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The Growth of the European Ecosystem is Fueling Competition for SaaS Startup Expansion, According to Frontline Growth’s New Report

The timing and circumstances are perfect for U.S. venture-backed companies to harness Europe’s $18 trillion GDP economy, according to findings, despite a global slowdown in growth.

Business Wire — SAN FRANCISCOThe second European Expansion Report from Frontline Growth, a growth-stage venture capital fund for American software companies moving into Europe, has just been made public. The data, which was released three turbulent years after the initial report, confirms that Europe remains a crucial growth market for any U.S. software business aiming to become a global, category-leading organisation, even with capital markets retreating and performance being measured by paths to profitability.

“Frontline was essential in guiding us through the expansion process and understanding the European market. They rank among the most helpful investors I’ve ever worked with, and their most recent report’s data is a gold mine for CEOs with international aspirations.

Many venture-backed firms have given up the “growth at all costs” approach in the current economic situation and are instead concentrating on efficient expansion and cost containment. Although a recalibration to basic business criteria is beneficial, many American businesses have had to put an end to their plans for geographic expansion. Deprioritizing European expansion prevents enterprises from taking advantage of a sizable, untapped market that accounts for one-third of all global income for public software corporations. Companies who overlook their rivals in this region run the danger of losing significant market share, especially considering the strength of the current European technological ecosystem.

Prioritising European expansion can appear contradictory when the main message is to “conserve cash and preserve runway.” However, our analysis emphasises why now is precisely the time to grow, especially if they have an eye towards an IPO, for firms who have excellent product-market fit, a proven go-to-market strategy, and have already experienced early demand from overseas, according to Brennan O’Donnell, Partner at Frontline Growth.

High 3 cloud-primarily based drivers of digital transformation in 2022

Four significant expansion trends that have evolved over the past few years are highlighted in Frontline Growth’s 2023 report:

1. There are more reasons than ever to delay European expansion. Over the past ten years, venture capital raised by European startups has multiplied ten-fold, expanding to over $90B in 2022. Today, the number of new businesses being established in Europe is comparable to that in the United States, and the calibre of these businesses has greatly improved. These elements work together to make Europe a very competitive market, making the choice of whether to develop there crucial now more than ever.

  1. The highest performing American companies at IPO generate more than 40% of their global revenues in Europe. With the top-quartile of firms reaching at least 28% and the most successful software companies hitting over 40%, Europe continues to constitute a significant portion of overall revenue for category-leading companies. This equates to about $80M ARR for the average company going public today. Companies with European revenue arrive at their initial public offerings (IPO) expanding 5% more quickly year over year than they would with just their U.S. business.
  2. 2. Capital market turbulence is a reliable indicator of European growth rates. Unsurprisingly, the epidemic caused a contraction in growth during 2020. However, in 2021 and 2022, levels swiftly resumed as businesses sought to speed growth and take advantage of the seemingly endless supply of capital. It’s interesting to note that whereas sales-led expansions are typically more volatile and responsive to market situations, engineering-focused expansions in Europe tend to be relatively stable.
  3. 3. As destinations for corporate headquarters, London, Dublin, and Amsterdam are gaining appeal. 90% of first-office locations for sales-led expansions are now found in these three cities, up from 57% just ten years earlier.

Jack Altman, CEO of Lattice, said: “Expanding internationally can be intimidating, but Europe has been an important part of Lattice’s growth over the past several years.” “Frontline was instrumental in helping us understand the European market and navigate expansion. They are easily one of the most helpful investors I’ve ever worked with, and their latest report data is a goldmine for CEOs with global ambitions.”

More than 200 venture-backed software businesses that have expanded into Europe since 2010 are examined in Frontline Growth’s 2023 European Expansion Report, along with more than 300,000 data points on their hiring practises, headquarters location decisions, and leadership recruitment. The research also offers specific opinions on issues including expansion timing, product localization, go-to-market strategies, and more from dozens of EMEA general managers and foreign VPs. Visit this link for further details and a free download of the report:

Concerning Frontline Growth

A fund for growth-stage venture finance for American software companies entering the European market is Frontline Growth. The fund has helped American businesses that have defined their respective industries, like Lattice, Navan (previously TripActions), Attentive, Greenhouse, Vanta, and others, succeed in Europe by offering practical assistance with scheduling expansions, creating go-to-market strategies, and locating senior personnel. Leading European executives from Slack, Cloudflare, Dropbox, Stripe, Google, LinkedIn, and other firms are among the LPs of Frontline Growth, which is run by former operators with decades of experience in expansion at businesses like Google, Twitter, SurveyMonkey, and Yammer. Visit to find out more.

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