Exit growth: a changing geography

Alessandro Petrich, Analyst at P101 | April 27th, 2016

Exit, the “magic word” when it comes to start-up investment, does no longer frighten Europe. According to the European Tech Exits Report by Tech.eu, in 2015, in the tech industry only, European exits have been 594 – 65% more than in 2014. Besides, both the number of transactions and their value have increased.

Such a positive result has also been reported in the Global Startup Ecosystem Ranking 2015. Indeed, according to the report by Compass – that has monitored the liveliness of entrepreneurial ecosystems worldwide in the last two years – the exit phenomenon is growing exponentially both in the Silicon Valley and in Europe. While, on the one hand, the Valley has registered a +46% exit value in the last two years and has captured alone about 50% of the total exit value in the best 20 entrepreneurial ecosystems worldwide, on the other hand, Europe has increased its share of the total value by 314% compared to two years ago. This figure must, however, be handled carefully, as it is influenced by the stellar IPOs of Rocket Internet and Zalando in Berlin and by the frenetic London ecosystem.

Generally speaking, over the past two years, the exit share generated by non-Silicon-Valley ecosystems has increased by 14% of the total value. In other words, if in 2012 the Californian technology hub could count for the 55% of the pie, between 2012 and 2015 it has seen a decrease in its share down to 41%. Of course, this does not mean that the value of Silicon Valley exits has decreased, rather, that other centres of innovation are growing fast.

What does this proliferation of exits mean? It’s a clear signal that ecosystems are becoming more and more mature globally and that the number of startups with a high added value – achieved thanks to the financial support of VC funds – is increasing. In Berlin, for example, where the exit value has increased by 20 times, the relationship between exit growth and market vibrancy is blatant. Indeed, the Berlin ecosystem is ranked amongst the world’s 10 best ecosystems, the activity of local VCs has grown by 12 times, and the city has become Europe’s new technological frontier.

Where does Italy stand? The figures for our country, as indicated by the Compass report, are positive too. In particular, the ecosystems of Rome and Milan are on the rise. For example, in September 2014 Oakley Capital acquired 75% of Facile.it – the country’s most famous portal for the comparison of insurance rates, bank accounts, telephone charges, electricity and gas bills – for 100 million Euros. Also, in February 2015 the German giant Rocket Internet acquired the food delivery startup PizzaBo for about 55 million Euros.

These data let us hope for a bright future of the Italian ecosystem. They should be interpreted, in fact, as the proof of the livelihood of Italian start-ups. They demonstrate that Italian start-ups are positively valued abroad and that step by step we are bridging the gap that still separates us from the top European hubs. Our hope is that what occurred in Berlin will happen in Milan or Rome: a city that until two years ago was considered to be dry soil for start-ups looking for consistent investment rounds is today competing with London for the title of main European innovation hub. Yet another definitely a good sign for our country: Italian start-ups that grow thanks to international M&A activity – just think, for instance to the fusion between Yoox and Net-à-Porter that took place in 2015.