The State of European Tech

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1 The State of European Tech November 2015 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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The State of European Tech 1. Introduction 2. Entrepreneurial Mindset 3. Tech Community 4. Talent 5. Capital Flows 6. Europe’s Success Stories 7. The Future 8. Appendix 2 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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1. Introduction #whatsnext4eutech November 2015

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Achievement unlocked. But not mission accomplished. Like successful companies, successful ecosystems go through distinct stages – and 2015 has been a breakthrough year for Europe. 5 years ago, major questions remained. Could Europe give birth to companies with real scale? Could it produce enough talent and overcome the cultural barriers to entrepreneurship? Could it attract significant VC funding - and would the IPOs ever come? Based on one of the most comprehensive studies ever undertaken into European tech, 2015 has conclusively answered these questions with a series of milestones: •  10 European software companies reaching billion-dollar valuations (making a total of 35 since 2003) •  on track for more than $10B invested in European tech startups •  over 5,000 active angel investors •  1.6m professional developers •  ...and over 100 tech IPOs in the last five years How do we unlock our potential by bringing our hubs closer together, and overcoming an alarming gender imbalance? By addressing these challenges, can Europe create an ecosystem self-sustaining enough to weather any future economic shocks? By setting out where we are today in an unprecedented level of detail, we hope this study also helps to show the way to what’s next. Niklas Zennstöm Founder and CEO Atomico Riku Mäkelä CEO Slush Achievement unlocked. But not mission accomplished. The next stage will bring its own challenges. How do we produce companies valued in the tens or hundreds of billions? How do we bridge the late stage funding gap? Source: Atomico, CrunchBase, Angel List, Stack Overflow Developer Insights, CapitalIQ 4 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Atomico and Slush Atomico is an international investment firm, focused on helping the world’s most disruptive technology companies scale and become global leaders. Founded in 2006 by Niklas Zennström, a co-founder of Skype, Atomico has made over 50 investments across four continents. 5 SLUSH & ATOMICO | The State of European Tech Slush is a not-for-profit technology and startup event, organized annually in Finland, Japan and China. In 2015, the Slush event in Helsinki drew together 15,000 entrepreneurs, investors and journalists from close to 100 countries. The mission of Slush is to encourage the next generation of brilliant minds to become entrepreneurs, and to catalyze tech communities across the globe. #whatsnext4eutech November 2015

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Our data partners CrunchBase is the leading platform used by millions of entrepreneurs, investors, and analysts looking to discover innovative companies and the people behind them. Founded in 2007 by Mike Arrington, it began as a simple database to track startups covered on TechCrunch. Today, CrunchBase delivers market insights to millions of users and businesses around the world. The CrunchBase Dataset is constantly expanding through contributions from its community of users, investment firms, and network of global partners. CrunchBase accelerates innovation by bringing together data on companies and the people behind them. For more information, please visit Glassdoor is the most transparent jobs and recruiting marketplace that is changing how people search for jobs and how companies recruit top talent. Glassdoor combines free and anonymous reviews, ratings and salary content with job listings to help job seekers find the best jobs and address critical questions that come up during the job search, application, interview and negotiation phases of employment. For employers, Glassdoor offers recruiting and employer branding solutions to help attract high-quality candidates at a fraction of the cost of other channels. Glassdoor, which has over 10m reviews, salaries and other types of content across more than 190 countries, operates one of the most popular job apps on iOS and Android. The company launched in 2008 and has raised approximately $160 million from Google Capital, Tiger Global, Benchmark, Battery Ventures, Sutter Hill Ventures, DAG Ventures, Dragoneer Investment Group, and others. 6 Meetup is a global network of local communities, built by ordinary people around the things they care about the most. Using the Meetup app or website, you can find people in your town who are into the same things you are, and build a real community around that interest. There are currently 24 million members in over 200,000 Meetups in over 180 countries. Meetup believes that people can change their personal world, or the whole world, by organizing themselves into groups that are powerful enough to make a difference. Stack Overflow is one of the smartest and most helpful corners of the Internet. It’s the place where millions of developers go to learn, share their knowledge, and advance their careers. With nearly 30 million monthly visitors and 10.2 million programming questions, Stack Overflow has unparalleled insights into how developers think, what matters to them and what gets them excited. Stack Overflow's Developer Insights team works with employers around the world to help them understand regional and localised distribution of technical talent and provides consultancy services around attracting and engaging with programmers. SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Survey and opinion formers When it comes to the state of European tech, facts and figures can only get you so far. They can help you identify how much is being raised and where the investments are going but they cannot help you analyse how people are feeling, how confident they are and whether their mindsets have changed. These are all important questions and so we decided to supplement our fact-finding analysis with a survey of entrepreneurs, investors and other tech stakeholders. In October 2015, we sent out the survey to people in our European network and received over 800 responses from people with a direct interest in European tech. We have incorporated the findings into this report. See Appendix for more details. To provide additional context we also interviewed some of Europe’s leading entrepreneurs and investors and you will find their insights throughout. 7 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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2. Entrepreneurial Mindset Achievement unlocked: culturally acceptable in Europe to be a tech entrepreneur What’s next: investors need to keep pace with scale of ambition #whatsnext4eutech November 2015

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Europeans embrace entrepreneurship as a culturally acceptable career choice as it finally passes the “parent test” Statement: It is culturally acceptable in Europe to be an entrepreneur Founders and investors agree…* Founders …as do employees of startups and other businesses* 80% 70% Investors 80% 78% 75% Corporate employees Startup employees Public sector 17% 13% 10% Disagree 14% 10% I don’t know Agree 11% Disagree The future looks bright for students… Student respondents only 11% 8% 9% 14% I don’t know Agree …and for young people in general 49% “I strongly agree”, by age group 41% 34% 33% 27% 14% 14% 0% Stongly disagree 18% 5% Disagree I don’t know Agree Strongly agree 55+ 45-54 35-44 25-34 * Note: Strongly disagree and disagree, and strongly agree and agree have been added together Source: Slush & Atomico Survey 9 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 18-24

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Entrepreneurship is now attracting the brightest minds from corporate careers and education Q: What were you doing immediately before you founded your company? (founders only) “What we have seen, is that people tend to go from working at a safe company like Ericsson, to actually trying to experience the life of working for a startup. But this wasn’t the case 5 years ago – back then you were insane if you joined a startup. That has definitely changed.” Alan Mamedi, Truecaller “I think what has happened is that the brightest of the brightest are no longer choosing banking or consulting as their default profession. Being an entrepreneur is now up there as a preferred choice.” Brent Hoberman, Founders Forum 47% 28% 18% 6% Working for a company that wasn’t a startup Working for another startup Studying Other Source: Slush & Atomico Survey 10 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe’s founder base is now stacked with repeat entrepreneurs Q: Is your current company the first company you started? (founders only) 38% 62% first-time founders repeat founders “There is an increasing number of serial entrepreneurs and for example we have three cases in which we have already invested in an entrepreneur’s first and second company. There is an increasing amount of ambitious entrepreneurs who already master startup fundamentals.” Petteri Koponen, Lifeline Ventures Source: Slush & Atomico Survey 11 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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European founders are not afraid of failure… Statement: I would rather take risks and fail than choose the safe option Founders Investors Startup employees All 89% 76% 20% 3% 4% 8% 9% 8% Disagree 16% I don’t know 76% 75% 16% Agree “Being an entrepreneur is now a viable career choice. People are ready to take risks and are just going off and starting companies.” Christian Hernandez, White Star Capital Note: Strongly disagree and disagree, and strongly agree and agree have been added together Source: Slush & Atomico Survey 12 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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… and although most think big and long-term, there is still some short-term orientation Q: What are your goals for your startup? Most founders are thinking really big and long-term… “change an industry and create mindblowing things” “become a monopoly in our field” …but some are still focused on Europe or the next milestone “grow bootstrapped, then exit after we've grown to the right size” “make €1m this year” “getting funding” 158 responses “world domination” “selling it in the next 2 years” 73 responses “build a successful internet firm employing 5-10 people or exit in a year's time” “grow and conquer the world” “building a sustainable company that takes an entire industry upside down empowered by technology” “become a global leader, a defining company for our sector” “50 employees and 5M€ revenue by end 2017, present physically in 5 countries” “raise capital and visibility” Source: Slush & Atomico Survey 13 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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European founders have global ambitions, but many focus on their domestic market first before thinking of international expansion Q: How would you describe the international mindset of European entrepreneurs? “I think today every industry is thinking more and more global. Just in the past five years there’s been a huge perception shift. The advice I would give to the next generation of entrepreneurs is to think big, think global. You should have goals set immediately, even though reaching them could take a long time. Let’s put it this way: if you have your goals set on a level that makes you slightly uncomfortable, you’ve probably set them right.” Petri Järvilehto, Seriously 10% 1% 44% 46% 43% Founders Investors •  9% 8% Many European founders will focus on their domestic market and nearby markets first, before thinking about going global •  36% While almost no founders or investors believe European entrepreneurs think only domestically, there is still room to improve the global mindset of Europe’s entrepreneurs 3% 0% "Entrepreneurs only think and act with a domestic mindset” "Entrepreneurs mostly think and act with a domestic mindset" "Entrepreneurs think and act domestically, but have some international ambitions" "Entrepreneurs mostly think and act with a global mindset" "Entrepreneurs always think and act with a global mindset" Source: Slush & Atomico Survey 14 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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International expansion is key to achieving billion-dollar success… It’s incredibly rare to build a domestic $B firm in Europe… % of $B+ companies that scaled internationally to reach $B+ valuation Domestic only …so startups from small markets must internationalise faster Time to international expansion in years, by home market population International 4% 3.3 2.9 23% 81 % 96% 1 .4 77% 1 9% Europe Asia US "We’re seeing that no matter where companies start out, the great ones can scale internationally faster than before and disrupt established players anywhere in the world. Every company from a country with less than 50m people went international before reaching a billion-dollar valuation." Carolina Brochado, Atomico Under 50m 50-150m •  International expansion is faster when you come from a small market - averaging just 1.4 years for companies with a domestic population of less than 50m, less than half the time of companies from countries with a population of over 50m people •  This is critical to success - every company from a country with less than 50m population went international before hitting a billion-dollar valuation Source: Atomico 15 SLUSH & ATOMICO | The State of European Tech 150m+ #whatsnext4eutech November 2015

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…fortunately, most European startups are born with a native international mindset and an inherent competitive advantage Share of non-native employees in founders’ companies Many European startups start with an international blend… ...and become even more internationally diverse as they grow Q: What percentage (%) of your employees are not native to the country where your company is based? 58% 56% 44% 12% 0-25% 26-50% 15% 15% 50-75% 76-100% Non-native Native “Today we have a very diverse team - about 40 nationalities. And we have kept this strategy as it’s been helpful for scaling the company around the world - it’s been much faster because we have the in-house knowledge of these markets. For example, when we scaled into India, Alan and I had never been there, and the same goes for Lebanon. And these have now become key markets for our growth - so it’s really helpful to have an international employee base.” Alan Mamedi & Nami Zarringhalam, Truecaller Source: Slush & Atomico Survey 16 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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In their own words Brynne Herbert, MOVE Guides Brent Hoberman, Founders Forum “The decision to start MOVE Guides in London has always been about 3 things: time zone, connectivity, and talent. On talent, London gives me and MOVE Guides a diversity of perspective. London is a natural melting pot of people from across Europe and from other countries. We feel very strongly that it brings unique perspective into the company and fosters innovation. It provides diversity in teams, which gives a lot of different benefits to the organization. At MOVE Guides, we have about 30 different nationalities on our team today, and it's absolutely contributed to many of the pieces of innovation that we've fostered, and also, is a big part of our culture.” “European entrepreneurs instinctively know that their domestic markets are too small so they take it internationally from much earlier on. As a result, Europeans often have to deal with multidimensional complexity much earlier on than American entrepreneurs.” Daniel Ek, Spotify “I just had this itch, I wanted to fix a problem. And because this was something that people in all countries face, I had to take a global approach in order to fix it.” Source: Atomico & Slush Interviews 17 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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3. Tech Community Achievement unlocked: large and highly-engaged tech communities What’s next: build closer links between our disparate hubs Source: #whatsnext4eutech November 2015

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Europe’s leading hubs host large and active tech communities Top 20 hubs with tech-related Meetup communities, 2015, ranked by # of attendees at Meetup events 167.6 160.5 More than 630k people have attended one of 25k tech-related Meetups in Europe in 2015* 62.6 46.4 Source: 19 Manchester Moscow Istanbul Other ,000 of tech Meetups Vienna 4.9 Bristol 5.1 Copenhagen 5.3 Zurich 6.1 Brussels 6.2 Oslo 6.9 Hamburg 8.4 Barcelona 10.0 Dublin 10.5 Budapest 12.5 Stockholm 13.5 Munich 14.4 Madrid 15.9 Amsterdam 16.0 Berlin 16.8 Paris 18.0 London 25.7 3912 1519 1543 872 609 571 549 384 480 549 475 541 398 530 296 222 336 213 172 168 11504 * 2015 is YTD to October 2015 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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There has been significant growth in the levels of tech community engagement across all established tech hubs in Europe… Tech-related Meetups and event attendees (RSVPs) in selected European tech hubs London Meetups RSVPs 6,000 Berlin Meetups ,000 RSVPs 5,21 6 4,400 4,000 2,000 200 150 3,281 100 2,214 1 ,265 50 0 Meetups RSVPs 2,500 Meetups 2012 2013 2014 2,057 2,000 1,495 1 ,500 1 ,000 500 0 0 2011 2015* 45 2011 Meetups 600 531 ,000 RSVPs 732 620 20 10 194 0 Source: 20 2013 2013 2014 2015* 2014 RSVPs ,000 RSVPs Meetups 1 78.7 1 00 2 57.0 19.0 1 25.0 0 2015* 0 2011 2012 2013 2014 * 2015 YTD extrapolated for rest of year from September SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech 4 3 1 32.0 5 0 2012 10 0 2012 Meetups 200 44 2011 20 210 15 400 200 40 Helsinki RSVPs 800 50 30 801 Stockholm Meetups ,000 RSVPs November 2015 2015*

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…and there are also dozens of hubs with fast-growing tech communities emerging across the continent Top 15 fastest-growing hubs by number of tech-related Meetup communities* 1 91 2013 1 75 # of tech-related Meetup groups by city 2015 YTD 15 1 98 86 52 43 1 7 1 3 23 36 Munich Madrid Moscow Ljubljana Lisbon Hamburg Copenhagen Annual growth Zagreb 1 7 Stuttgart 1 2 42 Prague 1 2 49 35 Cologne 1 2 37 Frankfurt 1 7 41 68 59 Bucharest 1 3 63 Lyon 1 2 63 Istanbul 1 7 66 55 +125% +108% +106% +97% +93% +89% +78% +76% +74% +72% +72% +71% +70% +65% +65% “We are already seeing a change in attitudes and it is pretty amazing. We are seeing that people don’t just want to work in a start-up, but want to create a start-up. In 2012 this was unheard of, so this has all happened in just three years in Lisbon. It’s crazy exponential change for the better in Portugal” Anthony Douglas, Hole19 Source: 21 * Based on all hubs that had at least 10 active tech-related Meetup groups in 2013. YTD up to October 2015. SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe is building a strong base of mentors and every success story is helping create a new pool of role models for the next generation Statement: I am able to turn to supportive mentors to help me when I face a challenge in growing my business “In my first five years I got really poor advice, and I just hate the fact that there may be talented people out there with the opportunity to grow a global business, receiving poor advice too. That is why I am more than happy to give advice to others. It feels like the right thing, and of course it gives me energy as well. I get a lot of energy from meeting these people that are ten years younger than me and are doing something really cool and new and fresh and they're not suffering from the challenges you have as a larger company.” Sebastian Siemiatkowski, Klarna Repeat founders First-time founders 41% All founders 36% 30% 28% 24% 22% 23% 20% 20% 15% 14% 11% 4% 6% 5% Strong disagree Disagree I don’t know Agree Strongly agree Source: Slush & Atomico Survey 22 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Earlier European success stories have already created a pool of stars that have remained as active participants in local ecosystems European tech “mafias” ”Mafia” Selected members Selected associated companies Ahti Heinla, Asko Oja, Jaan Tallinn, James Bilefield, Janus Friis, Jonathan Christensen, Niklas Zennström, Taavet Hinrikus, Sten Tamkivi, Daniel Ek, Jacob de Geer, Martin Lorentzon, Rene Rechtman Adam Valkin, Alex Chesterman, Mark Livingstone, Mike Blakemore, Saul Klein, Simon Calver Benoit Portoleau, Franck le Quay, Frédéric Clement, Greg Coleman, Julien Simon, Maxime Agostini, Pascal Gauthier, Tom Triscari, Tristan Croiset Source: CrunchBase, LinkedIn 23 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Founders now believe they can build their companies from Europe Q: If you were to start over, where would you choose to found and build your company? I would choose to stay where we are now 62% A different European city 17% Bay Area/Silicon Valley 12% A different US city Elsewhere 7% “I declined an offer from a US investor, because it came with the caveat of "move to the US and we’ll invest". I said "ok then we’re done". It doesn’t make sense for us to move to the US because we’ve proven we can build something out of Lisbon. It's unnecessary to pay 5 or 10x, to significantly increase my burn to do the same thing somewhere else when we have the talent and know-how to build product locally. We may need some biz dev here and there, but we can think global and act local out of Lisbon.” Anthony Douglas, Hole19 2% Source: Slush & Atomico Survey 24 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Startups enjoy major benefits from being located in Europe’s leading hubs, but there is still little interconnectivity between them Importance of tech hubs and interconnectivity Q: Do you think it is important for a company's HQ to be located in a major European tech hub? Investors Founders Q: How would you describe the degree of interconnectivity between Europe's different tech hubs? All Investors 70% 69% 71% 37% 11% 8% 46% 41% 22% 20% 9% Disadvantages outweigh advantages 7% No real difference Advantages outweigh disadvantages Weak links Emerging links 4% Source: Slush & Atomico Survey SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 8% Strong links “Apart from personal relationships that founders have with friends, there's no exchange going on at all. For example, people from London are not systematically coming to Berlin or Stockholm or wherever to exchange knowledge. At best they may pop in for a coffee when they happen to pass through but there is no structure. It is a huge responsibility that falls back to the VCs and the people that fund companies across the region because they have the key network and they are the link between the companies.” Florian Meissner, EyeEm 25 All 57% 54% 46% 18% Founders

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In their own words Christian Hernandez, White Star Capital Sebastian Siemiatkowski, Klarna “There are a whole set of European companies today that actually will produce significant wealth, which can then permeate back into the ecosystem as role models the people will aspire to follow. We will then see the kind of momentum that leads LPs to want to bet more actively in Europe and provide more supply and capital at the later stages where we’re still lacking.” “Today, if you’re really talented and you reach out, you could instantly get quite good backing from mentoring and advice on money and so forth - and this did not exist ten years ago. That has definitely changed. It’s still harder if you’re in Poland; it’s easier if you’re in Berlin or in Stockholm.” Florian Meissner, EyeEm “Lisbon’s changed, I’m considered one of the “old school” guys as I started before people even knew what the word start-up was in Lisbon in 2011/2012. Then Startup Lisboa brought the first wave of entrepreneurs together into one place. Two or three years later and Web Summit is coming to Lisbon, we’ve got Portuguese startups like Codacy actually winning the Web Summit, we’ve got companies like Talkdesk & Uniplaces raising huge rounds, etc. A lot of young people are actually seeking out advice from some of the "older" guys. We’re giving advice to the younger entrepreneurs, and even the older ones who are quitting their jobs to start their own companies - they’re not making the same mistakes that we made. I pride myself on that, as I made every single mistake, and giving some of this knowledge back to the community is really important for the ecosystem to thrive.” “When I started I was completely wet behind my ears, and I dived into a very early stage of Berlin start-up. There simply weren’t a lot of people back then who you could look up to or ask for advice. That started to change shortly after I came back. There were a couple of people starting companies at the same time. Some failed, and some of us survived, but now there is a tightknit community of founders that have emerged from that field and we're now very close friends. Some of us started investing on our own, and some of us actually still run companies but most of us are acting as mentors to others. This is not unique to Berlin. I think a number of cities in Europe have their own cohort” 26 SLUSH & ATOMICO | The State of European Tech Anthony Douglas, Hole19 #whatsnext4eutech November 2015

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4. Talent Achievement unlocked: 1.6m professional developers in Europe What’s next: address alarming gender imbalance Source: #whatsnext4eutech November 2015

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European talent exists, you just have to know where to find it Availability and quality of talent in Europe Q: How would you rate the general availability of European engineering talent? Founders Investors Q: How would you rate the general quality of European engineering talent? All Founders Investors All 50% 50% 43% 40% 40% 39% 46% 42% 39% 40% 31% 25% 15% 18% 26% 20% 18% 16% 11% 10% 1% 0% 1% Severe lack of talent 1% Lack of talent Adequate pool of talent Good pool of talent Very good pool of talent •  57% of all respondents think there is good or very good availability of European engineering talent •  Founders are most positive, with 60% believing there is at least a good pool of talent 0% 0% Much lower quality than other regions 3% 4% 7% 4% Lower quality than other regions On a par with other regions Higher quality than other regions to be at least on a par with other regions and many believe it to be better •  Only 4% of all respondents think the European talent pool is Source: Slush & Atomico Survey SLUSH & ATOMICO | The State of European Tech Much higher quality than other regions •  The quality of talent that is available in Europe is perceived lower quality than other regions 28 10% #whatsnext4eutech November 2015

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Europe’s key hubs are building a critical mass of developers… # of professional developers per hub and density of professional full-stack developers per country – data from Stack Overflow Developer Insights Full-stack developers per ,000 people 0.2 3.5 38,194 9,586 Oslo 71,497 11,346 Moscow Stockholm London 40,538 London, Europe’s largest developer hub, has 71,497 professional developers compared to 83,262 in San Francisco According to Stack Overflow Developer Insights, there are 1.6M professional developers in Europe today 15,915 Berlin Paris 27,333 22,944 9,990 Madrid Istanbul Lisbon Source: 29 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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…and, importantly, a large pool of mobile developers # of professional mobile developers per country – data from Stack Overflow Developer Insights Professional mobile developers 237,437 •  The UK has the largest professional mobile developer pool, but there are growing hubs of talent emerging across the whole region, including in places such as Poland and Turkey. •  The Nordic region is an emerging hub for mobile development within Europe, and is home to 9% of the region's mobile developers. Sweden has over 7,000 mobile developers; almost half of whom reside in Stockholm. 186,602 32,525 31 ,251 Belgium 4,1 96 4,047 Austria Switzerland 5,21 4,739 8 Romania Sweden 7,71 7,625 5 Turkey Ukraine Poland Netherlands Italy Spain Russia France Germany United Kingdom Europe United States 1 8,488 1 7,740 1 4,898 1 4,492 1 0,879 1 0,402 8,752 “There is a huge opportunity for entrepreneurs focusing on mobile technology. Europe's population of mobile developers is now larger than that of the USA - in fact, European startups have access to more than 50,000 mobile specialists than their American counterparts” Dimitar Stanimiroff, Stack Overflow Developer Insights Source: 30 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe is also nurturing a strong talent pipeline for the future Europe produces 2x more STEM grads per year than the US… STEM grads per year …and the cumulative difference over 10 years is >5m grads STEM grads over past ten years +600.000 / y +5.2m 1.1m 9.7m 4.5m 0.5m Europe STEM = Science, Technology, Engineering, Mathematics Source: Eurostat 31 US Europe US “You’ve got some of the top universities in the world in Europe. You no longer have to go to Stanford or Harvard or MIT to get great engineering talent. You can now go to Imperial, Cambridge in the UK or ETH in Zurich or the Max Planck Institutes in Germany or École Polytechnique in France.” Brent Hoberman, Founders Forum SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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But tech entrepreneurship still has an alarming gender imbalance Q: What is your gender? (founders only) 11% 89% “We’ve seen the share of female attendees at Slush grow from 5% to 25% in just a few years, but amongst founders the change is painfully slow.” Riku Mäkelä, Slush Source: Slush & Atomico Survey 32 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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There is a clear cost advantage to building a team from Europe Median annual base salary in US$ thousands San Francisco The total base salary cost of a 17 member team is ~1.5x higher in San Francisco than in London, according to salary data from Glassdoor London 1,477 1,078 752 474 376 121 77 118 108 110 334 85 Engineering Product Operations Finance Sales & Marketing Sr SW Engineer x 2 SW Engineer x 3 UX Designer x 1 Data Analyst x 1 Product Manager x 1 Operations Manager x 1 Office Manager x 1 Finance Manager x 1 Sales Director x 1 BusDev Manager x 1 Sales Associate x 1 Marketing Manager x 1 Customer Service x 2 Note: The roles chosen are designed to represent the hypothetical team of an early-stage SaaS company, excluding an assumed technical founding team Source: 33 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 17 member team

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Building a world-class leadership team in Europe is viable… Statement: It is possible to find talent to build a world-class startup leadership team in Europe All respondents 50% Investors 44% Founders 41% 36% 37% 37% 13% 6% 6% 7% Disagree Over a third of respondents strongly agree with the statement, with an even response rate from both founders and investors 4% 1% 2% 2% Strongly disagree Of all respondents, 80% agree that it is possible to build a world-class leadership team in Europe •  12% •  I don’t know Agree Strongly agree Source: Slush & Atomico Survey 34 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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…but it involves competing in a global war for top executive talent Sebastian Siemiatkowski, Klarna Florian Meissner, EyeEm “The problem is I now need senior executives that have experience of working in a company that has grown from a couple of hundred million dollars in revenue to a couple of billion dollars in revenue. These types of people are rare in Sweden. It is hard to find senior executives to help grow from a small to a medium sized and then to a really huge international company and to encourage the talent to move here. I’m competing with PayPal now. I need to be able to hire the same people they hire.” “The signs are there that the top global executive talent is ready to join European tech companies but it is not easy; it really takes a huge effort. If you are only looking at Berlin or London for the right people you are not thinking big enough. You have to think of the biggest fish in the world and then you need to try and poach them. That is the mindset you have to have. You should not be aiming to hire from the small business round the corner but the global leader in your field.” Source: Atomico & Slush Interviews 35 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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European countries are introducing programmes to attract overseas talent, but more can always be done to turn a trickle into a flow Country Name of Programme Year Introduced UK UK Tier 1 Entrepeneurship Visa 2008 3-Year Residency Permit (except for Prospective which is 6 months), Requirement of Maintenance varies Ireland Start-up Entrepeneur Programme 2010 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €75,000 Italy Startup Law 2012 1-Year Residency Permit, Requirement of €50,000 Spain Ley de Emprendedores (Entrepeneur's Act) 2013 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €75,000 Denmark Start-up Denmark 2015 2-Year Residency Permit, Renewable for 3 additional years, Requirement of €17,500 Netherlands Ambitious Entrepreneurship 2015 1-Year Residency Permit France French Tech Ticket 2015 Prize Money of €12,500 (Renewable at end of 6-month program), Residency Permit Fast-Track, Residency Permit of 6 years Guidelines "I think in general, there are a lot of non-native founders in the UK. There are a lot of people who found companies and grow them and have particular risk tolerance who are also immigrants and I think there is a correlation. I think the immigration system in the UK has - up until now - been a competitive advantage. Eileen Burbridge, Sherry Coutu and Sean Park are all immigrants who have been welcomed and have driven innovation. Listening to the current immigration debate I worry that these benefits are at risk“ Brynne Herbert, MOVE Guides Source: Government websites, 36 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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In their own words Anthony Douglas, Hole19 Petri Järvilehto, Seriously “One of the reasons why Lisbon is great is that we have access to great talent, particularly in design and development; we also have really talented engineers from the major technical universities, like the Superior Technical Institute here in Lisbon. We usually hire graduates straight out of the Institute, we work closely with those guys.” “About half of our development team in Helsinki is from outside of Finland. It’s quite easy to recruit from within Europe, and especially in gaming there’s been a shift where you have people from other industries hopping over to gaming. It used to be the other way around: game developers had dreams of making movies one day, but today you have Oscar winners in gaming companies.” Ilkka Paananen, Supercell Dimitar Stanimiroff, Stack Overflow Developer Insights “With regards to talent, there’s still a bit of friction but even that is slowly getting better. In the gaming industry, many talented developers are a little older which means they have families. In this sense, Finland has a few big advantages such as the world’s best elementary school system that has gotten a lot of praise in global PISA studies in recent years. Many people want to raise their kids here because of that.” “For years it's been said that 'the European startup scene is up and coming'. Our technology has identified over 1.6m professional developers in the region, proving that startups now have access to a pool of technical talent that's even larger than the US. Forget up and coming, it's all happening now.” Source: Atomico & Slush Interviews 37 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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5. Capital Flows Achievement unlocked: on track for $10B invested capital in 2015 What’s next: bridging the late-stage funding gap with European capital Source: #whatsnext4eutech November 2015

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Capital is flooding into Europe Deal volume and value across Europe* Total # of rounds up 2.5x in three years… …and $ value growing rapidly # of deals US$B invested +33.2% 9.4 3,01 1 2,601 1 ,976 1 ,785 3.8 1 ,274 2011 2012 2013 7.1 +23.5% 2014 2015 YTD •  Total deal volume has more than doubled in Europe in the past five years •  2014 saw the record year for deal volume, but 2015 has seen a slowdown so far this year 2011 4.6 4.8 2012 2013 2014 2015 YTD •  Since 2014, Europe has seen increased late-stage funding contributing to significant $ amount growth in invested capital •  A large share of capital has been invested by non-European funds that have increasingly recognised Europe’s potential Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 39 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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An explosion in seed rounds and strong capital flow into later stages Deal volume and value across Europe by stage* Seed stage round counts exceed growth at other stages… # of deals …but $ amount growth in Series B and later US$B invested 3,011 25 1 07 2,601 87 9.4 42 252 2.0 39 9 7.1 243 0.7 1,976 1,785 35 76 1 89 1,274 16 71 81 1 6 1 ,962 30 42 0.9 237 4.6 1 ,782 1 1 3.8 1 58 0.3 1 ,209 1 ,047 0.2 0.5 0.6 0.6 441 2011 2012 2013 0.6 0.4 1.8 1.8 2011 2012 623 377 2014 1.1 0.3 0.6 0.9 2015 YTD Series D+ 0.8 2.6 2014 2015 YTD 0.7 1.4 2013 Seed Series B 1.0 1.0 Series A Series C Other Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 40 SLUSH & ATOMICO | The State of European Tech 1.8 0.7 0.6 0.2 422 1.0 2.5 0.6 641 377 4.8 1.2 #whatsnext4eutech November 2015

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UK draws largest share of rounds and total capital deployed Deal volume and value in Top 5 countries in Europe* UK sees largest overall deal flow… # of deals …as well as largest share of invested capital US$B invested 3.011 9.4 2.601 1.068 7.1 832 1.785 570 1.274 408 1 35 1 31 42 48 1.976 2.9 277 1 92 1 64 1 07 51 638 1 80 96 1 07 1 54 1 25 64 73 3.8 207 1.283 799 764 1.4 0.3 0.3 0.3 0.1 1.7 0.4 0.5 0.3 0.1 1.4 51 0 2011 4.6 1 58 91 18 1 1.255 2012 2013 2014 United Kingdom 2015 YTD Germany France 1.6 2011 2012 Sweden Netherlands 4.8 1.3 1.4 0.9 0.5 0.4 0.4 0.1 0.6 2.0 1.7 2013 2014 0.7 0.4 Rest of Europe Note: Top 5 countries based on European countries with the largest sum of total invested capital in 2015 YTD Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 41 SLUSH & ATOMICO | The State of European Tech 3.8 #whatsnext4eutech November 2015 1.0 1.0 0.2 2.1 2015 YTD

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Europe’s top hubs grab growing share of invested capital Top 5 European hubs versus overall capital invested in Europe* Capital invested as % of total in Europe in period •  46.8% 30.2% 2011 Rest of Europe •  Both Top 5 investment hubs and rest of Europe growing annually in $ value invested •  53.2% 69.8% Top 5 hubs represent an all-time-high share of total European funding at ~47% Signs that a winner-takes-most dynamic is emerging at the geographic level, where the leading hubs capture a growing share of overall capital invested in the region 2015 YTD London + Stockholm + Berlin + Paris + Moscow Note: Top 5 hubs based on European cities with the largest sum of total invested capital in 2015 YTD Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 42 SLUSH & ATOMICO | State of Technology in Europe #whatsnext4eutech November 2015

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Europe is witnessing the rise of entrepreneur-led investing Founder-funder transactions per year and # of European startups funded by entrepreneur-led VCs* Founder-funder angel investment transactions per year1 # of deals # of startups funded by entrepreneur-led VCs per year2 # of startups 193 1 74 1 73 1 50 48 1 42 Projection for 2015 37 13 1 80 148 88 88 1 45 2011 2012 2013 2014 2015 YTD 11 1 2011 2012 2013 2014 2015 YTD “It's easier to start a company than ever, but scaling to become a global winner is still very hard. We know what that feels like as an entrepreneur, and we learned a lot of lessons from scaling Skype about what to do and what not to do. Rather than trying to create one more successful company, we thought we could have more impact by helping an entire generation of European founders build the Skypes of tomorrow.” Niklas Zennström, Atomico Note 1: Unique investments into European companies by European angel investors that have previously founded and built their own European technology company. One round per investor per company included only. Excludes founders that have founded institutional VCs. Note 2: Number of European technology companies funded by entrepreneur-led European institutional VC funds. Includes any fund where at least one of the Founding Partners of the fund has previously founded and built a European technology company. Source: CrunchBase, *Technology investments only. Excludes Israel. 2015 YTD based on 9M to September 2015 43 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 Projection for 2015

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Europe’s leading hubs are building strong pools of angel investors Active angel investors per city “Successful entrepreneurs are now taking the time, sitting down with startups, mentoring them and many are acting as business angels. There's a whole shift of mentality amongst entrepreneurs with people thinking globally and wanting to create huge businesses. And now the angel money is definitely there to support them and there are a number of good mentors that can give proper advice, as well as seed capital. This just didn’t exist when we started Klarna ten years ago” Sebastian Siemiatkowski, Klarna Europe now has over 5,000 active angel investors resident in the region’s top hubs, according to Angel List 2.125 420 383 1 68 Vienna Hamburg Brussels Oslo Angels per ’000 people Copenhagen 54 Dublin 56 Zurich 74 Munich 88 Stockholm 92 Madrid 1 24 Barcelona 1 30 Amsterdam 1 47 Istanbul 1 53 Moscow 1 61 Helsinki 1 96 Berlin 250 Paris 270 London 325 0,25 0,19 0,11 0,54 0,02 0,02 0,25 0,10 0,05 0,19 0,11 0,34 0,24 0,16 0,05 0,04 0,32 0,09 Source: Angel List, FiBAN 44 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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A new breed of institutional VC funds is rising in Europe New institutional tech VC funds launched in Europe since 2011 with a minimum fund size of US$40m 385 Most recent fund size, US$m 200 1 66 1 40 1 20 10 1 69 66 40 Lakestar 83North Global Founders Capital Mosaic Ventures Felix Capital Project A Ventures Passion Capital SpeedInvest Hoxton Ventures Year founded 2013 2015 2013 2014 2015 2012 2011 2011 2013 Location Luxembourg UK Germany UK UK Germany UK Austria UK Source: Dow Jones VentureSource, Press releases 45 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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European and international corporates are increasingly active in Europe Selected corporate investors with dedicated European tech VC focus Non-European European Salesforce Ventures Announced: 2015 Fund size: $100M / year "There is so much incredible innovation happening in Europe today. Our $100 million commitment strengthens our mission to help startups grow and give back to their communities.” IrisNext Announced : 2015 Fund size: $329M “We believe Europe’s startup scene has enormous potential. We’ve seen compelling new companies emerge from places like London, Paris, Berlin, the Nordic region and beyond —SoundCloud, Spotify, Supercell and many others.” 46 “DTCP will support Deutsche Telekom’s strategy as an external innovation engine through investments in venture capital, with a special focus on Germany’s exciting and growing start-up scene.” Google Ventures Announced : 2014 Fund size: $125M / year Source: Company press releases Deutsche Telekom (DTCP) Announced : 2014 Fund size: $275M “The goal of this new fund, named IrisNext, is to become one of Europe’s leading venture capital funds through funding from major international groups of French, German and international origins, as well as from institutional investors” Supported by Iris Capital & Capnamic “The corporates are waking up to the idea of digital disruption and entrepreneurship in general. The corporates we talk to through Founders Intelligence want their employees to be more entrepreneurial and to work much more closely with entrepreneurs” Brent Hoberman, Founders Forum SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Capital is more readily available in Europe… Q: How has the experience of raising capital in Europe changed? 58% 53% •  18% •  22% 20% 18% 12% 8% 1% 8% 9% 2% "It is harder than ever to raise capital" Investors are noticeably more positive on the current situation of capital availability 51% of founders that have previously started a company think capital is now more readily available versus 40% of first-time founders, suggesting repeat entrepreneurs may find it easier to raise rounds 47% 22% 3% 55% of entrepreneurs and 80% of investors believe that there’s more capital available than a few years ago •  Founders Investors All "It is hard to raise capital" "The capital environment is unchanged" "Capital is more readily available today" "It is the best time ever to raise capital" Source: Slush & Atomico Survey 47 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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…but Europe still lacks capital relative to the opportunity VC funds in the US raised 5.4 times more capital than their European counterparts The US produces 2.9x more $B+ companies than Europe… Companies surpassing $B+ milestone by geography, Q1/13-Q2/15 …but US VCs raised 5.4x more capital than European VCs Funds raised by VCs by region, US$B, Q1/13-Q2/15 2.9x 5.4x 82 76.1 28 1 4.0 Europe US Europe US Source: Atomico, DowJones VentureSource 48 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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This lack of capital is most prominent at Series B & beyond… VC funds raised in Europe and US, by investment stage Funds raised by VCs, 2010-2014, US$B ~5x ~3x 46.8 42.3 •  The US produces 3x as many $B+ companies as Europe, but raises 5x as much capital •  The relative availability of capital varies significantly by stage. At the Series B stage and beyond there is a significant difference in terms of available capital (14x US vs Europe) relative to the number of companies reaching $B+ valuations •  As a result, there are relatively fewer local firms able to fund the increasing number of European winners on their path to global category leadership ~14x 24.3 13.0 10.0 1.8 Early-stage (Seed/Series A) Multi-stage Europe Later-stage (Series B+) US Source: Dow Jones VentureSource 49 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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…so leading US VCs are active in Europe and filling the funding gap VC Selected investments in Europe (SWE) (SWE) (UK) (UK) (UK) (SWE) (GER) (GER) (UK) (SWE) (SWE) (GER) (GER) (GER) (UK) “While we don’t have an office in Europe we do have fourteen portfolio companies and every USV partner has at least two European portfolio companies. So we all travel to Europe regularly and we look at new investments.” Fred Wilson, Union Square Ventures Source: CrunchBase, 50 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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In their own words Petteri Koponen, Lifeline Ventures Petri Järvilehto, Seriously “It absolutely has become easier to raise funds as an investor over the past five years. A good track record is crucial for a VC investor when she is fundraising; we can see a huge difference between now and four years ago when we were raising our first VC fund. Overall, there are more European VCs with a solid track record so it’s easier to raise funds.” “It’s definitely a lot easier to build a global tech company than it was 6 or 7 years ago. Funding is the first thing that is just completely different to some years back. In Finland alone, you have several sources of pre-VC funding that enable you to get going, and then raising venture capital has become a lot more efficient as well.” Riccardo Zacconi, King Ilkka Paananen, Supercell “I think the investment landscape in Europe is dramatically different. There is much more money in the market than a few years ago, but also much more competition.” “I’d say that today it’s easier to raise capital. Mostly because all top-tier investors have already done at least their first investment into Northern Europe. So they’ve gone over that entry barrier, and it’s much easier after that.” Source: Atomico & Slush Interviews 51 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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6. Europe’s Success Stories Achievement unlocked: 10 $B+ companies in 2015, making a total of 35 since 2003 What’s next: companies valued in the tens and hundreds of billions #whatsnext4eutech November 2015

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More hugely successful companies are now coming from Europe # of European $B+ companies founded since 2003, by year first surpassed $B+ milestone 35 (+10) 25 (+12) Skype was the only $B+ company founded since 2003 from Europe until 2010 13 (+5) Source: Atomico, *2015 YTD is to 30 October 2015 53 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 2015 YTD 2014 2013 2010 4 (+2) 2012 2 (+1) 2011 1 (+1) 2005 8 (+4)

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Europe’s hall of fame: European $B+ companies founded since 2003 $B+ companies by country UK Germany Sweden Russia France Netherlands Ireland Finland Denmark 2015 (2011) 2015 (2012) 2014 (2003) 2013 (2007) 2014 (2006) 2014 (2006) 2012 (2004) 2013 (2010) 2014 (2007) 2015 (2009) 2014 (2010) 2013 (2005) 2014 (2007) 2013 (2005) 2015 (2007) 2015 (2011) 2014 (2009) 2012 (2006) Key: Year reached $B+ (founding year) 2015 (2010) 2015 (2011) 2005 (2003) 2010 (2003) 2014 (2009) 2011 (2006) 2013 (2003) 2012 (2007) 2014 (2007) 2014 (2007) 2015 (2010) 2012 (2008) 2015 (2009) 2015 (2003) 2011 (2007) 2014 (2007) Source: Atomico 54 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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European companies are transforming a wide range of sectors $B+ companies by sector and customer focus Retail, financial services have produced most $B+ companies $B+ companies by industry sector Consumer-focused companies dominate $B+ companies by primary customer focus 8 8 27 7 4 3 3 8 2 Retail Financial Enterprise Gaming Social & Services Apps comms Music Other •  “Other” category consists of six different verticals •  All retail companies originate from large domestic markets (UK, GER), and 4 out of 7 are Rocket Internet-backed firms Consumer Enterprise •  Europe’s $B+ companies are dominated by consumerfocused businesses, but Europe is also building a growing portfolio of enterprise success stories Source: Atomico 55 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe is delivering the end product through exits Operating status of $B+ companies founded since 2003 and total proceeds raised via IPOs European $B+ companies exit at same rate as other regions $B+ companies by operating status European tech companies outraising US companies at IPO IPO proceeds raised in US$bn by tech companies by region 19.9 US Facebook IPO Europe Private 51 % 54% 58% 6.9 16.0 5.3 5.0 4.5 3.6 Exited 49% 46% 42% 2.4 2.2 3.9 1.5 0.5 Europe North America 2011 2012 2013 2014 2015 29 Asia 18 24 41 24 100+ European tech IPOs since 2011, according to CapitalIQ Source: Atomico, CapitalIQ 56 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe’s challenge is to build the next generation of global winners Share of global $B+ companies and categorization of $B+ companies founded since 2003 The US and China have produced larger companies… …and are home to all $10B+ companies founded since 2003 125 Rest of World Europe 5% 9% 1 0% 1 5% 23% China 2 $50B+ 1 0 $10-50B 8 $5-10B 1 1 $3-5B $1-3B 22% 52 94 US 63% 53% 7 7 1 3 35 7 3 4 25 Share of $B+ companies globally Share of market cap created by $B+ companies US 25 China Europe Source: Atomico 57 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech 24 November 2015 1 1 9 Rest of World

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7. The Future #whatsnext4eutech November 2015

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Europe has laid the foundations for a bright future Q: Are you more or less optimistic today about the future of European technology than 12 months ago? Very positive view shared by all respondent groups… Founders Investors All % of respondents more optimistic about the future than 12 months ago 75% 62% 55% 53% 39% …and the next generation is the most optimistic 62% 38% 32% 55% 51% 8% 6% 51% 45-54 35-44 8% Less About the same More 55+ 25-34 Age group Source: Slush & Atomico Survey 59 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 18-24

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Europe’s next generation will create even more success stories European $B+ companies by year founded •  •  ? Europe’s “class” of 2011 onwards will produce even more global category leaders •  In short, the best is yet to come from the new generation of startups originating from Europe’s maturing tech hubs ? 1 5 1 1 8 1 2003-2005 Avg. time to $B+ (years) Given this lag, companies founded since 2011 will only start to reach their potential in the coming years •  ? Over the past decade, companies have taken on average 5.7 years to first surpass the $B+ milestone 2006-2008 2009-2011 2012-2014 2015-2017 8.3 6.3 4.6 3.0 ??? Source: Atomico 60 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Europe is already building and investing in the next generation of potential success stories Methodology: total funding >$10M, most recent round since 1 Jan 2015, HQ in Europe, financing raised from one of the following: Accel Partners, Atomico, Balderton Capital, Creandum, Earlybird, Google Ventures, Index, Lakestar, Mosaic Ventures, Northzone Source: CrunchBase 61 SLUSH & ATOMICO | The State of European Tech “Major cities in Europe have emerged as important tech hubs and I’m very excited about what the future holds. For example, London leads the way in terms of Fintech. In Stockholm, the success of Skype and Spotify have positively influenced many Swedish entrepreneurs. Rocket, in Germany, has become a source of execution-focused talent. And in Helsinki, incumbents like Nokia fed talent into Supercell and Rovio creating a leading hub for mobile gaming. The virtuous cycle is increasingly self perpetuating where the combination of top talent, strong exits and successful entrepreneurs re-investing in the ecosystem generates leading companies." Carolina Brochado, Atomico #whatsnext4eutech November 2015

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European VCs will need to keep pace with the scale of entrepreneurial ambition Christian Hernandez, White Star Capital Florian Meissner, EyeEm “I think there is a disconnect between the intellectual output of Europe and the ability of funders to understand that intellectual output. The UK has one of the largest outputs of artificial intelligence and machine learning PhDs through Edinburgh, Imperial, UCL & Cambridge. And while we all run around saying that we're looking for AI Machine Learning startups, how many of us are actually deep enough to be able to go head-to-head with a CTO on Neural Networks? I'd say, half a dozen, if that, and that's across all of Europe. So we rely on our network of contacts and friends to help educate us, but if we're supposed to be betting on world-disrupting technology, how do we as investors become more adept at understanding what worlddisrupting technology is? What a great challenge to have!” “We don't have that kind of craziness yet. This moonshot idea of say building the next car, or sending people to the moon with rockets. But, I think this will evolve, because we just need a couple of really successful outcomes. People have got to dream bigger. It's a natural evolution of ambition levels, which are evolving on a daily basis.” Source: Atomico & Slush Interviews 62 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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The best time in history to be a European technology entrepreneur Statement: Now is the best time in history to be a technology entrepreneur in Europe Founders Investors 50% Corporate employees Public sector •  Founders and investors have the most positive view on the current situation: 50% of investors and 40% of founders agree strongly •  Repeat founders had a noticeably more positive view than first-time founders •  46% Employees of corporations and the public sector are positive, but not quite as much 43% 40% 36% 36% 27% 27% 17% 12% 11% 2% 1% 2% 3% Strongly disagree 5% 17% 14% 10% 3% Disagree I don’t know Agree Strongly agree Source: Slush & Atomico Survey 63 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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The state of European technology in one word Disruptive Opportunistic Follower SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech OK Infancy Renewing Striving Struggling Vibrant Strong Startup Runner up Note: includes clear 1-3 word combinations that answer the question, precise synonyms have been consolidated and typos corrected. Word cloud shows words with a frequency of 2 or more. Source: Slush & Atomico Survey 64 Challenging Conservative Reborn Undervalued Exploding Bubble Shy November 2015 Dispersed Calm Early Possibility Inspiring Booming Over-hyped Complex Innovative Enthusiastic Diverse Accelerating Old Up-and-coming Boring Adolescent Emerging Copycat Boiling Blossoming Mature Awesome Lagging Thriving Great Good Scattered Expanding Fragmented Falling behind Average Intriguing Nascent Potential Driven Burgeoning Creative Vivid Challenger Rising Opportunity Vital Promising Dull Developing Confident Challenged Exciting Competitive Changing International Wannabe Amazing Catching up Teenager Improved Interesting Digitalization Heterogenous Improvable Growing Aspiring Awakening Q. What one word would you use to describe the state of European technology today?

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In their own words Ilkka Paananen, Supercell “It is easier to build a global technology company from Europe than six or seven years ago for a number of reasons: it is easier to raise money, it is cheaper to build and operate products and services thanks to innovations like cloud platforms and it is easier to get global distribution thanks to app stores and the Internet. And, very importantly, there are role models these days, people who have successfully built globally successful companies, who inspire others to do the same. “In other words, the importance of geographic location has decreased significantly. And interestingly, we do have an advantage in Europe that has to do with geography. Europe is a fragmented home base with many languages, cultures, and small domestic markets. Because of this it seems to be more natural for Europeans to think global from day one. For example, no startup entrepreneur in Finland would ever build anything just for the local home market because it is simply so tiny. So we need to, and want to go global from day one. It feels natural for us. I don’t think it is the same for entrepreneurs who have larger home markets. “Over the next ten years there will be a lot more successful companies out of Europe. And I think that people will have stopped wondering about this rise of European tech, as it has become something of a norm. We won’t have the debates on European versus American technology entrepreneurship, and people will definitely have stopped questioning Europe’s role in global tech. I think people will take it for granted that all technology entrepreneurship is global by nature, including entrepreneurship in Europe.” Source: Atomico & Slush Interviews 65 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Final thoughts Daniel Ek, Spotify “Being an entrepreneur is not for the faint-hearted. It’s an insane emotional rollercoaster. Even at this stage, people say “You’re done, you’ve done the hard years, now you can relax.” That’s not how it works, there are still days that are incredibly tough. I think that’s life if you’re an entrepreneur and you’re constantly not satisfied with the status quo.” #whatsnext4eutech November 2015

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Join the conversation What’s next for European tech? #whatsnext4eutech @atomico @SlushHQ #whatsnext4eutech November 2015

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8. Appendix #whatsnext4eutech November 2015

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Survey respondents n=844 Survey respondents by age 38% Survey respondents by gender 80% 33% 18% 19% 6% 5% 1% 18-24 25-34 35-44 45-54 55+ Female Survey respondents by occupation group Male Prefer not to say Survey respondents by geography 35% 52.8% 18% 16% 15% 15.9% 5% Founder Corporate Investor Startup employee 5% 4% Other Student Public Sector Nordics UK & Ireland 21.0% 10.3% DACH Source: Slush & Atomico Survey 69 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015 Rest of Europe

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Europe in context Population: 506m GDP: $17.97 trillion Internet users: 399m Smartphone users: 222m Population: 321m GDP: $15.40 trillion Internet users: 279m Smartphone users: 176m Population: 1,367m GDP: $9.20 trillion Internet users: 673m Smartphone users: 269m Population: 1,252m GDP: $1.82 trillion Internet users: 233m Smartphone users: 187m Source: World Bank, ITU, Eurostat, GSMA Intelligence 70 SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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Acknowledgements •  •  Niklas Zennström Tom Wehmeier •  •  Riku Mäkelä Marianne Vikkula •  Shari Doherty •  Andreas Saari •  •  Maxim Streletzki Sana Fathima •  •  Sami Hakkarainen Linn Henrichson •  Andrea Ringblom •  Carolina Brochado DATA PARTNERS FOUNDERS & INVESTORS •  •  •  •  Alan Mamedi, Truecaller Anthony Douglas, Hole19 •  •  Florian Meissner, EyeEm Ilkka Paananen, Supercell •  Joe Wiggins, Glassdoor •  Brent Hoberman, Founders Forum •  Nami Zarringhalam, Truecaller •  David Pashman, •  Brynne Herbert, MOVE Guides •  Petteri Koponen, Lifeline Ventures •  Nan Li, •  Christian Hernandez, White Star Capital •  Petri Järvilehto, Seriously •  Natalia Radcliffe-Brine, Stack Overflow •  Daniel Ek, Spotify •  Riccardo Zacconi, King •  71 Gené McPherson, CrunchBase Cory Cox, CrunchBase Dimitar Stanimiroff, Stack Overflow •  Sebastian Siemiatkowski, Klarna SLUSH & ATOMICO | The State of European Tech #whatsnext4eutech November 2015

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