These 30 VC-backed companies are creating jobs faster than any other in Europe…

In total 1,465 job positions in VC-backed start-ups were listed on the Ventureloop database over the last 7 weeks (Jan 15 to Feb 28). By splitting these jobs by country and VC fund backers I  identified in my previous post (published last Saturday) the list of Top 15 VC funds in Europe for the period Jan-Feb 2013.

I have now also split these jobs by start-up and industry segment to produce the list of Top 30 EU start-ups over the same time period and to get a feel for industry segment dynamism by country. The results are presented below:

Top 30 EU start-ups by job creation

High-level comments:

– the two biggest job creators were and Spotify –  both have a predominant footprint in Sweden

– Criteo is ranked 3rd and is the only start-up with a majority of job creation in France…

– 9 of the top 30 start-ups created jobs in 3 or more of the 5 EU countries analysed here, highlighting that these companies have already undergone significant geographic expansion

– c.57% of the Top 30 companies had a majority of job creation in the UK

Top Tech segments by job creation in Europe in Jan-Feb 2013

High level comment: Digital gaming, Digital advertising and Digital music are the most important Tech segments in Europe.

Industry segment dynamism in the Top 5 EU countries in Jan-Feb 2013

High level comments (Note: the above chart was based on an industry classification of the top 43 start-ups, which represented 53% of total job creation in Jan-Feb 2013):

– the UK is the most diversified start-up eco-system, with no industry segment representing more than 16% of job creation

– by contrast, Sweden had two segments representing more than 27% of job creation (Digital games and Digital music) – highlighting that the Swedish eco-system is still young and may currently be over-reliant on few major but recent success stories

– the German start-up scene enjoys a level of maturity that seems to sit in between the UK and Sweden, with a reasonable coverage of key Tech industry sectors


Here is the Top 15 of VC funds by job creation in Europe in 2013 (… so far)

I’ve just found out about This website provides what looks like a pretty comprehensive listing of available job positions in VC-backed companies throughout the world.

I thought it would be interesting to crunch that data to see what insights it can provide. Having a vested interested in the EU innovation eco-system I focused my analysis on the top 5 EU countries by number of jobs listed in the Ventureloop database for the period 15 of January to 28 of February 2013 (i.e. 7 weeks), which were as follows:

  1. the UK with c.900 jobs (49% were in the Greater London area)
  2. Germany with c.290 jobs
  3. Sweden with c.150 jobs
  4. the Netherlands with c.70 jobs
  5. France with c.70 jobs

In total 1,465 jobs were listed on the Ventureloop website over the last 7 weeks. If job creation is equally distributed over time and assuming the Ventureloop database is exhaustive this would amount to a total of c.11,000 jobs created by VC-backed start-ups in Europe in 2013… not bad!!

I tried accessing older job listings from the Ventureloop database, via the Wayback Machine ( but they were not available. I may carry out this analysis again in 3 months to see how the results presented below evolve over time.

With no further ado, here goes the output of my data crunching (click on the pictures to enlarge):

VC job creation_1

VC job creation_2

Based on this analysis, the Top 15 of VC funds based on job creation* in Europe was as follows in descending order:

Rank VC fund name Total jobs created
1 Index Ventures 312
2 Balderton Capital 130
3 Wellington Partners 92
4 Accel Partners 92
5 Sequoia Capital 90
6 Draper Fisher Jurvetson 72
7 Bessemer Venture Partners 71
8 Summit Partners 65
9 Benchmark Capital 63
10 First Round Capital 46
11 Sigma West 41
12 Kleiner Perkins Caufield & Byers 38
13 North Bridge Venture Partners 26
14 Northzone 25
15 Meritech Capital 21

I will shortly publish another post, showing how this job creation was split by start-up and by industry segment – watch this space 😉


*In cases where a start-up was backed by several VC funds I assumed an equal share of capital investment from VC backers and distributed to each VC fund an equal contribution of job creation. For instance a start-up with 3 backers with 5 jobs offering would result in a job creation of 5/3=1.66 attributed to each of the 3 VC funds

A (lasting?) rise in Corporate Venture Capital

Corporate Venture Capital (CVC), a subset of Venture Capital, refers to the practice of capital investment in fast growth start-ups by organisations that are themselves subsidiaries of non-financial corporations (renowned examples include Intel Capital and GE Energy Capital). Such CVC activity goes back at least 50 years, and corporate interest has ebbed and flowed. 

Historically, corporate venture programs have waned during difficult economic times; but this has not held true over the 2008-10 recession. Furthermore, according to statistics recently published by the US’ National Venture Capital Association (NVCA), CVC investment has reached a four-year high in participation (i.e. share of deals with at least one corporate VC), at 15.2% in 2012 from 14.1% in 2011.

These indicators coupled with the fact that corporate venture capital groups now represent the fastest growing new member segment for the NVCA suggest that the sector is poised to become a very important part of the US venture landscape in the next five years. 

According to a 2011 study by Louvain University, around 20% of the Fortune 500 have created a CVC unit. Examples of well-established CVC funds include:

  • Pharmaceutical companies such as Smith Kline Beecham, GlaxoSmithKline, Johnson & Johnson, Eli Lilly
  • Technology companies such as Google, Microsoft, AOL Ventures, Deutsche Telekom, BlackBerry and Intel
  • And industrial companies such as BASF, Chevron, GE Energy, Dupont, Siemens, or Cargill

What’s in it for these corporations?

CVC programmes obviously aim to benefit their corporate parent. As such, they tend to focus not just on short-term financial returns but also on strategic returns i.e. the development of synergies.

Interestingly many CVC funds invest in ventures that do not operate directly in their own industry sector but rather in adjacent sectors. For example, only 18% of all CVC investment by semiconductor firms goes into semiconductor ventures according to a study by the London Business Schools. Corporations can also use their CVC arm to learn about geographically distant markets or to access distant technologies

Essentially, corporate venturing activity is an acknowledgement of the importance of having a way to scan, identify and leverage innovative ideas developed outside the corporation.

What’s the impact of CVC on the innovation eco-system?

In the past, the limited lifespans of CVC programmes (c.1.5 years compared to 6-7 years for a traditional VC fund) as well as inappropriate compensation structures for CVC personnel (flat salary and corporate bonuses not aligned with ROI performance) have been major hurdles to the long-lasting impact of CVC. The new generation of CVC funds, however, brings reassurance on these scores and one may hope that CVC is now well on course to boost established companies’ innovation capability… and support innovation eco-systems!

CVC funds are active at all stages of investment maturity. They often co-invest with traditional venture firms and also sometimes take the lead and invest prior to any other traditional venture investors. In principle, CVC activity can have a most significant impact on innovation eco-systems in specific industry sub-sectors that are not already seen as prime investment targets by traditional VC funds.

For instance, innovative sectors with high capex requirements and slower maturity curves such as the Renewable Energy / Cleantech sectors have historically suffered from a lack of VC funding. They simply do not fit the investment model of traditional VC funds and very often do not pass their discount rate hurdle. Last week brought the last straw in a series of bad news for VC funding supply into the Cleantech sector, as VantagePoint announced it was forced to give up its attempt to raise a new fund focusing on Cleantech due to lack of interest from the LP community. This news came after many other traditional VC firms have also pulled back in recent years (or changed their strategy to focus on green IT) including Mohr Davidow, NEA, Draper Fisher Jurvetson, and Kleiner Perkins.

Bearing this in mind, I had a look at NVCA statistics to identify the sectors that attracted a high share of CVC engagement in 2012. As it turns out, only four industry sectors scored high both in terms of share of deals (>15%) and share of total investment (>10%), as listed below:

  1. Biotechnology
  2. Healthcare Services
  3. Retailing/Distribution
  4. Semi-conductors

For these four sectors the rise of CVC is very good news indeed. I hope Cleantech will make it to that list in 2013…

Why 3D printing will be a game-changer sooner than you may think…

The 3D printing industry wasn’t born yesterday; the technology has been around for more than 20 years and has seen significant revenue growth over that period, as summarised in the Wohlers Report 2012 (“Additive Manufacturing and 3D Printing State of the Industry”):

In 2011, total industry revenues for industrial and professional purposes had grown to more than $1.7 billion, including both products and services. The industry’s compound annual growth rate has been 26.4% over its 24-year history, and double-digit growth rates are expected to continue until at least 2019”

So why the sudden hype ?

Over the last few years, the technology has reached an impressive mix of affordability, ease of use, performance, and compatible materials (it used to be only plastic, now you can use gold, titanium, ceramics, marble powder, etc…), which has resulted in a tremendous widening of the range of potential applications. Here is a list of notable examples of applications, current or future:

  • 3D printed moon buildings that could be constructed from material already on the moon’s surface (designs were developed by Architects Fosters and Partners in partnership with the  European Space Agency)
  • Wiki Weapon’s 3D-printed guns: the idea of digitally transmitting a gun, perhaps encrypted and over an anonymous network, is truly chilling and is stirring a warm debate in the US

This is by no-means an exhaustive list. The truth is, we are only starting to grasp the limitless potential of 3D printing technologies. What truly amazes me with this technology is that it is powered simultaneously by two complementary adoption waves: the top-down industrial wave (think: big R&D labs of major aerospace and defence companies) and the bottom-up prosumer wave (think: hobbyists/ designers/ entrepreneurs working in their garage). The reason I find this amazing is because I believe these two simultaneous waves will boost the speed at which 3D printing technologies spread and change the world.

As a point of comparison, let us consider how computers got to progressively change the world we live in. In a recent interview by Techcrunch, legendary entrepreneur and investor Marc Andreessen described the different phases of diffusion of the computer and software technology:  

The computer industry started in 1950 and basically ran for 50 years with the same model, where all of the new computers and the new software started out being sold for the highest prices to the biggest organizations.

So originally the customer was the Department of Defense and the first computers in History got sold for, I don’t know, tens of millions of dollars at the time.

And then five years later computers’ price dropped, so the big insurance companies could buy them. That’s when Thomas Watson, who ran IBM at the time, was quoted as saying, “There’s only a market need in the world for five computers”.

Years later the PC came out and then all of a sudden individuals could start to buy computers. But the PC only ever got to hundreds of millions of people. It never got to billions of people.

Years later, the smartphone came out and it will get to billions of people.

This kind of trickle-down model has been true for 50 years but around 10 years ago the model flipped. Today, the most interesting and advanced new technology comes out for the consumer first. And then small businesses start to use it. And then medium-size businesses start to use it, and then large businesses start to use it, and then eventually the government starts to use it.”

Now compare this 50-year timeline with the progression seen in 3D-printing over the last 20 years. It almost seems as though 2012 was to 3D printing what the launch of smart phones was to the computer and software industry. Except that in the case of 3D printing this tipping point is happening at both ends of the spectrum: both on the enterprise side AND the consumer side.

  • Enterprise side

To date, rapid prototyping has been the main use for 3D printing in the manufacturing industry, enabling higher efficiency in product design development cycles. However, machines have become more reliable and the range of materials more empowering, to the point that 3D printing can now be used as a real production method to make the final product. Indeed, experts have estimated that whilst 28% of 3D printing investment in 2012 was in final product applications, this will increase to 80% by 2020.

When 3D printing as an industrial production method reaches maturity, you can expect a game-changing ripple effect on supply chains. Think of it this way: your entire factory will be mobile! What happens when your factory becomes mobile? The offshoring trend of manufacturing that started in the 80s’, resulted in billions of investment in developing countries by manufacturing companies headquartered in developed countries. This mighty offshoring trend brought tremendous benefits to the economies of China and Mexico, caused millions of jobs in developed economies to shift from manufacturing to service industry sectors, and re-shaped global supply chains around the world. And to think that all of this was justified by one element: the cost of labour gap between developed and developing countries… Try to imagine what impact 3D printing will have when it sets foot in a previously labour-intensive industry and altogether removes labour from the economic equation,

Of course, it will take years and billions of R&D spending for 3D printing technologies to get to the point where they can fully deliver these promises on the industrial side… but make no mistakes, it will get there. (Do you think the clothing industry won’t be affected? Have a look at these 3D printed marvels)

  • Prosumer side

The first two retail stores selling 3D printers opened in 2012 in the US with models ranging from $600 to $2,199. One store is on the West coast (California-based Deezmaker) and the other one in New-Yord (MakerBot). At that pricing point 3D printing is now accessible to pretty much any professional with a design engineering degree. Actually, CAD software is catching up, so any amateur – not just engineers – will soon be able to design their own models and print them with relative ease…

Economies are essentially based on the trade of three categories of goods: raw materials, manufactured goods and knowledge (i.e. services). In the same way the Internet brought to the masses the power to create and share knowledge, 3D printing is bringing to the masses the power to design and produce manufactured goods. For that reason, I believe 3D printing will bring to manufactured goods the same level of disruption that the Internet brought to the services/knowledge industry.

[I intend to publish further articles on the 3D printing industry looking at current competitors, analysing their business models and revenue sources]

How Sony gave away the MP3 player market to Apple… and then the digital music market

In 2001, Sony Corporation was already the giant conglomerate that we know today. It was engaged in four main operating segments – Electronics (including video games, network services and medical business), Motion pictures, Music and Financial Services. These made Sony one of the most comprehensive entertainment companies in the world. And yet, 2001 marked one of the greatest missed opportunities in the history of Sony. With the introduction of the iPod, Apple leapfrogged all of Sony’s legacy products in the portable music player market and strategically positioned itself as the number one platform for the emerging digital music market.

On paper Sony had all it needed to do what Apple did. And more if you consider all of the experience it had gained over several decades in the music and entertainment market. So how did this happen?

The biography of Steve Jobs by Walter Isaacson (2011, © SIMON & SCHUSTER) provides key insights to answer this question (if you haven’t read the book yet, I highly recommend it). I summarise below the relevant passages, paraphrased and highlighted in italic.

Step 1: The iPod – a superior design

In April 2001 an interesting gathering took place in Apple’s fourth-floor conference room, where Steve Jobs decided on the fundamentals of the iPod.

The meeting started with a presentation of the potential market and what other companies were doing. Jobs, as usual, had no patience. He wouldn’t pay attention to a slide deck for more than a minute. When a slide showed other possible players in the market, he waved it away. “Don’t worry about Sony,” he said. “We know what we’re doing, and they don’t”. Instead Jobs liked to be shown physical objects that he could feel, inspect, and fondle. Unlike any other CEO, he was totally engaged with the product. So three different models were brought to the conference room and Steve settled right on one of the options.

Product development started right away after this meeting, with Steve Jobs getting actively involved in design sessions using his genius for product simplification and aesthetics. Ten years later, Apple has sold 300m iPods and holds an estimated 78% market share of the music player market, which doesn’t leave much room for good old Sony…

But what led to this staggering success was not just the iPod’s superior design. Mostly, it was the creation of a superior platform.

Step 2: The iTunes store – a superior platform

In 2001, executives in music companies were desperately scrambling to agree on a common standard for copy-protecting digital music. Warner Music and AOL Time Warner were working with Sony in that effort, and they hoped to get Apple to be part of their consortium so a group of them flew to Cupertino in January 2002 to see Jobs.

It was not an easy meeting, Jobs, sitting at the head of the conference table, fidgeted and looked annoyed. After four slides, he waved his hand and broke in. “You have your heads up your asses,” he pointed out. “You’re right,” they said after a long pause. “We don’t know what to do. You need to help us figure it out.”

If the music companies had been able to agree on a standardized encoding method for protecting music files, then multiple online stores could have proliferated. That would have made it hard for Jobs to create an iTunes Store that allowed Apple to control how online sales were handled. Sony, however, handed Jobs that opportunity when it decided, after the January 2002 Cupertino meeting, to pull out of the talks.

Instead Sony joined with Universal to create a subscription service called Pressplay (ever heard of it, anyone?). Meanwhile, AOL Time Warner, Bertelsmann, and EMI teamed up with RealNetworks to create MusicNet. Neither would license its songs to the rival service, so each offered only about half the music available. Both were subscription services that allowed customers to stream songs but not keep them, so you lost access to them if your subscription lapsed. On top of that, they had complicated restrictions and clunky interfaces.

At this point Jobs could have decided simply to indulge piracy. Free music meant more valuable iPods. He knew, however, that the best way to stop piracy was to offer a legal alternative that would be more attractive than the brain-dead services that music companies were concocting. So Jobs set out to create an “iTunes Store” and to persuade the five top record companies to allow digital versions of their songs to be sold there.

When the iTunes platform went live in April 2003, Bill Gates expressed his frustration. He admitted that Steve Jobs’ abilities to focus in on a few things that count, get people who get user interface right, and market things as revolutionary were amazing. But he also expressed surprise that Jobs had been able to convince the music companies to go along with his store. “Somehow they decided to give Apple the ability to do something pretty good”.

How good did iTunes turn out to be? The chart below shows the cumulated number of digital transactions completed on iTunes since its launch.

iTunes downloads

As you can see, the “billionth download” landmark was reached after less than a year-and-a-half of operations. Pretty good indeed…

Take-away lessons

Here are the lessons you would hope Sony’s management has gained from that experience:

Lesson 1: a company is only as good as its product/service

Sony should have been able to develop an innovative product and re-invent the portable music player market more than 20 years after they had first introduced the Walkman back in 1982. With the ever-improving access to the internet and consumers’ interest in digital music, radical innovation should have been Sony’s priority in the late 90’s. Instead, they were spending millions of dollars improving the efficiency of their manufacturing process and supply chains so that they would be able to ship more and more of their devices to the market and at a cheaper price. Nor should they have been spending millions on advertising, trying to convince consumers that Sony’s portable music devices are “the cool thing”

Lesson 2: strong leadership is needed to beat the silos

What made the iTunes success all the more infuriating to executives at Sony is that in principle they could have done the same, but they just never could get their hardware, software and content divisions to row in unison. This kind of “silo” mentality was unthinkable under Steve Jobs at Apple. He reined as a king (some would say dictator) and was the unifying element around which all divisions would orbit. This is reflected in the high level of integration in Apple’s products and services: beyond being compatible, they complement and reinforce each other.

Any employee from Sony would have been stunned by the decision-making process that took place in April 2001 when Jobs decided on the fundamentals of the iPod. At Sony just like in many other major corporations, decisions like this would have taken dozens of meetings, the production of hundreds of PowerPoint slides and going back for more market study and competitor analysis. Would Sony’s history have been the same had it been shepherded by a stronger leadership?

Has Sony capitalised on these lessons?

Two things make me think that is not the case:

  • have a look at the evolution of Sony Corp’s share price over the last two years… it doesn’t seem like they are anywhere near the end of their ordeal (ticker symbol SNE at the New York Stock Exchange)

SNE stock price 2011-12

  • as far as lessons 1 and 2 are concerned: I will not attempt to judge whether Sony Corp’s executive team has improved its leadership and decision-making processes but I will give my humble opinion about the quality of Sony’s mobile phones: they are crap! I’ve had an Xperia phone (by Sony Ericsson) for just over a year and I can’t wait to get rid of it

David Ltd vs Goliath Inc: how start-ups beat corporate giants

It seems like the word “Innovation” is on everyone’s lips nowadays. My definition of innovation in the context of business is: “the development and commercialisation of new products or services”.

For most companies in “developed economies” (for lack of a better term), a strong innovation capability is no longer just a “nice-to have” but a requirement for survival. There are countless examples of once powerful corporations that have learned this the hard way, by failing to adapt their products and services to new market demands or changes in the competitive environment.

Take the example of Kodak, this industrial giant once defined the photography industry and it is now filing for chapter 11 because they failed to adapt to a new disruptive technology: digital cameras (they did try to jump on the digital bandwagon when they realised their mistake, but too late).

When such companies are at the peak of their growth and success it seems inconceivable they could ever disappear or let smaller competitors steal any significant market share away from them. But times and again the David vs Goliath story repeats itself: nimble, agile, quicker-to-react, hungrier competitors are able to take on these invincible giants.

How does this happen? Let’s look at the theory. The chart below illustrates the typical life cycle of an industry.

Pic 1

Of course the definition of an “industry” can vary a lot, depending on how specific you are. For instance, when talking about the photography industry, do you mean cameras in general or more specifically analog cameras? The lifespan of industries also vary a lot, from decades to centuries. For instance, the oil extraction industry has been going on for almost a century now and experts are still arguing about when this industry will enter its decline phase (forecasts depend based on estimates of remaining oil reserves, consumption trends and evolution of extraction technologies) whereas the mobile phone industry is only four decades old and has already undergone one cycle as smart phones are progressively replacing feature phone. However, the maturity cycle described in chart above generally holds true.

The tricky bit, of course, is how to get the timing right: how do you know exactly where you stand in the cycle as of today, and what the future holds for your industry? In hindsight things always seem obvious and it is easy to post-rationalise. But let’s put ourselves in the shoes of Gordon, the CEO of Goliath Inc., a corporation that has managed to establish itself as a dominant player in the widget industry, and reached a pretty big size in doing so. Goliath Inc. used to be a small start-up like any other, addressing the needs of a small niche of customers of the widget market place, the so-called early adopters (i.e. geeks happy to try anything new as long as it seems cool enough). However, Goliath Inc. was then successful in “crossing the chasm”: i.e. transitioning to the growth phase by capturing the interest of the so-called early majority of customers. One thing led to another, for some years Goliath Inc. rode the growth wave, as more and more customers flocked to the new and superior widget introduced by Goliath Inc. Of course this success very quickly caused competitor reaction as other players entered the market to get a piece of that growing cake and legacy competitors also tweaked their offering to try to remain relevant. But Gordon sailed through this competitive environment as well as he could and defended the leadership position of Goliath Inc.

This brings us to today. Over the years the collective revenues of participants in the widget industry have followed the curve shown below, and we are now located on point A.

Pic 2

What happens next?

  • Goliath Inc. gets complacent! When you are at the top of the curve it’s really difficult to see how things could ever go bad. You have to understand how tempting it is for the Gordon to keep on using the same recipe that brought him success in the past. It is also easy for him to kid himself into thinking that he still understands perfectly the user needs and requirements in the widget market: “I am the dominant player in this market, who else could possibly know more than I and my A-team of executive managers, filled with Harvard MBAs?”. And yet, year after year, the A-team spends less time on the field, talking and listening to customers, witnessing how the widgets are used in practice and instead spend an increasing amount of time strategising in fancy corporate meeting rooms, on the top floors of Manhattan skyscrapers. Sadly, even if the A-team does pay attention to the evolution of customers’ needs, this is not of much help because…
  • The customers of Goliath Inc. get complacent too! In a mature industry the vast majority of customers are of the “Late Majority” or even “Laggard” type, i.e. they are mostly happy to accept the product/service on offer without much afterthought. Gordon’s team is hardly going to come up with a breakthrough next generation of widgets by relying on the feedback they get from these customers…
  • The diversification trap: to make things worse, Goliath Inc. by now participates in not just one but several industries, each with its own intricacies and a different maturity curve. In fact, as Goliath got bigger and experienced ever-slowing growth Gordon decided to go on a buying spree. The logic went as follows: “What better way to diversify than to acquire another company? This would definitely bump up our sales, right? My deal advisor from Wall Street has identified the right target company and his analysis shows that the deal is justified: there is a $20 million potential synergy (!). I feel Goliath Inc. is going to become once again the darling of the stock market”. Of course mergers and acquisition deals very often prove to be value-destroying and synergies rarely materialise out of the thin air they are made of. Unfortunately, by the time this has become obvious to Goliath Inc. the Sirens of Wall Street are long gone (and you can be sure they didn’t forget to cash in their advisory fees). As Goliath Inc. fell into this diversification trap (several times), the A-team inevitably lost its focus. The bureaucratic burden got heavier and heavier. Next thing you know, strategy and management consultants were called to the rescue and asked to make sense of the situation. Poor old Gordon is still trying to interpret that 1-million dollar slide that was supposed to deliver “the answer”:

Pic 3

Looking at it this way, you can understand how the thousands of small start-ups experimenting with new products and services in their garage went largely unnoticed by the A-team of Goliath Inc….

Pic 4

That is until one of these start-ups, David Ltd, found “the next big thing”, and in one fell swoop made irrelevant the widget industry, the one in which Goliath Inc was once making millions…

Pic 5