foires ou les conférences que les scale-up sont établies. Par exemple, en France et on
a encore un peu ce problème en Belgique, où vont les gens les plus malins qui sortent d’école d’ingénieurs ? Ils
vont dans des boites de conseil, c’est bien mais ce n’est pas comme ça que l’on crée une licorne. Donc c’est
 V.

comment tu arrives à capter les gens pour qu’ils quittent les grandes entreprises et qu’ils arrivent à lancer des
boites et qu’ils le fassent avec des bonnes personnes sur les bons problèmes. Le grand truc sur lequel l’Europe ne
fait pas bien les choses par rapport aux États-Unis c’est qu’aux US ils ont tendance à avoir des très gros plans
d’investissement soutenus par l’état pour faire émerger un écosystème tech. L’armée par exemple a joué un rôle
extraordinaire pour la mise en place de toute une série de marchés. Qu’est-ce qu’on fait par rapport à ça en Europe ?
Si tu forçais toutes les administrations publiques belges à déployer 2% de leur budget dans des startups tu crées
de la demande. C’est bien mieux de créer de la demande que de donner des subsides.
VI.