Europe’s technology sector is flourishing, driven by unicorns — billion-dollar enterprises that provide value to investors and serve as breeding grounds for future entrepreneurs. According to a report by Accel and Dealroom, more than 360 venture-backed unicorns in Europe and Israel have given rise to 2,027 startups as former employees transition into founder roles.
The effects are significant: 53% of these startups are launched in the same city as their parent unicorns, bolstering local ecosystems. Additionally, 60% of these spin-offs have obtained over $1 million in private funding, with a third securing at least $10 million.
Tech Funding News spoke with several of Europe’s unicorns and their supportive VCs to delve into this trend.
The rise of unicorn hubs: UK, Germany, and France
The UK, Germany, and France stand at the forefront of Europe’s unicorn landscape. The UK leads with 62 unicorns, while Germany and France follow with 48 and 39, respectively. London emerges as Europe’s premier startup generator — its 34 unicorns have produced 327 startups, with 62% remaining in the city. Berlin’s 27 unicorns have generated 283 startups, and Paris’s 29 unicorns have created 264 startups, with 69% staying local.
“We are seeing this effect all over Europe, especially in London, Paris and Berlin as the data shows,” says Maria Palma, General Partner at Freestyle and former GP at Kindred Capital. “At one point when I was tracking the Paris ecosystem recently, we realised that almost 90% of the people I had as great founders/operators on my watchlist had prior experience working at a startup in either SF/NY or London/Paris.”
Thomas Bigagli, Partner at Plug and Play, weighs in on the geographic impact: “53% of new startups are founded in the same city as their parent unicorns. It results from operational talent, capital, and ambition concentrating around proven models.” He points to Vilnius and Barcelona as examples of cities benefiting from this trend.
Beyond these capitals, secondary hubs are flourishing. Manchester and Cambridge in the UK are leveraging university ecosystems to foster innovation. Munich has established itself as a hub for deep tech in Germany through its connection to research institutions like TUM, while Hamburg advances logistics and e-commerce. France sees growth in Lyon and Marseille, where health tech and green innovation attract investment.
Dr. Hendrik Brandis, Co-Founder at Earlybird Venture Capital, highlights a significant shift toward decentralisation. “The contrary is true,” he explains. “85% of latent tech founders are not located in major hubs like London or Berlin. Remote work and digital tools are integrating non-urban entrepreneurs into the ecosystem.” He notes that European cities with at least one unicorn grew from 8 in 2011 to 65 by 2021 — a clear sign that entrepreneurial energy is spreading across the continent.
Founder Factories: Klarna, Spotify and Zalando
Europe’s unicorns function as “founder factories,” spawning hundreds of new ventures. Klarna, Spotify, Zalando, Skype, and Delivery Hero have each produced dozens of startups. Agur Jõgi, CTO at Pipedrive, sees this trend as evidence of Europe’s growing maturity: “Europe has evolved from being a relatively quiet player in the global tech scene to becoming a vibrant hub for innovation and entrepreneurship.”
Delivery Hero alums have launched 43 companies. Niklas Östberg, CEO of Delivery Hero, credits this success to their empowering culture: “We have a very entrepreneurial spirit and a reputation for giving people room to grow. This helps a lot in talent acquisition,” he says. “We’re proud to see people feel confident starting their businesses after a few years at DH.”
Revolut shares this perspective: “Our innovative culture attracts ambitious individuals eager to develop their skills,” says a company spokesperson. “This environment equips employees with the mindset necessary to drive their ventures.”
N26’s spokesperson states: “At N26, we foster an entrepreneurial spirit among our team, encouraging innovation and disruption daily. We’re proud that over 30 former employees have founded their ventures, significantly contributing to the global startup ecosystem. We celebrate their achievements and remain dedicated to cultivating talent and supporting the tech community in Europe.”
Carolin Wais, Partner at Plug and Play, highlights the broader shift: “Over the past 25 years, Europe has evolved from a fragmented and often risk-averse startup landscape into a dynamic engine of innovation — and we’re now seeing the full impact of the ‘unicorn founder factory’ effect. Founders who’ve exited or scaled unicorns are reinvesting — not just with capital, but with time, networks, and operational know-how.”
But Matt Cooper, co-founder and Executive Chairman at Exceptional Ventures, encourages a more grounded perspective: “People come out of them having learned a lot. They’ve seen what good (and bad) looks like; they know how to raise money, they know how to build teams, and they have access. That matters. But we shouldn’t romanticise the pattern too much.”
Angel flywheels and ecosystem ignition
Unicorn alums are also fostering angel investment communities within their ranks. Palma points to Monzo as an example: “Tom [Blomfield] invested in multiple spin-offs from Monzo employees who became angels themselves.” These internal investment flywheels mirror Silicon Valley’s “PayPal Mafia” model.
Successful exits also ignite ecosystems in emerging regions. Konstantin Gnyp of Runa Capital highlights Bulgaria as an example: “A $262M exit — Telerik in 2014 — kickstarted a vibrant ecosystem that produced Payhawk (Bulgaria’s first unicorn) and others.”
Gnyp believes this trend is just beginning: “When hundreds of people build a unicorn together, it’s natural that some will spin out to start their ventures, often bringing former teammates. Liquidity events accelerate this even more, giving founders the capital and confidence to start something new or invest locally. With several times higher startup funding in Europe than a decade ago, I believe we’ll see even more tech hubs emerge in the coming years.”
Europe’s talent flywheel thrives with spin-offs but struggles with “unicorn migration.” Many unicorns move their headquarters to the US or UK for better capital access and larger markets, hurting local economies due to job and intellectual property losses. Additionally, European startups encounter larger funding gaps in later stages than their US counterparts. Policymakers are tackling this by creating pan-European funds and national programs to keep high-growth companies in Europe.
What’s next for Europe’s tech?
Looking ahead, Dr. Brandis says that Europe’s unicorn engine may face challenges as VC supply struggles to match demand. “I don’t think the supply of VC will grow at the same pace as the demand, driven by an exponential growth of high-quality startups,” he warns. “That will make funding rounds challenging until we see a trend change in the financial sentiment and significant capital pours into the ecosystem.”
Agur Jõgi, meanwhile, highlights healthtech as another emerging wave: “Europe’s aging population, advances in AI, and personalised medicine are reshaping healthcare needs across the continent,” he says. “The focus is shifting from treating illness to enabling healthier, longer lives.”
Luis Llorens, Principal at Plug and Play, sees the next wave of founders emerging from the unicorn spin-out ecosystem, noting that “capital is no longer chasing every pitch deck — it’s chasing operational excellence and clear paths to monetisation.” Focusing on “capital efficiency, product-market fit, and scalable business models” is shaping a new breed of resilient, globally relevant companies.
Matt Cooper adds another note of caution: “We shouldn’t expect a rush of founders jumping sectors. People tend to stick to what they know. You’re not going to see a wave of unicorn health techs being founded by ex-fintech people,” he says. Instead, each new wave — like AI or wellness — will likely be led by “a fresh batch of entrepreneurs who are already close to that space.”
