Idinvest — European Consumer Startups Map 2020

Eurazeo
Eurazeo
Jun 3, 2020 · 18 min read

Consumer behaviours are changing fast. You can now find and buy almost anything you could ever need on your smartphone while commuting: food, gaming, education, housing, banking, entertainment, clothing… — from buying a €1k mattress online to booking an online appointment with a GP.

B2C startups are taking advantage of the web as the ultimate and universal distribution channel and are leveraging mobile to reach as many customers as possible. Brands are also going global and are easily able to attract more users in Japan or in the US even with an app originally developed in a Swedish garage!

The Old Continent has enjoyed successful VC-backed consumer startup exits and there are still massive opportunities ahead. More than half of the largest recent European companies’ tech exits are consumer startups (Spotify, Supercell, King, Farfetch, Zalando, Delivery Hero, Just Eat, Skyscanner…) and there are many more promising scale ups following this path (Revolut, Deliveroo, Glovo, Auto1, Backmarket, Wefox…).

Venture Capital investment in European consumer startups has risen at a whopping annual rate of 30% from €4.4bn in 2014 to €16.6bn in 2019, while the overall investment in consumer startups globally grew at 19.5% annually.

European startups are attracting a larger share of VC money: in 2019, 16% of all VC investments in the consumer sector went to European startups, compared with 11% 5 years ago. We believe that Europe is uniquely positioned to build global leaders in certain consumer categories (finance, healthcare, food, travel, gaming, sustainability, privacy, sharing economy etc.).

6 months ago, we decided to launch a study in order to release Idinvest’s European Consumer Startup Map which features 180+ of the most promising consumer startups in Europe.

We have analysed and surveyed 1,500+ companies across Europe to finally release this list. We have limited the list to companies generating a revenue of more than €1 million in most cases and which have raised less than €100 million. Companies above this fundraising threshold, which have a high growth rate (or which have already exited) are considered “Giants” of each category.

Among thousands of consumer facing apps, we have picked a list of the top performing companies, covering a wide range of categories, from stock trading to personal journaling and gaming. This is not a scientific study but more a feel of the pulse of the market. If you think we are missing some companies and/or categories, please feel free to share your thoughts.

A quick disclaimer: Idinvest-Eurazeo’s portfolio companies are over-represented in this mapping. It’s all part of the game when it comes to projects like this. We designed the mapping to add these companies to our initial list of rising stars, instead of putting them at the expense of other companies. We also included all our consumer companies without trying to discriminate.

Finance

In the past 5 years, venture capital investment within the finance sector in Europe has risen from €663m in 2014 to €4.7bn in 2019 (+48% CAGR vs. +29% CAGR for worldwide fintech investments). It’s the largest VC-backed consumer segment in Europe and 26% of all VC investments in fintech were made in Europe (vs. 16% on average for all categories).

Fintech has started to go mainstream and the number of sub-verticals has grown quickly, driven by the open-banking revolution and API-connectors like Plaid, Tink and Truelayer.

Neobanks (Revolut, N26 and Monzo), as well as PFM (personal finance management) startups (Lydia, Cleo, Bankin’, Finanzguru) are positioning their apps as one-stop shops for all your finance needs: paying for your daily expenses, buying stocks or crypto, signing up for insurance and so on. These players are aiming at maintaining a daily relationship with users with the long term vision of replacing traditional banks. They are becoming the swiss army knife of finance tools.

Some other players are going after a single vertical and are developing an outstanding consumer experience with a more compelling value proposition and lower pricing. Some of the trends that caught our attention include:

  • Trading applications (TradeRepublic, Freetrade and Bux in Europe, Robinhood in the US) are democratising stocks and indexes trading, especially for millenials.

Mobility

In the past 5 years, venture capital investment within the mobility sector in Europe has risen from €352m in 2014 to €2.5bn in 2019 (+48% CAGR vs. +29% CAGR for worldwide mobility investments). It’s the second largest VC-backed consumer segment in Europe and 11% of all VC investments in mobility were made in Europe (vs. 16% on average for all categories).

  • Micro-mobility is still in its early days in Europe. The first wave came with Chinese free-floating shared bikes (2016–2017). The second wave involved e-scooters (2018–2019) dominated by American companies Lime and Bird. Most recently, e-scooters have flooded all major cities, with European players leading the way (Circ (acquired by Bird), Voi, Tier and Dott). The next micro-mobility wave (2020–2021) relates to e-bikes. This time around, European players are leading the way with startups such as Cowboy, Vanmoof and Angell focusing on the premium urban segment and Cityscoot for e-mopeds.

Healthcare

In the past 5 years, venture capital investment within the healthcare category in Europe has risen from €658m in 2014 to €2.0bn in 2019 (+25% CAGR vs. +13% CAGR for worldwide healthcare investments). It’s the third largest VC-backed consumer segment in Europe and 19% of all VC investments in healthcare were made in Europe (vs. 16% on average for all categories).

  • What is the consumer market in healthcare? As most healthcare products are not paid for or chosen directly by consumers in Europe, one could be tempted to reduce the European healthcare industry to wellness, a niche within the healthcare sector. But in reality, the consumerization of healthcare is a trend that goes beyond business models, and startups are building products and experiences that are increasingly tailored for the end user; patient or consumer, depending on the context.

Generalists offer convenient platforms or aggregators of products (online pharmacies) and services (teleconsultation companies). They provide solutions for everyone and tend to integrate more and more vertically into the user/patient journey, as TeleClinic is doing in Germany, by matching teleconsultation with pharmacies and labs, to drive retention.

Verticalized startups target therapies or a specific population. They tend to start with more organic users solving a specific problem before diversifying their offer. D2C men’s health companies like Charles in France choose to expand their initial offer to drive more usage and retention. Digital therapy startups tend to leverage their experience in product and clinical studies to create more therapies in their therapeutic area.

  • Among these startups, many look (or will look) to the US for a bigger or more consumer-like market, as Kaia Health is doing. However, regulation is not always a downside and a lot of companies in this list turn the inherent complexity of their home markets into barriers to prevent entry from competition. This will drive a trend of dominant national players, like Doctolib in France.

Food

In the past 5 years, venture capital investment within the food sector in Europe has risen from €769m in 2014 to €1.9bn in 2019 (+19.8% CAGR vs. +30.9% CAGR for worldwide food investments). 19.8% of all VC investments in food were made in Europe (vs. 16.1% on average for all categories).

  • The first wave of European food tech was focused on building the food delivery infrastructure (Delivery Hero, Deliveroo, Glovo, Takeaway) and created liquidity for restaurants.

Travel

In the past 5 years, venture capital investment within the travel category in Europe has risen from €383m in 2014 to €1.6bn in 2019 (+33% CAGR vs. +29% CAGR for worldwide travel investments). 20% of all VC investments in travel were made in Europe (vs. 16% on average for all categories).

  • Travel is one of the few sectors with a market size bigger in Europe than in North America (39% of global tourist spend in 2018 is in Europe, vs. 24% in the Americas, source Statista). Hence Europe acts as a great lab for travel startups to innovate in and many travel tech giants have emerged in Europe, including the likes of booking.com, Secret Escapes and Skyscanner.

➡ The travel sector has historically been largely underserved by technology and multiple players are helping upgrade the industry’s tech stack. Some players are helping bring about much more agility in the industry by introducing the latest generation of property management software (Mews, Apaleo) or by simplifying how distribution works (Duffel, Impala). We’ve also seen a wave of startups focusing on operations management (key handling, cleaning, reservation management, pricing) for home rentals (e.g. Guestready). These enablers have resulted in the emergence of a new generation of travel startups and this trend is likely to accelerate.

➡ We’ve seen multiple startups leverage technology to develop furnished apartment rental businesses, either as operators (Limehome) or marketplaces (Homelike)

➡ The scope of the accommodation sector has become so wide that two types of players have emerged: (i) meta search engines (Holidu, Hometogo), which help consumers navigate through multiple marketplaces simultaneously via powerful search engines that focus on user experience and price and (ii) specialist distribution platforms (OTAs) that are targeting niche audiences including The Plum Guide for luxury home rentals or Dayuse which offers hotel bookings ‘by the hour’.

➡ With the Covid-19 outbreak impacting the travel sector more than any other industry, travel startups will be forced to continue to adapt to new consumer behaviours. This will likely translate into a new generation of startups, focused on different use cases including, for instance, travelling closer to home. The event industry is reinventing itself and some long haul travel may also be replaced by online remote events.

Retail & Ecommerce

In the past 5 years, venture capital investment within the retail category in Europe has risen from €885m in 2014 to €966m in 2019 (+2% CAGR vs. -3% CAGR for worldwide retail investments). 14% of all VC investments in retail were made in Europe (vs. 16% on average for all categories).

In the past 30 years, the consumer adoption of marketplaces and e-commerce websites has risen dramatically. We are now using these platforms on a daily basis and long gone are the days when consumer marketplaces were dominated by eBay and Craigslist.

  • P2P marketplaces, Depop and Vinted, are growing , driven by key technological enablers such as the ubiquity of high performance smartphone cameras and mobile payment (Apple and Google Play)

Housing

In the past 5 years, venture capital investment within the housing category in Europe has risen from €94m in 2014 to €842m in 2019 (+55% CAGR vs. +48% CAGR for worldwide housing investments). 9% of all VC investments in housing were made in Europe (vs. 16% on average for all categories).

  • Housing proves to be a resilient market, as demand still outstrips supply in larger cities. The shift to suburbs has failed to materialise so far. Millennials still want to become homeowners and are hungry for alternative mortgage options. In city centres, where home prices have skyrocketed, new rental models struggle to be competitive compared to traditional renting, so they focus on gentrifying areas.

Gaming

In the past 5 years, venture capital investment within the gaming sector in Europe has risen from €125m in 2014 to €758m in 2019 (+44% CAGR vs. +6% CAGR for worldwide gaming investments). 30% of all VC investments in gaming were made in Europe (vs. 16% on average for all categories).

  • Gaming is the largest culture-related category — bigger than the film and music industries. It generated $152bn in revenues in 2019 and is forecasted to reach $196bn in revenues by 2021.

Entertainment

In the past 5 years, venture capital investment within the entertainment sector in Europe has risen from €206m in 2014 to €577m in 2019 (+23% CAGR vs. +13% CAGR for worldwide entertainment investments). 8% of all VC investments in entertainment were made in Europe (vs. 16% on average for all categories).

  • Current social networks are broken because they are monetised through advertising and value content over interactions. This is why we invested in Yubo — a video-chat app for the gen. Z. This is also why we believe that new safe-space social networks will emerge, focused on group chats (like Yolo) or specific demographics (Peanut for women, Jodel for neighbours).

Education

In the past 5 years, venture capital investment within the education sector in Europe has risen from €118m in 2014 to €393m in 2019 (+27% CAGR vs. +16% CAGR for worldwide education investments). 10% of all VC investments in education were made in Europe (vs. 16% on average for all categories).

  • Many wish they were lifelong learners. According to Bain, “by the end of the 2020s, automation may eliminate 20% to 25% of current jobs, hitting middle to low income workers the hardest.” We must reinvent ourselves continually to remain relevant for the world of tomorrow.

Wellness & Beauty

In the past 5 years, venture capital investment within the wellness & beauty category in Europe has risen from €207m in 2014 to €334m in 2019 (+10% CAGR vs. +3% CAGR for worldwide wellness & beauty investments). 15% of all VC investments in wellness & beauty were made in Europe (vs. 16% on average for all categories).

  • People (especially millennials) are willing to allocate a higher wallet-share into wellness and this is done mostly via monthly or yearly subscriptions. 3 main activities are particularly in demand from consumers: mindfulness, nutrition and fitness.

Eurazeo

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