Why SPACs could be a boost for Europe’s marketplace companies

Large exits in Europe during Q1 involving marketplace companies Toro, Cazoo, and Lilium are fueling growth in the sector, say investors from SpeedInvest and Adevinta

Companies that act as marketplaces have seen a boom in the US, and Europe is now ready to take a slice of the pie. And with more SPACs looking to Europe, this might be the ticket.

Mathias Ockenfels, general partner at early-stage investor SpeedInvest, said the European marketplace sector is heating up and offers new exit opportunities for international investors.

“There is an abundance of capital in the markets so that then trickles down to marketplaces. And if you look at Europe, many of the unicorns are actually marketplaces,” Ockenfels said. “The SPAC craze also opens up another opportunity for exits, and we know that there’s a number of European-focused SPACs being raised at the moment.”

SpeedInvest, Adevinta Ventures, and Dealroom.com said in a report that venture capital investment in Europe’s marketplace companies reached $8.7 billion for the first five months of 2021, 2.6 times higher from the same period last year. That figure includes capital raised via SPACs.

Fundraising in Europe for the first five months of 2021 reached $6.2 billion, on pace to meet the $20 billion raised for all of 2020, according to the Dealroom report. Ockenfels said many of these recently raised include a focus on marketplaces. The report said public marketplace value is at $235 billion worldwide, of which SPACs were responsible for $72 billion.

Ockenfels said investor interest in European marketplace companies is indicative of the fast recovery after the pandemic.

“Before the pandemic unfolded, there was a lot of investor interest from later stage US funds in Europe. Then it halted a little during the crisis, but now it’s coming back,” he said.

Mathias Ockenfels
Mathias Ockenfels, SpeedInvest

According to Ockenfels, there were several large exits for marketplace investors in the first quarter alone. Many of these were through SPACs. This included the trading platform e-Toro, London-based car dealer Cazoo, and aerospace firm Lilium.

Part of this growth stems from Europe having to play catchup to China and the US, countries with robust marketplaces already, said Ovidiu Solomonov, senior vice-president for markets and ventures at Adevinta.

“Marketplaces in Europe are following more mature ones in the US or Asia, so that’s also a driver for sales. And we are seeing players from abroad knocking and saying, ‘I want to come to Europe, but I would rather buy you guys,’” Solomonov said.

He added it took a while before Europe started building marketplaces, and now there are companies attractive enough for VCs to exit.

Venture Capital Journal previously reported that more than $39 billion had been invested in marketplace companies in the past decade, according to data provide by PitchBook. Many experts say marketplaces have to be more than just aggregators of sellers but also provide tools to better the experience on their platforms.

Both SpeedInvest’s Ockenfels and Solomonov feel investors will continue to pour money into European marketplace companies, especially as more people become comfortable with digital transactions.

“We are bullish on marketplaces no matter what. It’s a trend that continues to stay because if you build a fundamentally solid business, it has staying power. You can do that with marketplaces, especially in times of crisis, and there are new opportunities and categories for marketplaces,” Ockenfels said.