The State of European Tech – a Recap
I’m going to keep this intro short and sweet: today’s edition is about one thing and one thing only (or, it could be argued, about all things Europe, put together into a nice little package with a pretty bow on top): Atomico’s 2021 State of European Tech Report. If you care about Europe Tech (which I’m assuming you do, because if you don’t you wouldn’t be here, would you?) — go read it. Atomico has outdone itself this year (yet again) — and there’s nothing I can write that will do the report justice.
That said, I’ll do the following: if for some reason you still need convincing, or you’re too busy and would like a primer on what the report says before you dive in after (or during) the Holidays, below you’ll find what I think are 8 key takeaways from the report everyone in European tech should at least be aware of.
Ready?
1. There’s Cause for Celebration
Let’s start with the headline — Europe, despite Covid, despite Brexit even, is thriving. If you’ve been anywhere in the European Tech internet lately, you’ve probably read this already; still, it is worth reinstating and recapping. Here are the numbers: European funding tripled in size in 2021 — with projections that account for reporting lag putting that number near $120 billion, in contrast to 2020’s $41 billion. That alone is cause for celebration — an indication that the European ecosystem not only managed to bounce back from Covid, but that is also healthier than ever. Or in short: there’s a bright future ahead.
And there’s more good news; fundraising isn’t the only number that has gown up significantly in the past year. The overall value fo the ecosystem has soared too, leapfrogging from $2 trillion to $3 trillion in the past year alone. And if that isn’t impressive enough, consider this fact: it took the European ecosystem decades to reach the $1 trillion mark (back in 2018), then 2 years to get to the $2 trillion mark, and less than 8 months to reach the $3 trillion mark. This, in large part, can be attributed to the groundbreaking number of unicorns minted in the first 8 months of 2021 — 98, to be precise, making it the biggest (percentage) increase since 2014, when the number jumped from 34 to 69.
2. We’re Overtaking our American Friends
Takeaway #2: Europe no longer trails behind the US, at least when it comes to VC investing and ecosystem health. Europe has made impressive gains over the last few years, particularly in the early-stage realm, raising 33% of all rounds of up to $5 million (while the US raised 35%). The report even makes the case that ‘while Europe’s share of the pie has risen over the year, it’s been at the expense of America. Over the past five years, Europe has increased its share of global early-stage startup funding by 13 percentage points, whereas the States’ has decreased by 20. This is also an important leading indicator of Europe’s tech strength to come, if many of those early-stage companies raise follow-on rounds.’ And there’s more: if anything (and this is particularly interesting), Europe has one over Silicon Valley et al. according to Tom Wehmeier (partner at Atomico). It turns out that, over the last few years, European VC has generated better returns for investors than US VC — ahead by about 5 points over both three-year and five-year time frames, to be precise, and three points over a decade. Which leads us to our next point…
3. The World is Turning To Europe
There’s been, in the report’s words, an ‘American invasion’ into Europe — one that’s reached a pinnacle in 2021. Atomico analysed the landscape and now reports back that 618 ‘unique US institutions have participated in at least one investment round in Europe per year’, a jump from 431 in 2020.
But it isn’t only the US. The pool of investors active in Europe continues to expand, both European ones (particularly in later-stage rounds, with a jump of over 200% in $100m + rounds compared to 2020), and the rest of the world. In total 2,826 unique institution participated in at least one European tech round in 2021 — a significant increase from 2019’s 2,044.
4. The Planet Matters To Us, More So Than Ever Before
This I’m including here because it just made me smile as I read it (and, in more practical terms, because it’s an indicator of where the Ecosystem is moving towards, and what opportunities lay ahead for Founders and investors interested in Europe): Planet positive (not neutral) startups were all the buzz in Europe during 2021, trailed behind by Frontier / deep tech and DeFi & Crypto (yes, we care more about the planet than we care about Web3, I was surprised to read that too.)
In the first nine months of the year, the total investment into ClimateTech (or: Planet Positive, a phrase I like much more) amounted to $10 billion, around 11% of total funding. More particularly: Europe is winning here too: while we still lag behind the US in overall funding, Europe has a ‘higher proportion of investment into purpose-driven startups.’
5. London Is Still King, But Brexit May Make Things Hard
London remains king of European Tech hubs by capital invested, cashing in a grand total of $18.36 billion — an almost 95% jump from 2020’s $9.9 billion. This is more than double the second place geography, Berlin, which raised a total of $7.1 billion in 2021, trailed shortly behind by Paris ($6.53 billion) and Stockholm ($6.52 billion).
But here’s the thing: Brexit may put a stop to London’s reign — and most likely harm the European ecosystem as a whole, particularly due to its impact in talent supplies. According to the report, along with the Netherlands, in the UK founders believe the talent pool size is decreasing; out of all respondents, 36% of founders report available talent has decreased compared to 2020.
6. But There’s Two Surprisingly Key Geographies
But while London is key, there are two geographies that, in my reading of the report, deserve special recognition: Netherlands & The Nordics. According to Atomico: “The Netherlands is truly one of the stars of this year’s report. It has 2.6X as many startups per 1M population as the European average (ahead of the UK, Germany and France), and is the home of European big tech, taking fourth place globally by total market cap of public tech companies (ahead of South Korea and Japan).” And it makes sense: Some of Europe’s biggest tech companies (ASML, Just Eat, Adyen) call the Netherlands their home; and out of the 10 largest deals raised by European tech companies in 2021, 2 were from the Netherlands, which in turn has made it fifth in Europe when it comes to the number of unicorns it hosts.
As hinted earlier, and by the table just above, another key geography is Sweden, and the Nordics as a whole. Sweden have seen a significant increase in mega-rounds ($100 million +), going from 0 in 2017, 4 in 2019 and 6 in 2020 When it comes to unicorns, Denmark, Norway and Sweden are all in the top 10 countries with the largest number of them — and two of those countries (not Norway) are in the top 10 geographies with the most cumulative capital invested per capita over the last 4 years. (for more on the Nordics, go check out Neil S W Murray’s amazing tweeter thread., which I’m basically summarizing here)
7. The Regulatory Landscape
There’s a reason why most of my reports come with a ‘EU Regulation’ section; Europe is a particularly tricky geography when it comes to regulation and policy of any kind, and more so when it comes to startups — and has historically lagged behind our American counterparts. All of that to say: one underreported takeaway of the State of European Tech Report is the climate of optimism in the ecosystem when it comes to exactly this.
Out of all founders & leaders interviewed for the report, 26% feel ‘the regulatory landscape has changed for the better’, with only 20% stating the opposite, and 21% believing the regulation is set to be the biggest obstacle to Europe’s growth and health in 2022. Similarly (and this, to be honest, is not too much of a surprise), 48% of investors believe regulatory fragmentation in the EU (no regulatory alignment between different countries) to be the key challenge to solve for, if we expect Europe to continue growing as an ecosystem (21% of respondents believe this). The only ‘obstacles’ that outranked regulation in terms of importance were the obvious ones: those related to funding and talent access.
INTERESTING LINKS
The Gig Economy’s Days in Europe Are Numbered
Bored Ape Yacht Club: Someone accidentally sold a $300,000 NFT for $3,000
How to build and maintain culture during hypergrowth
Three reasons why startups fail to grow
Meet the fastest-growing fintechs of 2021
The top Gen Z investors in 2021 shaking up VC in Europe
In Europe’s war for tech talent, are visas the answer?
Here’s what it means when a VC asks for a pitch deck
13 startups tackling the global waste problem, according to VCs
Poland latest to probe Apple’s app tracking transparency shift — over self-preferencing concerns
UK’s antitrust watchdog is taking a look at Microsoft-Nuance
Spain moves closer to passing a startup law
Volvo Cars and Northvolt seek to take $3bn battery venture to US and Asia
The time bombs ticking inside the world’s software
Is the IPO boom about to bust?
MONEY STUFF
Backed by Sir Paul McCartney and Björn Ulvaeus, Audoo raises £7.2 million in new funding round
With a focus on email marketing ad revenues, Copenhagen’s Passendo raises €2.3 million
Fashion rental marketplace HURR stitches up $5.4 million
The UK’s Buy Now Pay Later for car repairs, Bumper drives home with $12 million
Yolda keeps on trucking with $5 million bridge round
Monitoring electric-driven motor systems in harsh environments, Samotics raises €14.5 million
Sofia’s LAUNCHub Ventures closes second fund at €74 million
Flink brings in $750 million at the till, now at $2.1 billion valuation
Berlin’s embedded insurance solution hakuna closes €1.5 million pre-seed round
Adding a layer of gamification to retail loyalty programmes, Gamifiera raises $1.3 million
Measuring the impact of training on remote-first sales teams, Berlin’s Wonderwerk raises $2.5 million
Mambu mambos on over to €235 million in new raise at €4.9 billion valuation
SMB expense management platform Pleo picks up $200 million, now at $4.7 billion valuation
As the collective rises, Collective collects $8 million in seed round
Berlin’s Planetly acquired by US-based OneTrust
McCain Foods gobbles up minority stake in Dublin-founded plant-based frozen foods producer Strong Roots at $55 million
Providing travel experience creators with everything they need, London’s Easol raises $25 million in Tiger Global led round
LiDAR sensor and detection software maker Blickfeld raises $31 million
Parisian cybersecurity startup GitGuardian raises $44 million in new round
Πηγή: Gonz Sanchez
seedtable.com
