Founder factories fueling next gen startups

Success breeds startup success. The European and Israeli tech ecosystem is in a much stronger position since the 2008/9 financial crisis due to a spinning flywheel of talent from existing unicorns. In a new report in partnership with Accel, we’ve explored how the founders of today’s startups got their earlier startup experience at some of the region’s leading unicorns. Of the more than 300 VC-backed unicorns in the region, 203 unicorn alumni founder factories have fuelled more than 1,000 (1,018) new tech-enabled start-ups, with former employees becoming founders.

Most famously in the US, the founder and first-hire alumni of the “PayPal Mafia” went on to found Tesla, LinkedIn, Palantir, SpaceX, Square, Slide, Kiva, YouTube, Yelp, and Yammer. In Europe and Israel, Skype, Spotify and Criteo have quietly become their own unicorn alumni founder factories, vital training grounds for entrepreneurial talent.

Familiar founder factories, including BlaBlaCar, Criteo, Delivery Hero, Klarna, N26, Revolut, Skype, Spotify and Zalando, top the founder factory ranking with talent from each producing more than 20 new tech start-ups. However, a new wave of unicorn founder factories is on the rise as companies such as Babylon, Celonis, Conduit, iZettle and SumUp have seen 10 or more companies set up by former employees.

Wise meanwhile was itself founded by alumni of Skype, and has now produced almost as many startups. The European startup family tree is growing.

“Talent is the most fundamental ingredient of any successful tech ecosystem. It’s clear that European talent is now at a very different level than in 2000 when Accel opened its London office. While founders and their teams are navigating a tough macroeconomic environment, it’s also true that the community is in a much stronger position than during the 2008/9 financial crisis. There’s now a wealth of strong founders and operators building innovative companies that have experienced the start-up journey before and have the knowledge to create global success stories. We’re looking forward to seeing the next wave of companies!”

Founder factories lay strong foundations in thriving tech hubs

Early tech ecosystem success not only creates value and belief for a community, but breeds a generation of operators who know how to start and scale successful businesses, who have the right network and at times the exit capital to start their next venture.

The data shows that companies founded by former unicorn employees more often than not are done so in the same cities as where their unicorn employer was minted. More than half (56%) of companies founded by ex-employees were founded in the same city as the unicorn.

This results in thriving tech hubs developing in cities where unicorns have been created.

For example:

• London: 27 London-founded unicorns saw 168 startups founded by former employees and 69% were founded in London
• Tel Aviv: 27 Tel Aviv-founded unicorns saw 108 startups founded by former employees and 81% were founded in Tel Aviv
• Berlin: 24 Berlin-founded unicorns saw 138 startups founded by former employees and 70% were founded in Berlin
• Paris: 22 Paris-founded unicorns saw 125 startups founded by former employees and 75% were founded in Paris
• Stockholm: 11 Stockholm-founded unicorns saw 98 startups founded by former employees and 59% were founded in Stockholm
• Copenhagen: Six Copenhagen-founded unicorns saw 20 startups founded by former employees and 50% were founded in Cophenagen
• Munich: Six Munich-founded unicorns saw 28 startups founded by former employees and 50% were founded in Munich
• Tallinn: Four Tallinn-founded unicorns saw 37 startups founded by former employees and 38% were founded in Tallinn
• Helsinki: Four Helsinki-founded unicorns saw 16 startups founded by former employees and 50% were founded in Helsinki

Fintech factories

The fintech industry has unquestionably created enormous value in the European economy over the past decade, yielding multiple decacorns, and many unicorns. In each of the seven biggest European economies, at least one fintech now ranks among the top five financial institutions.

Given the size of the opportunity and intricacy of the market, it is no surprise that fintech unicorns continue to produce new waves of founders, especially in Europe with its favourable conditions for growth and access to leading financial markets.

In the last 14 years, 61 fintech unicorns have seen 310 startups founded by former employers, 40% of which were also in fintech too.