December 4th, 2017

EU Tech Industry to Reach $19BN Investment from Venture Capital As 5 Trends Show Huge Potential

eu-tech-investment

According to the 2017 State of European Tech Report, released by Atomico at Slush, the European tech industry is set to see a considerable growth in investment thanks to 5 key trends that have lead to the report predicting that it could see $19BN invested into it before the close of 2017.

The co-sponsor of the latest report, Orrick, have advised on more European venture capital investments and M&A exits globally than any other law firm this year, and has lead to a partner within their Technology Companies Group, Chris Grew, to draw the conclusion that the European market should be considered to be a ‘power broker in the global technology ecosystem’.

“This edition of the State of European Tech Report confirms that Europe has arrived as a power broker in the global technology ecosystem and celebrates another record year for European tech investment overall.”

Chris Grew, Partner of Technology Companies Group

Grew’s comments were made based on the firm’s belief that “Europe leads the world in several essential sectors”, highlighting its mobile and FinTech advances as well as accrediting it with some of the largest advancement in AI, cryptocurrencies and ‘deep tech’, while also revealing that Europe has become the fastest growing region for M&A activity in the world.

Drawing on his experiences of the past year, Grew revealed that his firm felt that there was a fundamental shift happening within the European industry, saying that traditionally it would be European companies that were looking towards Silicon Valley for exit strategies, however, they now believed that European’s were seeing the US as a suitable destination to acquire, expand and demonstrate their success.

The thoughts of Grew are seemingly backed up through proof that European companies have once again seen the amount invested continue to lead other prime countries, with the UK once again being the largest destination for capital investment, with $5.4BN invested in 2017 compared to Germany ($2.5BN) and France ($2.1BN) according to figures released by Dealroom.co.

While the UK continues to lead the way in terms of capital investment, there was considerable growth within the region associated with ‘deep tech’, seeing $1.8 billion invested this year, a large jump in the figures that revealed that between 2012 and 2016, ‘deep tech’ had previously secured $2.4 billion.

 

The 5 Trends That Aided EU Tech Industry Investment

 

1. Strong foundations with a healthy landscape

While the year looks set to mark a new record investment for EU tech, with just over $19BN invested compared to 2016’s $14.4BN, it has also risen to become the year that has recorded a new record high for $50 million+ rounds than previous years – being on track for more than 50 in 2017.

The previous all-time record stands at 43 rounds back in 2015, however, this year has seen an increase in the number of successful rounds that originate from outside of both UK and German markets, with markets such as the Netherlands, Spain, Finland and Slovenia also within the successful rounds to date.

2. Growth of deep tech across Europe

deep tech and bitcoin

Cryptocurrencies like Bitcoin continue to drive the EU markets forward as deep tech sees 40% increase on 2016 figures

Deep tech continues to thrive in the European market this year and is set to end the year with a 40% increase in investment compared to the previous year, with a record $3.5 billion invested in 2017.

One of the main contributions towards such an impressive increase in investment has been the willingness of Europe to put itself ‘front and centre’ in the growth of activity across the crypto/blockchain economy.

The continued development of blockchain development across European based projects that are using the new ICO model to raise capital in Europe has seen the market record bigger growth than any other region worldwide.

3. Emerging regulation set to create an opportunity for competitive advantage

There has been a broad acceptance throughout the European tech industry that regulatory changes need to be made in order to create development incentives for companies that are within the AI, blockchain and autonomous vehicle industries, with a shared option that these changes should be considered a priority.

4. A new collaborative approach to EU markets continues to thrive

With the advancement of technology moving at a considerable rate, the number of funding rounds that have included at least one corporate investor has climbed significantly, with 637 funding rounds in 2017 involving at least one corporate partner, an increase of 600% on figures shown for 2012.

It is also widely believed that about 20% of all venture funding in Europe now has ties to corporate investment.

5. Competitive battle for tech developer talent

While the number of professional developers is claimed to have reached 5.5 million this year, the UK continues to be considered as the number one destination when those professionals are looking to migrate into the European market, albeit with an expected share loss to other dominant European countries such as Germany and France.

With the top destinations for developer migration continuing to be dominated by European destinations, the health of the European tech industry continues to strive collectively.

 

Reference / Sources

2017 Investment Statistics – Dealroom.co

2017 State of European Tech Report – news.atomico.com

European tech industry set to receive record $19BN investment – Information Age

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