Europe has seen an immense increase in the number of initial public offerings (IPO) and private equity investments this year. With 30.9 billion EUR in European investment in the last half-decade, Europe is approaching the ‘Golden Age’. This term was coined by Sonall de Rycker, an Accel partner.
Experts are already comparing the Europe public listings to its US counterpart, based on five-year growth from 2015 till present. However, despite its decline over the years, the United States has 4.0x more venture capital investments compared to Europe. When aggregated, the top US tech IPOs are 6.9x larger than the UK top ten tech IPOs.
Technology, the Building Block of the European Economy
According to investors, founders and CEOs of Europe’s leading companies, technology is the driving force in the European economy. The charts tell a different story, as Fintech and Enterprise Software companies have brought 45 billion EUR investments to Europe.
Despite having ‘one of the best life science AI teams in the world’, Sofia Hmich, the founder of Future Positive Capital believes the European tech sector is underinvested. Sofia said, ‘The amount of invested capital still isn’t representative of the quality and potential value of the deal flow in Europe.’
Young Nations Shall Grow, but The Old Ones Die Not
The geographical focus of venture capitalists remains on these three locations: the United Kingdom, Germany and France. It’s also worth noting that less obvious hubs such as Bucharest and Milan are getting more attention from external investors.
The three amigos have a cumulative investment that exceeds 9 billion EUR. However, the United Kingdom is responsible for 50% of the cumulative European fintech investments in 2018. Other countries like Denmark, Austria and Belgium all experienced immense deal volume in 2019.
Twenty-nine 900 million EUR+ (1 billion USD) venture capital-backed tech companies are from the UK. The second and third largest sources of 900 million EUR+ (1 billion USD) VC-backed tech companies are Germany (17) followed by France (11).
This graph shows the Capital Invested (in million EUR) by country, cumulative since 2015 and per year.
In line with Atomico’s report, London is Europe’s tech capital. The home of Big Ben boasts 13,000 distinct tech companies that have been participating in fundraising since 2015. In addition, UK FinTech companies attained huge investment rounds over 90 million EUR.
Many experts expect Europe to maintain this growth by sourcing more funds and breeding more talents. With much hope and optimism, Roxanne Varza, Station F director, said, ‘I am even more optimistic than I was 12 months ago if that’s possible. In the last 12 months, we have seen record funding and birth of the new French unicorns.’
Future of European Investments
The growth of Europe’s IPO is remarkable, but European companies still have to attract more investors to compete with the US on a global scale. According to Daniel Kelper-Knorr, ‘Europe needs more capital, especially in latter and growth phases to grow really big European companies of global importance.’
52% of founders believe the ability to raise venture capital in Europe is the same as it was five years ago. Some (32%) think it is harder while 25% believe it is getting easier.