The Most Used Business Models In The European Startup Ecosystem

According to the European Startup Monitor (2016), the most used business models in the European ecosystem are IT/software development, followed by SaaS and Industrial technology/production/hardware. The greatest challenge is related to sales and customer acquisition. 

An overview of the European startup ecosystem

As reported by the European Startup Monitor:

To provide an overview of the industries in which the startups are operating, the respondents were asked to match their startup to one of eighteen industry categories. The results indicate the relevance of the digital economy for innovative European startups; the digital economy accounts for five of the seven major categories. Most startups stated that their venture belongs to the IT/software development sector (15.0%) followed by software as a service (12.2%) and industrial technology/production/ hardware (8.3%) . The most frequent categories on the level of individual countries are IT/ software development (8 countries) and software as a service (8 countries).

What is the most popular business model for European Startups?

Most Popular Business Models of European Startups (2016)

IT/software development 15%
Software as a Service (SaaS) 12.2%
Industrial technology/production/hardware 8.3%
Consumer mobile/web application 6.8%
E-commerce 6.6%
Bio-, nano-, and medical technology 5.8%
Finance/finance technology (FinTech) 5.2%
Online marketplace 4.9%
Education 4.8%
Consulting company/agency 4.6%
Online service portal 4.2%
Green technology 4.0%
Food 3.4%
Media and creative industries 3.3%
Games 1.3%
Offline services 1.3%
Stationary wholesale and retail 0.6%
Other 7.9%

What is the prevailing business model for each country?

Prevailing business model by country

Austria SaaS
Belgium: SaaS SaaS
Cyprus Industrial technology/production/hardware, Consumer mobile/web application
Finland: SaaS SaaS
France Consumer mobile/web application; IT/software development
Germany IT/software development
Greece Industrial technology/production/hardware
Hungary IT/software development
Ireland SaaS
Israel IT/software development; SaaS
Italy IT/software development
Netherlands Other categories
Poland IT/software development; SaaS
Portugal IT/software development
Slovenia IT/software development
Spain SaaS
Switzerland Finance technology (FinTech)
United Kingdom e-commerce
Other EU countries SaaS

What is the major challenge?

Greatest challenges for European Startups

Other 0.8 %
Team development 3.1 %
Acquisition of staff 5.6 %
Processes/internal organization 5.7 %
Profitability 5.7 %
Internationalization 6.3 %
Cashflow/liquidity 7.6 %
Raising of capital 12.1 %
Growth 16.6 %
Product development 17.1 %
Sales/customer acquisition  19.5 %

Sales and customer acquisition is the biggest challenge European startups have. As pointed out many times over on this blog, sales and distributions are among the most challenging part for any startup. At the same time, it is also the reason why many startups fail and many others do not succeed.

Reference for the data: European Startup Monitor

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Gennaro Cuofano

Creator of | Head of Business Development at | International MBA

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