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The average European startup might struggle to get the same attention as the latest hot prospect out of Silicon Valley, but some of Europe’s biggest names are famous across the globe. We chose these five startups — Just Eat, Rovio, Spotify, Vente Privée and Wonga — for our Super Stars section, as they have grown large and morphed into international brands.
Some of these startups have benefited from access to strong local European markets, and others have simply offered better global products. While a couple of these choices, such as Just Eat and Vente Privée, are a bit long in the tooth by startup standards, they have managed to remain agile and active.
Singling out which qualify to be Europe’s Super Stars has been a tall order, but in the first part of GigaOM’s Euro 20 roundup, we’ll look at five of the continent’s biggest — and hungriest — startups.
Founded: Copenhagen, 2000
Investors: Index Ventures, Greylock Partners, Redpoint Ventures
Business: Hub for online food delivery
Although it was founded more than a decade ago, don’t be fooled into thinking this Danish company is in danger of getting stale. The team behind Just Eat has spent a long time working on online food delivery, and now claims to have the largest site of its kind, anywhere, with listings for more than 15,000 restaurants in 10 countries stretching from Ireland to India.
On the surface, Just Eat’s model is simple: It partners with brick and mortar takeout firms to give them a reliable web interface, search engine and ordering service. But it works because everyone ends up winning: Users get a single site that can satisfy their appetites; restaurants get increased customers; and Just Eat acts as the broker and takes a slice of the business.
That model was perfected over five years working in and around Copenhagen, but things really kicked off when Just Eat launched its U.K. service in 2006. The company is now headquartered in London, and Britain counts for around half of its partnerships. It’s a truly European business, and having recently taken $48 million to fund its aggressive expansion, it has serious ambitions.
Founded: Helsinki, 2005
Investors: Accel Partners, Atomico, Felicis Ventures,
Business: Games studio responsible for Angry Birds
If you want proof that overnight success is little more than a myth, look no further than Finnish games company Rovio, the name behind the blockbuster cell phone hit Angry Birds. While its deceptively simple physics game seemed to sling shot out of nowhere and become a smash hit, the small mobile games studio actually endured years of minor hits and significant misses before striking gold.
Angry Birds has become a sensation, downloaded more than 200 million times. Those are numbers that have convinced investors to deliver another $42 million to the company to help the business spring on to bigger and better things, and senior executives have said the company plans to go public.
But unlike many companies that develop games and apps, Rovio sees a broader future than simply creating more games. Boss Peter Vesterbacka has said he wants to exploit the games’ brands’ success in any way he can, whether it’s selling toys in China or making movies in the U.S. For the latter, he brought on former Marvel Studios boss David Maisel.
Whether the company has the chops to develop beyond the single Angry Birds franchise remains unclear. But for now, those irritable avians are a force to be reckoned with.
Founded: Stockholm, 2008
Investors: Creandum, Northzone Ventures, Li Ka-Shing, Wellington Partners, Sean Parker, The Founders Fund, Kleiner Perkins Caulfield & Byers, Accel Partners
Business: On-demand music streaming service
Spotify is probably the single startup from Europe that has gathered the most buzz in recent years — and for good reason. The hype around this streaming music service began almost as soon as it appeared in late 2008, with the launch of its smart application.
Technically the Spotify app is a triumph, using a peer-to-peer system to spread the work and make listening instant and smooth. In marketing terms, meanwhile, it was able to fill a void left by the likes of Pandora, which had retreated from Europe over concerns about licensing costs, and Last.fm, which had gone quiet after being purchased by CBS.
Built by Daniel Ek and Martin Lorentzen, a pair of serial entrepreneurs from Sweden, Spotify’s core business is subscriptions. More than a million users pay around $8 each month to gain unlimited access to the service’s music catalog, with a higher tier subscription allowing use on mobile.
But streaming music is an area where many companies have struggled to make the numbers work in the past, and there have been significant pressures on Spotify’s bottom line — pressure that has led the company to tighten up its freemium services and add more track-purchasing options. Still, it helps that the major labels (in Europe, at least) are on-board and taking some money out of the business, even if artists don’t earn a great deal from radio-style plays.
Right now, the big questions surrounding Spotify seems to be about its ambition. It has spent years trying to broker deals with labels to launch in the U.S., and finally in mid July, Spotify launched in beta (GigaOM offered invites to its readers here). Will the U.S. move prove to be a major breakthrough for the company, or will the new focus prove to be its Achilles heel? With another $100 million round in the bank, CEO Ek has a substantial war chest and relentless focus.
Founded: Paris, 2001
Investors: Summit Partners
Business: Online flash sales of luxury goods
One of the continent’s biggest, and yet least talked-about, web companies is a French site credited with pioneering flash sales online. Although overstock sites had been around before it, Vente Privée’s spin — to offer luxury goods at sharply discounted rates for short periods of time — combines the desire for designer brands with the urgency and addictiveness of eBay auctions. And it has worked: The business has built up annual revenues reported at around $1.3 billion, and the model has been adopted by competitors such as Gilt Groupe, Amazon and (to an extent) Groupon.
Still run by founder Jacques-Antoine Granjon — an art-loving Frenchman who has been in the overstock business since the mid 1980s — it has taken a slow and steady approach to development. For most of its lifetime, membership was invitation-only, and it took years to move beyond the French market, even when Boston-based Summit Partners invested in 2007 to fund expansion.
But now, as the company’s bank account swells, its ambition seems to be ramping up, not least with a partnership alongside American Express that has seen it cross the Atlantic for the first time. With a decade of business under its belt, VP counts as the granddaddy of European startups, and yet it remains one with a solid business, and huge prospects for growth.
Founded: London, 2007
Investors: The Accelerator Group, Accel Partners, Greylock Partners, Balderton Capital, Dawn Capital, Oak Investment Partners, Meritech, Wellcome Trust
Business: Payday loans with online approval
London’s reputation as a banking hub means it has thrown up all kinds of interesting financial startups, but few have captured the attention as much as Wonga, the brainchild of South African entrepreneurs Errol Damelin and Jonty Hurwitz.
The duo decided to take one popular but overlooked financial industry — the provision of short-term “payday” loans — and push it online. The result is that (subject to credit checks) Brits looking for an advance on their salary can log on, enter their credentials and get up to $1,600 wired into their bank account that day, with the stipulation that they pay it back within a month.
The service has been heavily criticized. In fact, during one particularly fierce advertising push, the company was even discussed in unhappy terms in the British parliament. And it’s true that payday loan companies may seem like vultures, especially given the interest they charge looks dangerous (Wonga’s rates are around 1 percent each day, plus a flat fee).
But the reality is that payday loans are good business, especially in recessionary times where traditional retail banks are loath to take risks. And the business went some way to allaying fears by signing up Britain’s largest charity, the Wellcome Trust, as one of its investors. International expansion is tough in a market like this, meaning a monster $116 million round announced in early 2011, is largely being used to give the business more capital and fund growth at home.