The Accel 2023 Euroscape was unveiled on 17 October, 2023 at SaaStock EMEA. You can view the report here
In 2022, the global Cloud ecosystem went through a deep reset (see Accel 2022 Euroscape).
With $1.6T of public market cap lost in the global Euroscape Index and private cloud funding down more than 40%, the software world was wondering how far everything would keep falling.
Today, as we unveil our 2023 Euroscape: Generation AI, the picture looks much brighter. Boosted by solid balance sheets and the rise of AI, the US, European and Israeli cloud ecosystems have shown their resilience and are on a path to recovery.
Public Markets – AI generates a new $1T company. Profitability in the spotlight
The recovery has been much faster than what we observed in 2000. The NASDAQ Index took 18 months to return to 80% of its 2021 peak, in stark contrast to the 14 years it took to hit the same milestone after the 2000 crisis.
A large part of the value created in tech in the past year - $2.4T - has been generated by the “Tech Titans” (companies with a market cap > $1T). This exclusive club has seen a new member join, with Nvidia’s $1.1T worth driven by the massive need AI has created for its chips. Tech now represents five of the six companies who have passed the $1T mark.
On the public cloud front, the recovery is underway, with the global Euroscape Cloud Index up 29% YTD and revenue multiples reverting to the 10 year pre-covid average (6.1x NTM).
With macro trends putting pressure on the top line, companies have pushed towards profitability. However, the shift has not been as fast as expected as the number of public SaaS companies in the Accel Euroscape Index that meet the rule of 40 has now halved.
Cybersecurity remains the sector where we see the most growth, with Crowdstrike, SentinelOne and Zscaler among the five fastest growing companies in the Euroscape Index.
Venture financing: back to 2019 levels. AI driving largest private rounds and fueling innovation
With $31B invested in private cloud companies year to date, we have converged to pre-covid levels in Europe and Israel ($11B 2023 YTD), and the US ($20B 2023 YTD). However, it has been remarkable to see that the European and Israeli cloud ecosystems have solidified their relative strengths and represent more than half of the US (53%), which is greater than the 46% observed in 2020.
While figures have returned to those seen in 2019, today’s market is still in a very different place. The combination of strong balance sheets built through the raise of $230B from 2020-2022 and the emergence of generative AI (GenAI) have ensured that the global cloud ecosystem has continued to innovate and push the boundaries of automation.
As GenAI redefines the potential of software, unleashing previously unimaginable opportunities, we’ve seen the largest private financing rounds being secured by companies developing large foundational models:
- OpenAI raised $10B
- Anthropic secured around $2B across three rounds
- Inflection raised $1.3B
In addition, 60% of new unicorns created over the last 12 months are GenAI native.
While the majority of GenAI funding went to US companies, Europe’s GenAI talent pool shines through. European talent is producing 50% more AI journal publications than the US, with a similar citation rate, and the pool is deep and highly distributed across the region. With many promising GenAI companies emerging for the region, we think the continent will catch-up over the coming years.
2023 Accel Euroscape - A new category for GenAI
This year, we’ve screened 2200+ companies across more than 25 countries to build the list of what we think are the most promising early stage cloud companies across Europe and Israel. These companies have more than $1M in ARR, but are not yet unicorns. Combined, they represent more than 17,000 employees and have raised $7.6B.
Perhaps unsurprisingly given the title of this year’s report, the 2023 Euroscape 100 list includes a new GenAI category and you can see the full list of companies in the full report.
What lies ahead?
As we head into 2024, we feel there are six key trends that will produce the next generation of European and Israeli champions:
Read about these trends and more in the full report here