Since it was founded nine years ago edtech unicorn Multiverse has ticked off a number of key startup milestones. It raised a big money $220m funding round in 2022, took its valuation north of $1bn and, in March this year, hit $100m in annual recurring revenue (ARR) — which represents how quickly a company’s subscription base is growing and provides a forecast for how much money a company is expected to generate in the next 12 months.
“We’re not patting ourselves on the back for getting to where we are; we’re obsessional about what happens next,” says Euan Blair, the company’s founder and CEO. “Reaching that scale isn't just about winning new customers every week. It’s showing your existing customers value so they'll grow with you.”
Revenue has been front and centre of a lot of European startup messaging this year, in particular ARR. Companies have been hitting $100m in ARR faster than ever. Revenue at Swedish vibe coding startup Lovable, for example, hit $100m in ARR eight months (now $200m in ARR since that article was published) after it launched and hit 2.3m users.
More broadly, research from Dealroom found so-called thoroughbreds (companies generating more than $100m in revenue) — including Revolut, Wise and Alan — now account for 27% of EMEA’s $5.6tn tech ecosystem.
The $100m revenue mark in combination with profitability, or a clear path to it, is more tangible.
Prospective investors are also starting to prioritise moneymakers, says Gabor Pogany, co-head of J.P. Morgan’s Innovation Economy team for EMEA. “It shows the maturity of a business. Valuations can be very volatile. We’ve seen companies who were unicorns three or four years ago that aren’t anymore. The $100m revenue mark in combination with profitability, or a clear path to it, is more tangible.”
But what’s fuelling this acceleration in Europe?
AI is a big part of it, says Rosh Wijayarathna, co-head of J.P. Morgan’s Innovation Economy team for EMEA.
A new report by the venture capital firm Accel, for example, found AI-native apps are hitting $100m ARR in years instead of decades, with record revenue-per-employee ratios. “It's easier than it’s ever been to create a scalable business and you can do in days now what used to take months, with fewer developers.” Wijayarathna says.
Wijayarathna also points to a scarcity of capital driving more support to the best performers. “That’s one dynamic that has changed over the past few years. In 2021-22, capital was very cheap. Now, it’s very expensive and we have a scarcity of assets.
“Capital is targeting the best assets so they can scale faster. And then the talent goes to where the capital is.”
Another factor is an increase in the number of US investors backing European companies. Accel reported two-thirds of funding for AI application startups in Europe and Israel came from American investors; 10 years ago, when Accel first started compiling this data, Europe represented one tenth of US investment.
We need investors and board members who push founders to think about what it would take to build a $50bn company, not just a $100m one.
Multiverse’s biggest shareholders are US investors, something that Blair believes has pushed him to achieve more. One of the first questions Mary Meeker, general partner at US VC Bond asked him was how he was going to make Multiverse a $500bn business.
“We need more of that Silicon Valley mindset [in Europe],” Blair says. “We need investors and board members who push founders to think about what it would take to build a $50bn company, not just a $100m one. [And] we need to judge companies on their ability to grow, the security of their cash position and their ability to innovate.”
That said, successfully scaling a company is hard. McKinsey estimates 78% of companies that have successfully built a product and found product-market fit fail to scale.
In 2023, Multiverse laid off nearly a third of its US employees two-and-a-half years after opening its office there. At the time, Blair said, the company was tracking behind the US revenue targets it had projected.
“The main challenge is always focus,” he says. “Whenever we've made mistakes, it’s come from distracting ourselves by chasing superficial opportunities and not ruling them out early enough. One of our earliest investors, Danny Rimer, always says ‘the main thing is to keep the main thing the main thing’.”
Sometimes it takes a third voice. Bringing on the right partner that is aligned with your vision and can help you achieve that vision is so important.
Wijayarathna agrees focus is important, but adds that often the attributes of a company that can successfully grow to $10m ARR are not the same as those that will reach $100m. Building the right team for the right time is essential, as is strategic vision and financial discipline, on top of relentless product and client focus.
“You essentially need to change everything within your company when you hit that level of scale, including your management team,” he adds. That can be really hard to do, which is where the right strategic partners can prove invaluable. “Sometimes it takes a third voice. Bringing on the right partner that is aligned with your vision and can help you achieve that vision is so important, whether it’s an investor, a bank or other advisor.”
You also need to be financially agile, Blair says. For Multiverse, that came from VC investment and has been what’s allowed it to build an innovative product and hire a world-class leadership team. “It lets you operate in a model where you can make large losses before becoming profitable, because you are investing so heavily in innovation and growth,” Blair says.
It doesn't come from greed; it comes from a deep belief that the company can do something extraordinary.
Moreover, he’s thankful for the strategic partnerships that are pushing him to achieve more, faster. “Financial institutions like J.P. Morgan have provided unrivalled network effects and the ability to bring talent, energy and capital together with incredible speed.
“Meanwhile, the most helpful investors constantly push for bigger, better, faster. I remember one quarter where we'd just pulled off three times growth, and I thought [one of] our investors would be impressed. Instead, he just said: ‘I want more’.”
At the time, Blair says, he was surprised and confused. But “European founders need that,” he adds “It doesn't come from greed; it comes from a deep belief that the company can do something extraordinary.”
