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Pre IPO companies from the EU
The most promising private equity companies from the EU
We continue our series about the most promising companies by region. From our last post on the US companies, one of the mentioned companies have become public and another has announced a SPAC merger. So now we have created the list of the hottest pre-IPO companies from Europen Union.
Even though the European venture capital market is uncomparable to the US, it started 2021 off strongly, ultimately reaching an all-time quarterly high in Q1. Roughly €17.6 billion was invested across 1,907 deals, and VC activity on the continent is expected to break annual records as the year progresses, according to Pitchbook reports. So let’s take a closer look at the most promising companies from this region.
Klarna Bank AB
Klarna is a fintech platform known for its “buy now, pay later” model that offers shoppers interest-free financing on retail purchases throughout instalments. Operating as a bank, the company was founded in 2005 in Stockholm, Sweden and recently became the most valuable start-up in Europe.
The platform operates in 17 countries as a marketplace where users can purchase goods from the most well-known brands like H&M, Adidas, Sephora, Bloomingdale’s and 200,000+ more partner stores. The total number of users has tripled since 2019 and now equals 85 million with 12 million active users.
Klara has performed + 55% CAGR for operations and 30% + CAGR for revenues over the past seven years. Investors expect the pace to continue as e-commerce grows at least 15% per year and the company enters new markets. Moreover, in October 2020, Klarna and Macy’s signed a 5-year contract that provided additional funding for Klarna and significantly strengthened its position in the US market.
Klarna is a unique tool for its partners because it increases the order value by 30–40% and attracts new customers. According to the company reports, the number of clicks from partner stores has grown by 40 million since January 2020.
After the last funding round worth $1 billion the company valuation tripled up to $31 billion. Klarna plans to go public in 2 years, which gives a lot of time to gain capital in private equity. Considering the global trend of e-commerce growth, which was highly stimulated by pandemic, the company has a lot of room to grow.
Lead investors: Sequoia Capital, CommBank, Ant Financial, H&M
N26
N26 is a German-based neo-bank founded in 2013. The company offers mobile banking solutions to customers across the EU and UK. Its application users can easily open a current account with IBAN and make worldwide transactions. The company always developing new banking products and offers such services as deposit account, overnight draft and investments.
Currently, the N26 bank application is available in 22 European countries and recently it started expanding to the US market. The company enlarges its user base with aggressive marketing campaigns and a high number of partnerships such as Booking, Adidas, Udemy and etc.
Despite great performance in customer growth, the company is still making losses. N26 net losses at its core European business came in at 110 million euros in 2020, down from 165 million euros the previous year, according to CNBC. The positive dynamics in cash flow and astonishing €5,5 billion in monthly transactions makes investors keep their expectations high.
N26 have just entered the insuretech space. It has announced the launch of a new on-demand insurance product, N26 Insurance. It will offer the option to purchase coverage, manage plans, and initiate claims for a range of insurance plans from different providers, straight from within the N26 app.
Moreover, the company has appointed Dr Jan Kemper as a Chief Financial Officer. Dr Kemper has expertise in leading startups to the public market, which signals that even with operational losses, the company is planning to become public in the foreseeable future. That could only mean one thing for private equity investors — hiking valuation and increased demand for private equity stocks.
Lead investors: Tencent, Peter Thiel, Alianz X
Bolt
The company develops an on-demand transportation platform built to streamline day-to-day transportation and commute. The company’s platform allows users to browse and book different varieties of vehicles online based on their preferred location, date, prices and ratings, providing customers and clients with affordable and accessible ride-hailing, micro-mobility and food delivery alternatives.
Founded by Markus Villig in 2013, Bolt has more than 50 million customers in over 40 countries. Firstly known as Taxify, the company have rebranded into Bolt to expand its services beyond private cars. The main regions of operation are Europe and Africa. Recently the company has raised $24 million from International Finance Corporation, a division of the World Bank.
TechCrunch has calculated the after funding round in December 2020, the company valuation hiked up to $4,3 billion. The company has not revealed the official number but has confirmed that valuation has grown. Bolt positioning itself as a late entrant, which helps to spend less on educating the customers and R&D. The chosen strategy helps to invest in platform development rather than overhyped self-driving technology, as Uber did.
Comparing Bolt to major competitors makes the company look quite undervalued. Uber and Lyft capitalisation is $100 and $20 billion respectively. Another privately help mobility company Grab is valued at $14 billion. High interest from investors in the mobility sector and a lot of room to grow for Bolt makes this company an attractive investment option for private equity investors.
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