European tech booms, but Southern Europe and founder diversity still lagging

– Europe is solidifying as a global tech player European tech is projected to cross the \)">100B milestone of capital invested in a single year, close to 3 times the level in 2020. (Source: Dealroom)

The total number of tech companies that have scaled to 250M+) are now the norm in Europe — these grew 10x versus last year, now representing 40% of the total capital invested in the region. (Source: Dealroom)

Europe has its strongest ever pipeline of early stage startups with the region accounting for 33% of all capital invested globally in rounds of up to 3.8B vs the US at 750B of public tech market cap value and currently sits over 10B+) are becoming the norm. The largest IPO of 2021 is Romanian company UiPath, debuting at around 10B on their first day. (Source: Atomico)

15 European tech companies have gone public via SPACs in 2021 for a combined EV of 180B and has exceeded 2020 levels — this is the highest it has been in the last five years. 2021 has been a record year so far for dealmaking, with a total of 47 100B mark, with their valuation reaching a 2021 YTD high of 9.4B in 2020 to 5.9B (89% increase) and transportation at +34B has been invested in purpose-driven tech companies in Europe in the last five years, representing 17% of all funding. Purpose-driven companies are defined as companies building a sustainable future for all by addressing one or more SDGs. (Source: Dealroom)

Planet Positive investments — defined as companies working to make sustainable use of the planet’s resources — captured 11% of total funding overall in 2021, with Clean Energy and Climate tech startups capturing the lion’s share of funding with 24% and 19% respectively of all capital invested in purpose-driven tech companies in 2017-2021 YTD. (Source: Dealroom)

– Access to funding and talent are key challenges for European tech founders, but a virtuous cycle of talent is well under way

This year, Atomico partnered with Dealroom and Extend Ventures to carry out the biggest ever analysis of the talent pipeline in Europe, screening over 45,000 profiles of founders and senior leaders working across close to 5,000 European tech companies. Close to 40% are multi-generational leaders having worked for both more established tech and younger companies.

Close to 1 in 5 have gained experience in a 2M of total funding since 1st of January 2020, only 0.7% of the total capital raised to date has been raised by Black women founders, 1.1% by Black men founders, 22.7% by white women founders (Source: Extend Ventures)

Despite evidence showing that mixed and diverse teams perform better — they still only capture 9% of the capital raised in 2021. (source: Dealroom)

Although the ecosystem has matured as a whole, this is not the case everywhere

Despite having close to 30% of the European population, the CEE region has the lowest inflow of capital into its venture ecosystem amongst all the regions. (Source: Invest Europe)

– Pension funds need to step up

Pension funds ($3T in total assets) continue to disappoint in allocations to VC (less than 0.03%). Pushing that allocation to just 1% would be a seismic shift. (Source: Invest Europe)
Smart policy could be a competitive advantage on the global stage

Tech is flourishing in Europe, but it has so far been in spite of rather than thanks to policy and regulatory conditions. Yet smart policy can make the flywheel spin faster and give us a competitive advantage on the global stage.

According to investors, founders and policy experts across Europe, the focus should be on fixing the basics: Lowering the friction on talent, unlocking access to funding for both founders and investors, and harmonising rules between countries. They also think more could be done to make regulation future proof. (Source: State of European Tech survey 2021)

There is optimism for better collaboration between startups and scaleups and regulatory bodies. Across all countries analysed, a larger percentage of respondents said the European regulatory environment is getting better rather than worse with the smallest vote of confidence coming from UK based respondents and the largest from Norway. (Source: State of European Tech survey 2021)

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