Investment

Europe’s fastest-growing startup, the region’s burgeoning unicorns, and the fuel for family office growth

Thanks to Covid-19, Hopin, the virtual events platform, is enjoying faster growth than any European startup in history, according to Niklas Zennström’s Atomico, a VC investor. A year ago, Hopin scarcely existed.

It now claims a value of $2.13 billion based on its latest fundraising, from a mere eight months of sales data. 

The chances of backing a European unicorn, once vanishingly small, are now similar to the US – 1 in 100

The new shareholders who participated include renowned US venture capitalists often backed by family offices. Angel investors, increasingly backing European VC, will benefit from their enthusiasm.

Support from US investors means the European tech sector is on track to raise a record $41 billion this year, according to Atomico, although the pace of growth has slowed. 

Investors are pouring three times more money into tech ventures than five years ago. State investors, once key to propping up the market, have dropped away. The chances of backing a European unicorn, once vanishingly small, are now similar to the US – 1 in 100. 

Family offices are less evident than in the US. But individuals enriched by sales of their companies are reinvesting. Zennström, who co-founded Skype, is a classic example. Skype, Just Eat and Spotify are the European tech-driven companies which have created the most angels to date. One day, today’s angels will form a new generation of European family offices.

Nearly 80% of angels responding to the Atomico survey confirmed they were focused on backing new ventures. Areas of interest were led by tech applications in education, digital health and big data.

Promoters are finding it increasingly easy to lure talented individuals from existing employers through scouting exercises as VC booms and preys on traditional businesses.

Hopin, led by Johnny Boufarhat, is seen as a winner, partly because it has won so much business this year. It is in pole position to extract rent from the events sector, if and when the virus fades

Hopin’s November funding saw investors willing to pay 100 times earnings for Hopin equity worth $125 million, less than six months after raising $40 million earlier in the year. 

The experience reflects exuberance in the VC market across the world, where delivery firm DoorDash expects to have a launch value of $41 billion at its upcoming IPO against an estimated $16 billion in June.

Like Zoom, Hopin’s online events service filled a huge gap when the spread of Covid-19 led to the cancellation of in-person conferences across the world. Investors believe the clever graphics used by Hopin will remain popular when the pandemic subsides, particularly with the next generation. 

A big issue is whether Hopin will be able to handle the operational uncertainties which relate to a fast-growing business planning to recruit hundreds of people in the next year. But you can’t knock its inventive approach. 

A new feature called Hopin Explore makes it easy for investors to attend online events, currently totalling 15,000 a month. As part of the feature, it can host one-to-one networking opportunities.

VC firm Seedcamp was the first to hop on board the Hopin bandwagon for an undisclosed sum in October 2019, before the pandemic. It has invested in every subsequent round. 

Hopin raised a further $5 million in February. VC firms participated but several new backers were angel investors. They comprised Finnish mobile games developer Ilkka Paananen; platform developer Des Traynor; serial tech investor Tony Jamous; chief product officer at GoCardless Carlos Gonzalez-Cadenas; chief of team-building specialist Miro Andrey Khusid, and UiPath robotics expert Daniel Dines. US-based Andreas Klinger also invested through specialist investor Remote First Capital. 

In June, Hopin’s $40 million came from US-listed software group Salesforce and new VC investors like Accel, Northgate and IVP, which can boast a 43% internal rate of return over 39 years.

Top-rated newcomers in its November $125 million fundraising include Tiger Global (backer to a range of ventures like Peloton and Spotify) Coatue (Ant Financial and DoorDash). 

Another new shareholder is DFJ Growth which has been backing entrepreneurs for nearly four decades. A predecessor company was co-led by William Draper in 1959.  Descendent Tim Draper co-founded the current business with John Fisher and Steve Jurvetson. John Fisher is the only one of the three who works at the latest incarnation, alongside the likes of Barry Shuler, former chief executive of America Online, and Randy Glein who was once a systems engineer at Hughes Space & Communications. 

Another DFJ partner, Mark Bailey, has his own family office, which this week features in Family Capital’s Deals. 

DFJ has produced a stream of winners like Twitter and Space X. But, right now, it is Hopin which is flying with the angels.

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