Great companies come from anywhere: how the world’s most successful companies went global

Great companies come from anywhere: how the world’s most successful companies went global

©2015 Atomico, All rights reserved.

Data from billion-dollar Internet and Software companies founded since 2003

Interact with the data in Silk: http://data.atomico.com/

@atomicoventures #billiondollardata

Why have we launched this project?

•  We’ve always believed great companies can come from anywhere

•  Last year we mapped the global spread of billion-dollar software companies founded since 2003 to uncover how and where they are built. Now we want to understand what’s behind their success and what others can learn

•  We know how important international expansion can be in the growth of a tech company – but the timing of when companies go global varies dramatically

•  We wanted to know: what impacts the pace of internationalisation, and which factors

have led to the growth and acceleration of these valuations?


This is what we learnt.


First, when solving global problems, companies from small markets who scale fast win the race. •  Last year we mapped billion-dollar

software companies founded since 2003 to uncover how and where they are built

• We know how important international @atomicoventures #billiondollardata


Uri Levine, founder, Waze (founded in 2007, Israel)

“We were addressing a problem that exists nearly everywhere, so a solution could be applied everywhere. With this point of view we actually planned on being global from day one. “However, we were trying to do something that had never been done before; we were trying to build a truly global mobile app from Israel. A lot of people simply thought that this couldn’t be done, that we didn’t have the right skills or expertise or so on. “But we believed that we didn’t need a lot of the things they were saying we had to leave Israel to get and, on the day of acquisition, we only had around 100 employees based in two offices.”

To read the full interview with Uri, click here.

Historically, having a huge domestic market was a major advantage. Now the size of your domestic market is no longer a barrier to success.


Billion-dollar Internet companies founded since 2003 by population of country of origin

143

22

17

0

20

40

60

80

100

120

140

160

180

200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Under 50m 50 to 150m Over 150m

Entrepreneurs from smaller countries have found a way to level the playing field by expanding internationally earlier.

Time taken to go international from year of founding by population of country of origin


1.4

2.9 3.3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Under 50m 50 to 150m Over 150m (China, India, US)

Year

s fr

om fo

undi

ng

They think global from the outset. This is driven in part by necessity. Every billion-dollar company from a country with a population of less than 50m reached a $B valuation only after they successfully scaled internationally.

Billion-dollar Internet companies founded since 2003 by international expansion status


0%

15%

46%

100%

85%

54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Under 50m 50 to 150m Over 150m (China, India, US)

Domestic International

The lag between expanding internationally and hitting $B+ valuation is 3 years.


89%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Expand Internationally after reaching $B+ valuation

Expand Internationally before reaching $B+ valuation

% of international companies that expand internationally before reaching a billion-dollar valuation


Second, the world’s most successful companies are doing everything faster. They’re scaling at the speed of mobile. •  Last year we mapped billion-dollar




Phil Libin, CEO, Evernote (founded in 2005, Silicon Valley)

“Everything that used to be fundamentally hard - distribution, how people will hear about you, channel relationships and logistics - are less important. These things used to be real obstacles and you would have to be a pretty big company to tackle them...The big difference for companies launching now is that it’s so much more important to just focus on the product.”

To read the full interview with Phil, click here.

3.4

1.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Founded 2003-2008 Founded 2009+

Year

s fr

om fo

undi

ng

Driven by vastly increased internet penetration, the global adoption of social networks, app platforms and a global willingness to pay for goods and services online, entrepreneurs are going global faster than ever.


Time taken to first internationalise from year of founding

Time taken in months to reach first 100m users

72

25

0

10

20

30

40

50

60

70

80


39

11

0

5

10

15

20

25

30

35

40

45

Box Slack

Time taken in months to reach $10m ARR

Thanks to the ability to tap into a global connected audience of more than three billion Internet users, they are also reaching 100m users or $10m ARR faster than ever.


Note: Time to 100m users based on a cohort of fastest-growing consumer software products and services founded since 2003

Number of companies reaching a $B+ valuation within three years or fewer

This leads to companies reaching billion-dollar valuations faster than ever.


10

25

0

5

10

15

20

25

30


•  The average time taken to first surpass a billion-dollar valuation is 5.7 years

•  35 companies have achieved billion-dollar valuations within three years of their inception

•  The fastest recorded time to hit $1B is just 9 months (Beibei.com)

And more companies reaching billion-dollar valuations every year.


1 1 2 2 3 6 16 19

46

65 Pro

ject

ed (6

3)

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (YTD)

Number of Internet companies founded since 2003 reaching $B+ valuations per year

$168m

$248m

0

50

100

150

200

250

300


US$

mill

ion

But scaling globally today comes with higher funding requirements.

Median total funding raised by billion-dollar Internet companies


+48%

Source: CB Insights


Third, timing matters – and varies hugely by sector. •  Last year we mapped billion-dollar



Niklas Östberg, founder, Delivery Hero (founded in 2010, Berlin):

“We launched in 3-4 markets simultaneously right from the start. The business is very local so it’s not possible to launch in too many markets - we needed a local set-up that includes local accounting, local offices, local everything. It wouldn’t have been efficient from a technology or a capital point of view to do any more at any one time.

We started before the massive availability of capital. There was always a pressure to make sure we could fundraise. We needed capital to make sure we could make a land grab for early market share. I think it’s easier now.”

To read the full interview with Niklas, click here.


Consumer companies are faster to internationalise than enterprise companies, who typically require greater investment on the ground.

Time taken to first internationalise from year of founding by primary customer segment


2.0

4.1

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Consumer Enterprise

Year

s fr

om fo

undi

ng

China in particular is heavily focused on consumer – the opportunity for the next generation of Chinese entrepreneurs to tackle enterprise is huge.

Billion-dollar Internet companies by primary customer segment by geographic origin


68%

95%

75%

48%

32%

5%

25%

52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All China Europe Silicon Valley

Consumer Enterprise

Unsurprisingly, social and gaming companies are among the fastest to internationalise. They tend to be global from day one and require very little localisation of product.

Time taken to first internationalise from year of founding by sector


4.2

3.3

2.3 1.6

0.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Enterprise Apps Financial Services Retail Gaming Social

Year

s fr

om fo

undi

ng


Fourth, we’re on the edge of the third wave of internationalisation as Asian companies are now seeking to go global too. •  Last year we mapped billion-dollar



Tomoko Namba, founder, DeNA (founded in 1999, Japan):

“China and Japan are both very large markets. You can be comfortable inside in each market. “VCs in the US demand that entrepreneurs are global. But in Japan, VCs - in my days at least - wanted me to be down to earth, they wanted me to be profitable within two years and to be practical. If I’d have said I wanted to be the global leader, they wouldn’t have invested in me...The level of aggression for global domination is very different.” “And China is another universe. If you become the leader in China, it means you are number one in the world. So it’s very natural that both companies focus on their domestic markets.”

To read the full interview with Tomoko, click here. @atomicoventures #billiondollardata

We’ve already seen that the larger your domestic market, the lower the urgency to internationalise. Asian companies have unsurprisingly been much less focused on international expansion until now.

Billion-dollar Internet companies by international expansion status by region


81%

4%

23% 19%

96%

77%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Asia Europe North America

Domestic International

But this is changing. Asian companies will lead a third wave of internationalisation – as they grow their ambitions to win globally and replicate their success at home, abroad.

Cumulative count of $B+ companies that have internationalised by region of origin


0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

North America Europe Asia

First wave: North America

Second wave: North America + Europe

Third wave: Asia

Daniel Ek, founder, Spotify (founded in 2006, Stockholm):

“If you’re starting a new company today - that isn’t about securing local IP - the benefit is there are a bunch of platforms we didn’t have a few years ago like broadband, proliferation of devices, and platforms for monetisation. “All of things we used to have to do - like building your own hosting and scaling infrastructure - are tough problems that used to mean it took you a lot of time before you got to scale. Someone in India was able to corner off their market, someone in China was able to corner off their market. What happens now is that US companies immediately compete in Europe, and European companies immediately compete in the US. And of course it’s only a matter of time - a short time - before China starts competing with the rest of the world too. We’ll see hypercompetition that we haven’t seen before.”

To read the full interview with Daniel, click here.


So, to recap

•  A new cohort of global winners are emerging from smaller markets

•  The world’s most successful tech companies are doing everything faster

•  Timing internationalisation right is crucial, and varies by sector and business model

•  Asia will lead a third wave of internationalisation as entrepreneurs seek to replicate their success at home, abroad.


atomico.com@atomicoventures


To explore the data and for more information on how we compiled the research, please visit atomico.com

Interact with the data in Silk: http://data.atomico.com/

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Great companies come from anywhere: how the world’s most successful companies went global