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01

Key Findings

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The State of European Tech 2019

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Investments

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Investors

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Diversity & Inclusion

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People

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Purpose

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Places

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Policy

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About

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Appendix

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How Founders Get Started

Starting out...

We wanted to explore the initial phase of the founding journey. How do founders finance their companies? Who do they raise those initial funds from? How much do they raise? How do they decide where to build their companies? What personal and business considerations influence their decisions?

Nearly 50% of first-time founders set up and start their companies with less than $25,000. Repeat founders who have successfully scaled companies in the past are far more likely to raise significantly more to start their next companies. 32% of repeat founders with significant experience raised more than $500,000 to set up and start their most recent companies, versus 12% of first-time founders.

How much capital did you 'raise' or collect in order to set-up and start this company?

Source:

Legend

  • First-time founder
  • Repeat founder with limited experience in scaling company
  • Repeat founder with significant experience in scaling company
Note:
Founders only. Numbers may not add to 100 due to rounding.

Looking at the differences between men and women founders and their entrepreneurial experience, we found that women first-time founders were significantly more likely to have set up and started their most recent company with no capital or with less than $25,000. This gap disappears, though, when looking at the differences between experienced men and women repeat founders.

How much capital did you 'raise' or collect in order to set-up and start this company?

Source:

Legend

  • Women
  • Men
Note:
Founders only. Numbers may not add to 100 due to rounding.

We also observed material differences in the responses from founders who self-identified with different ethnic groups. 60% of founders who self-identified as Black/African/Caribbean started their most recent company with no capital or with less than $25,000.

How much capital did you 'raise' or collect in order to set-up and start this company?

Source:

Legend

  • No capital
  • Less than $25k
  • $25k-$100k
  • $100k-$500k
  • More than $500k
Note:
Founders only. Numbers may not add to 100 due to rounding.

Starting with less than $25k

55%
of women first-time founders start their company with no initial capital

Source:

The State Of European Tech Survey

The survey doesn't allow us to explore the relationship between the initial financing and the eventual success of a company. What we can say, though, is that founders of companies that have scaled to more than 100 employees are more likely to have set up and started with a larger sum of initial financing compared with founders of companies where the employee count is still less than 100 employees.

How much capital did you 'raise' or collect in order to set up and start this company?

Source:

Legend

  • <100 employees
  • >100 employees
Note:
Founders only. Numbers may not add to 100 due to rounding.

The need for funds focused on diversity is as important as the need for insights and related to diverse founders - and there is zero data on black founders in the UK. This is why I started interviewing black founders and creating a database with their permission. It is important to shine a light on the differences, especially as black founders have become synonymous with a seemingly perpetually fixed 0.2% funded statistic or the fact that 67% of those I surveyed mentioned that they were struggling to meet their needs before starting a company, compared to 19% of the respondents surveyed by Atomico. It’s time that black founders have realistic insights and perspectives as to what it takes to be a black founder and know that there are others in their ecosystem like them. This will hopefully create a clearer path for future black founders and the investors who back them.

Andy Davis

Backstage Capital

We also wanted to understand how founders finance the initial setup of their companies. The overwhelming majority of founders (around two-thirds) did so by tapping into their personal savings. The sources of initial funds vary significantly, however, depending on the level of experience of the founders. As one might expect, repeat founders with previous success are significantly more likely to have used angel investments and VC money for initial financing.

How did you finance the initial set up and earliest phase of your most recent company?

Source:

Legend

  • First-time founder
  • Repeat founder with limited experience in scaling company
  • Repeat founder with significant experience in scaling company
Note:
Founders only. Numbers do not add to 100 as respondents could select multiple choices.

It's interesting to look at how the sources of initial financing raised by founders to start their journeys vary across Europe. There is a material level of variance in the most prevalent form of initial funding depending on where you start your company. In the Nordics, for example, government grants are a much more common source of initial financing for founders in those markets. In France, there's a higher likelihood of obtaining a corporate grant than elsewhere in Europe.

How did you finance the initial set up and earliest phase of your most recent company?

Source:
Note:
Founders only. Numbers do not add to 100 as respondents could select multiple choices.

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