For over a For a decade, the tech industry has been chasing unicorns—those elusive startups valued at more than $1 billion. The craze began in 2013 when Eileen Lee — a Palo Alto-based VC — coined the term, which captured the imaginations of first founders and investors, then prime ministers and presidents. But these mythical beasts are also rare: Only 1 percent of VC-backed startups ever reach that status.
As society enters the age of AI and financial markets place new value on business fundamentals, our understanding of what makes a successful technology company is evolving. The pledge alone does not make a national, regional or world champion. Champions are those companies that combine both the promise of untapped growth and the underlying metrics that demonstrate strong and sustained customer demand.
Until recently, Silicon Valley was considered the world’s undisputed unicorn factory. But Europe’s innovation ecosystem has matured to a point where it is constantly spawning companies with both the vision to change the world and the foundations to sustain that change. Leading the pack is a cohort of more than 507 “thoroughbred” startups with annual revenues of at least $100 million.
More than a third of these high-potential companies are based in what we call New Palo Alto: not a single location, but a network of interconnected ecosystems within a five-hour train ride from London. After the Bay Area, it is the second most productive innovation cluster in the world and includes cities with an industrial heritage such as Glasgow, Eindhoven and Manchester, as well as world-renowned capitals of culture, politics and academia such as Amsterdam, Cambridge, Edinburgh, London, Oxford and Paris .
They are home to companies such as the low-cost computer maker Raspberry Pi, whose technology was invented and developed in Cambridge, is manufactured in Pencoed, South Wales and is sold around the world. Raspberry Pi recently capped more than a decade of growth with a listing on the London Stock Exchange. At the time of listing, it had revenues of $265 million and $66 million in gross operating profits.
Other New Palo Alto thoroughbreds include fintech companies Monzo, Revolut and Tide, which provide mobile banking to SMEs, as well as fast-growing companies such as iPhone Challenger Nothing and London-based Cleo, the conversational AI pioneer helping young consumers in The US manages its finances.
Seven of the 10 most valuable technology companies in Europe founded after 1990 originated from New Palo Alto: Booking.com and Adyen from Amsterdam; Wise, Revolut and Monzo from London; ASML from Eindhoven; and Arm of Cambridge. All are products of this interconnected ecosystem.
Yet for all its promise, New Palo Alto remains an underinvested region. While early-stage funding is now higher than in the Bay Area, thoroughbreds face a staggering $30 billion gap in funding at the crucial stage of expansion compared to their Bay Area counterparts.
The governments of New Palo Alto’s leading economies – Britain and France – have provided progressive policy frameworks to support innovation and technology companies, including investment in research and development, talent and visa programs. They are also introducing policies, including the Mansion House Compact in the UK and Tibi in France, to support greater scale of capital.
But no innovation cluster has become great because of politics alone. Success occurs when investors fully understand the investment opportunity. Now that we have almost 1,000 venture-backed companies in Europe, the Middle East and Africa with over US$25 million in revenue, helping this ecosystem reach its full potential is no longer a political challenge. It’s about recognizing a huge investment opportunity.
That’s why the amount of venture capital coming into the region has increased ninefold in the past decade, and why, over the next decade, major institutional investors in the UK and France will bring billions of dollars of investment to support private companies.
The new British prime minister’s constituency includes Somers Town, an area close to St Pancras station and within sight of the huge European headquarters of Google and Meta. Yet for all the shiny towers, too many neighborhoods in New Palo Alto have been abandoned by technology. In Somers Town, 50 per cent of children get free school meals, 70 per cent of residents receive welfare and adults live 20 years less than in leafy Highgate, just 20 minutes up the road.
As the technology industry faces increased scrutiny, we have an opportunity to offer an alternative model of innovation. By building purebred companies to be sustainable, transparent companies, we can begin the work of sharing the benefits of innovation more equitably.
Just as some of America’s most iconic cities take their names from the ancient cities of Europe – New York and New Orleans – New Palo Alto pays homage to its namesake while signaling a conscious choice for the future.
