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The fledgling startup sector in Europe has seen trailblazing growth over the past couple of years in funding, with more than 300 unicorns.
According to venture capital firm Atomico, startup funding in Europe, specifically the tech space, is set to rake in a record $121 billion this year. This is the first time that the region is recording an annual investment haul exceeding $100 million. Furthermore, this impressive sum is also approximately three times the $41 billion in generated capital that Europe realized from last year.
Optics Currently Look Good for Startup Funding in Europe
The stellar performance of startups in the European region underscores a period of surging valuations and prolific dealmaking. In addition, the total number of tech companies in Europe with over $1 billion in valuation now tops 320. Furthermore, almost 100 of these ‘unicorn’ companies came into operation in 2021. This is a testament to the fact that investors have increasing faith in the spiking European tech industry. In addition, out of the unicorn roster are also 26 companies, loosely termed ‘decacorns,’ which are worth $10 billion or higher. They include Swedish fintech firm Klarna, London-based fintech and financial solutions company Revolut, as well as API platform Checkout.com.
Head of insights at Atomico Tom Wehmeier summed up the entire situation:
“It’s been a defining year for European tech. I think what we’ve seen in the numbers is that European tech is creating value faster than ever.”
Furthermore, data firm Dealroom posits that Atomico’s most recent annual report on European tech reveals a surge in equity value. According to the “State of European Tech Report,” the total equity value of European tech companies in the public and private markets combined exceeded $3 trillion for the first time this year. Wehmeier suggested that this was not an easy feat, explaining that it took decades of the region’s tech space to hit the first $1 trillion equity value. As he put it:
“We got to that milestone only three years ago, in December 2018. And then we went from $1 trillion to $2 trillion in 24 months, and then this year, the most recent trillion has been added in eight months.”
Wehmeier also added that tech startups benefited immensely from the increase in adoption of online services during the Covid pandemic.
The European-US Dynamic
European tech companies trailed their US counterparts for sustained periods across several years. However, these companies are beginning to gain momentum by increasingly channeling tried-and-tested technical know-how into new ventures. Many of these talents cross over from ‘sympatric’ endeavors such as e-commerce and finance. For instance, leading investment firms such as Sequoia Capital and Coatue Management are in various stages of establishment in Europe. This trend further suggests that more money would undoubtedly circulate through and around the region.
On the flip side, the European region witnessed a record number of companies ceasing to exist through mergers and acquisitions and even IPOs. The total enterprise value created by these activities was about $275 billion.