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Investment Snapshot
Unlike in the US and Asia, where investors pulled back from record levels of investment in 2018, investment in European tech continues to grow. Despite a decline in the US in 2019, the volume in capital invested in the US will still end up at around 3.4x the level of Europe for the year.
Q2 2019 saw more than $10B invested into European tech companies in a single quarter for the first time ever. During the first nine months of the year, European tech companies have raised an average of around $3.3B per month.
Capital invested in Q2 2019
- $11.6B
- 2019 Q2 saw the largest ever quarter for capital invested in European tech companies.
There will inevitably be ups and downs in terms of the sequential quarterly sums invested into European tech companies, but taking a trailing 12-month view on capital invested shows the long-term, upward trajectory of capital invested in the region.
It does feel like we are in a golden age for Europe now: the quality of talent, the level of ambition and availability of capital are at a completely different scale
We have always had world class technology and invention in the region but it does feel like we are in a golden age for Europe now: the quality of talent, the level of ambition and availability of capital are at a completely different scale. European startups are building globally-defining consumer and enterprise businesses with great success. Spotify, UiPath, Adeyn are all strong examples. I think these and other role models have been decisive in inspiring a new and accomplished generation of founders, who are now choosing entrepreneurship as their career path.
The increase in large-scale deals of more than $100 million is driving the growth of total capital invested in Europe. In 2019, these deals accounted for 36% of all funding raised by European tech companies.
Capital invested ($B) and number of deals by round size
Legend
- $0M-$2M
- $2M-$5M
- $5M-$10M
- $10M-$20M
- $20M-$50M
- $50M-$100M
- $100M+
- 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.
Mega deals
- 36%
- of all funding raised by European tech companies was driven by deals over $100 million
A small number of giant deals have a material impact on the annual level of capital investment in European tech companies. The Top 3 deals in the first nine months of 2019 alone sum to $2.4B.
Total capital invested ($B) per year, divided by Top 3, 10, and all other deals
Legend
- All other deals
- Top 10 deals
- Top 3 deals
- Note:
- All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2019 based on data up to September 2019.
Europe's greatest challenges: despite the recent and highly welcome capital inflow, we need even more capital, especially in later and growth phases to grow really big European companies of global importance.
Europe's greatest challenges: despite the recent and highly welcome capital inflow, we need even more capital, especially in later and growth phases to grow really big European companies of global importance. And we need to produce more IPOs to include the wider public in the economic benefits of startup investing. And we still lack the large number of serial entrepreneurs like the US has coming out of these scale-ups and the IPOs who recycle their capital and talent into the tech ecosystem. Europe's greatest strengths are clearly our education system, our cultural diversity and the vast quantity and high quality of our tech founders. This is paired with lower entry valuations compared with the US and Asia, resulting in very capital efficient investment opportunities.
For additional context on annual capital investment into the European tech ecosystem, it is important to understand there is a material trend in effect that means many rounds are only captured after a significant delay (see note). This 'reporting lag' means that the final totals are not known until a significant time period has elapsed after the end of the year in question. Accordingly, we have indexically adjusted the annual totals to account for this reporting lag to enable a like-for-like comparison of overall investment trends at the European level.
Capital invested ($B) adjusted for reporting lag effect
Legend
- Actual amount ($B)
- Adjusted for reporting lag ($B)
- Note:
- The reporting lag is the difference between the date of a round's disclosure & the reported date of a round's occurrence, resulting in a material % of rounds being added after a long delay. This is estimated at 95% for 2018 and 2019 projected.
As above, it is important to take into account the 'reporting lag' (see note) to enable a like-for-like comparison of the number of deals at the European level.
Number of deals adjusted for reporting lag effect
Legend
- Actual number of deals
- Adjusted for reporting lag
- Note:
- The reporting lag is the difference between the date of a round's disclosure & the reported date of a round's occurrence, resulting in a material % of rounds being added after a long delay. This is estimated at 85% for 2018 and 80% for 2019 annualised.
Despite the record levels of investment into Europe, more founders believe it has become harder to raise venture capital in Europe over the past 12 months compared with those who believe it has become easier. This is the first time this has been the case over the five years we've asked this question to founders as part of this report.
Founders of larger companies (100+ employees) and founders who have raised more external capital take a significantly more favourable view of the VC fundraising landscape.
Amongst founders who are women, twice as many said it has got harder to raise venture capital in the past 12 months versus those that said it has got easier, though around half believe the fundraising environment remains unchanged.
Europe saw an increase in mega funding rounds of $100M+ in 2019, including six rounds of more than $500M.
We are on an overall good wave: more capital, more startups from seed to large, late rounds, more exits.
There is still a large capital gap regarding the US and China situations, but we can see very encouraging recent signals: the €100 billion EU Commission future fund and the €5 billion investment announcement from President Macron in France, for instance. We are on an overall good wave: more capital, more startups from seed to large, late rounds, more exits. We should all keep up the good work to position Europe as the key place for technology!
I take a long view on European tech, I'm old enough to remember how far we have come and to understand we still have a way to go yet. Plus, Brexit has changed the picture a lot, so progress based on the work done the year before isn't as inevitable as it perhaps was.