Much has changed since we presented the first State of European Tech report in 2015. That year, President Obama was marking the first anniversary of the climate agreement with China, while the European Council was reflecting on UK Prime Minister David Cameron's letter outlining the UK's future relationship with the bloc. The future has a habit of making a mockery of past predictions, but sometimes they do hit the mark. Back then we believed that tech in Europe had experienced a breakthrough year which would become the platform for greater success. This belief was not misplaced.

At this point, we were amongst a growing but still limited number of people who truly believed in the ecosystem's potential. Belief is as vital as talent or capital when it comes to building tech companies. However, in 2015, belief in the European ecosystem was limited to the European tech industry itself.

Fast forward to 2019, and while the world's media may have focused on Chinese-US trade disputes and volatility on the public markets, European tech has quietly increased its number of external believers. We see this everywhere, from the increased time top US investors are spending on the ground here to the fact that a fifth of European rounds this year had at least one US or Asian investor participating - a proportion which grows as the deal size increases. VCs are reporting increasing interest from global LPs, while previously unconvinced European Institutional Investors are now fully engaged. We're also seeing valuations and pre-emptive term sheets on the increase in Europe - always a sign that competition to invest in the best tech companies is accelerating, as well as a reflection on the quality of the opportunity.

In fact, European tech companies are performing at a level exceeding the expectations of all but the most optimistic. In 2015, we celebrated $10B of investment into the region's tech companies. This year, $35B seems par for the course. That year, our report concerned itself with the late-stage funding gap: in 2019, 40 different European tech companies were able to raise $100M+ rounds. To date, there are now at least 174 European tech companies that have scaled to a valuation of over $1B - including 99 venture-backed companies.

However, we can't afford to be complacent - or to lose focus. Now that we've instilled the external as well as internal belief, it's up to us to shape our own destiny when it comes to the future of European tech. We hope this report provides inspiration and guidance: we need to address our D&I issues, acknowledge the importance of well-being, foster a generation of purpose-driven companies, reinforce the density of our networks of people and capital, and end the disconnect between policymakers and founders.

A word on our D&I issues: we won't realise our full potential until we stop squandering talent and value. If we can ensure that all demographics and experiences feel safe and confident to participate, we will have a huge competitive advantage over other parts of the world that are less inclusive.

We hope this report is a useful piece of research which acts as an evidence-based riposte to lazy clichés about the ability of Europeans to build tech companies. However, this report isn't the last or only word on European tech. We encourage you to take the time to travel to the cities beyond those you'd normally visit, and live and breathe the wide and varied tech scenes that together represent the biggest driver of economic growth across Europe.

We write this report to shine a light on the European tech system. It deliberately provides a macro look at the landscape, and is intended as a study useful to as many people as possible. This means we have to sacrifice the telling of many granular stories that really bring European tech to life. The fact is, every hub has its own incredible story with its own micro cast of founders, employees, companies, investors and universities helping to advance tech locally as well as regionally.

Here at Atomico, we have invested in 20 cities across 15 countries, but we are very mindful of the fact we have blindspots. Each year we're delighted that European tech is getting more interconnected - it's on each of us to bring this to fruition, and to ensure these connections continue to be made. By building a density of talent and experience, we'll see the European tech community's common knowledge more efficiently passed on to future and current generations of European founders.

Doing this will help us achieve density in Europe: by ensuring talented developers and researchers are being matched with capital evenly across the continent, our already rapid progress will accelerate still more.

When we started in 2015, we believed that European success was being ignored. Today, belief in European tech comes from both outside our ecosystem as well as from within. It's accepted that you can raise the money you need, hire the best team, and scale internationally without having to migrate to the US. In fact, nothing demonstrates this shift more than the influx of US capital to the ecosystem - commitments to European VC funds from US LPs increased five-fold in 2018.

That said, we do need to make sure we don't fixate on the US or even China. We need to chart our own course and build our own tech ecosystem upon our own strengths and values. Our strong investor base, developing from seed to growth stage, has contributed to a real diversification of European tech. As you'll see, where once we were mostly consumer, we've developed a strength in areas like enterprise software and frontier tech too.

Finally, we also hope that this report also serves another purpose - that it provides information which leads to genuine change and improvement in our ecosystem.

We have much to be proud of, and much to work on.

This year we celebrate the fifth birthday of our report. More importantly, we are celebrating five years of astonishing growth in the European tech ecosystem. A comparison between where we are now with where we were in 2015 shows how far Europe has come: from the proliferation of unicorns to our deepening pools of talent, we have much to be proud of. Unfortunately, as the chart below shows, we have not made nearly enough progress with our funding of teams with diverse leaders.