In Partnership with
&
01

Key Findings

CCE0B547-8741-413C-87E1-6A66D227929BCreated with sketchtool.
04

Investors

CCE0B547-8741-413C-87E1-6A66D227929BCreated with sketchtool.
07

Purpose

CCE0B547-8741-413C-87E1-6A66D227929BCreated with sketchtool.
09

Policy

CCE0B547-8741-413C-87E1-6A66D227929BCreated with sketchtool.
11

Appendix

CCE0B547-8741-413C-87E1-6A66D227929BCreated with sketchtool.

Investment by Industry

Fintech and enterprise software companies have been the major beneficiaries of capital over the last five years. Looking cumulatively over the past five years, European companies in these two sectors alone have raised close to $50B.

Capital invested in fintech


$25B
invested in European fintech companies since 2015.

Capital invested ($M) by industry

Legend

  • Capital invested
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

Still, there is a high level of variety in terms of capital flow in different industries in the European tech ecosystem. There are now seven industries surpassing $2 billion capital invested versus only four in 2018.

Capital invested ($M) by industry

Legend

  • Fintech
  • Enterprise software
  • Health
  • Energy
  • Transportation
  • Food
  • Marketing
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

I believe a significant technology opportunity right now in Europe is in fintech.

I believe a significant technology opportunity right now in Europe is in fintech. A tougher macroeconomic landscape, negative interest rates and looser monetary policy has the potential to open up the way for exciting new business models, as incumbents face solvency risks and continue to lose ground in the face of disruptive innovation. In my opinion this will be beyond payments, trading and other technologies we’ve seen emerging in recent years and could mean a fundamental reshaping of government financial infrastructure including benefits, taxes and subsidies.

Akshay Naheta

SoftBank Investment Advisers

Managing Partner

European tech companies in fintech, enterprise software, energy, health and food have been the greatest beneficiaries of the increased investment in 2019, collectively seeing a boost of more than $11B in capital invested compared to 2018.

Absolute change by industry vertical of capital invested ($M), 2018 versus 2019

Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

Owkin for example, has over 50 European data scientists working on multi-modal analysis and interpretable AI, and our lab is widely considered one of the best life science AI teams in the world.

Europe has always had outstanding educational product and this favours health technology, particularly at the important confluence of biotech and infotech where Owkin plays. This requires highly technical mathematicians, engineers, and developers who are broad minded and can apply their discipline to the complex field of systems biology, drug discovery and drug development.

Our biggest challenge in Europe has been retaining talent and not losing it all to Silicon Valley, but as mentioned above, am improving regulatory and investment culture, as well as some real lifestyle advantages of living in a European city is encouraging a lot of our top PhDs and post-docs to stay in Europe. Owkin for example, has over 50 European data scientists working on multi-modal analysis and interpretable AI, and our lab is widely considered one of the best life science AI teams in the world.

Thomas Clozel

Owkin

Co-Founder & CEO

The fastest-growing industries in terms of percentage change year-on-year in 2019 include security, energy and food.

% change by industry vertical of capital invested ($M), 2018 vs 2019

Note:
Includes only verticals with $450M+ capital invested in 2018. All Dealroom data exclude: biotech, secondary transactions, debt, lending capital, grants. Note the data also excludes Israel. 2019 annualised based on data up to September 2019.

Investments into European deep tech companies are on track to break another record of $8.4B in 2019, up from $6.7B in 2018 and $3.0B in 2015.

Capital invested in deep tech


2.8x
the investment level of 2015.

Capital invested ($B) in European deep tech companies

Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

There is a strong increase in capital for deep tech companies across Europe....that said, the amount of invested capital still isn’t representative of the quality and potential value of the deal flow in Europe.

There is a strong increase in capital for deep tech companies across Europe. Companies like Ynsect, Orcam or AMSilk are demonstrating that you can leverage converging technologies to generate real value in large, global and complex industries. Recognizing these opportunities, investors (and acquirers) from Europe and abroad are investing in European deep technology assets (a majority of US acquisitions are now for deep tech companies). At the same time, a new generation of EU policymakers seeking to maintain “technological sovereignty” are creating incentives that help derisk investments in those businesses.

That said, the amount of invested capital still isn’t representative of the quality and potential value of the deal flow in Europe. This imbalance is especially striking when you consider the size of market opportunities these companies are pursuing, such as meat ($1 trillion), construction ($10 trillion) or clean energy ($2.5 trillion). Capital, in other words, remains unequally distributed across the spectrum of opportunity. Two main reasons for this “funding gap” (1) many VC investors do not have the expertise and structures in place to assess and support those companies, and (2) some historical attributes of deeper technology investments (time to market, capital intensity...) still hinder investors even though these aren’t applicable across all types of deep tech companies.

Sofia Hmich

Future Positive Capital

Founder

Artificial intelligence dominates capital invested in deep tech whilst quantum has yet to make its leap in Europe. In 2019, European companies categorised as 'AI' companies raised nearly $5B, the largest single sub-category.

Investment in AI companies


$4.9B
Capital invested in 2019 into European tech companies categorised as AI companies.

Capital invested ($M) by deep tech sub-category

Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

AI also dominates the number of deals invested in deep tech companies.

Number of deals by deep tech sub-category

Note:
Hardware includes hardware manufacturing. All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 annualised based on data to September 2019.

The UK is Europe's leading destination for deep tech investment, attracting $2.9B in 2019 and close to $10B cumulatively since 2015. France and Germany are also European deep tech powerhouses and saw a combined $2B invested in those countries in 2019. Looking beyond the Top 10, Romania stands out thanks to the large sums invested into UiPath, arguably Europe's fastest-growing deep tech champion.

Capital invested ($M) in European deep tech companies by country

Legend

  • 2014-2018
  • 2019
Note:
2019 annualised based on data to September 2019. Romania figures might be overstated due to $570M UiPath round taking place in 2019.

Quantum is a small but important emerging category for deep tech investments. On a global basis, cumulative investments into quantum companies has reached more than $600M and this is likely to miss a number of companies in stealth mode due to the sensitive nature of their technology.

Number of deals and capital invested ($M) in quantum globally

Legend

  • Capital invested ($M)
  • # of deals
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital. 2019 annualised based on data to September 2019.

European strength in deep tech is also extending itself into new sub-categories that are growing in importance as destinations for global investment. Quantum is a great example of how the region's research strength at European universities (such as Bristol, Innsbruck, Oxford and UCL) is helping to underpin Europe's position as a competitive force on the global stage.

Share of quantum deals (%) by region

Legend

  • United States and Canada
  • Europe
  • Asia
  • Rest of world
Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital. Please also note Europe data excludes Israel but is included in 'rest of world'. 2019 based on data up to October 2019.

The brand of Bristol where we are based is now recognised globally. We are on the map.

10 years ago, UK founders would go to Silicon Valley and be asked, ‘when are you going to relocate here?’ That’s no longer a question. Now the question is, ‘How can I invest in this incredible opportunity?’

That’s proof of the shift in external perception about the UK ecosystem. This reflects the work that the British government has done to promote the UK, but also the large number of highly successful tech firms that have come out of the UK. Now there are entrepreneurs who have ‘been there and done it.’ There are role models that the next generation can look up to, and that is fuelling even greater levels of aspiration and ambition.

And it’s not just the UK as a whole, the brand of Bristol where we are based is now recognised globally. We are on the map.

Nigel Toon

Graphcore

Co-Founder & CEO

Though many European quantum companies remain in stealth mode, a growing number of promising quantum companies have raised early-stage rounds in the past year. Although not included in the below, a few of these companies have also benefitted from grants from the European Union - Beit for example received an additional $2.6m.

Selected early-stage deals raised by European quantum computing companies in 2019

Note:
All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel.

Share this article