With 2021 marking the year of startups, it is hardly a surprise that the tech industry has grown by leaps and bounds. This has held not just for India but across the world as well. While behemoths like Apple and Google have their share of problems, there is no denying their dominance in the market. Now, it seems European tech startups have been catching up.
They have gained momentum in recent times – European startups gobbled up 20% of global fundraising in the first half of 2021. This is an increase from 13-14% in the first half of 2019. Overall, investment in European tech startups reached an impressive $93.3 billion in 2021, which is a record in itself. This was an increase of 142% over 2020, while the number of deals increased from 5, 746 in 2020 to 7, 051 in 2021. The data in comes via CBInsights.
If there is ever a prime time for investors to invest in European markets, the time is now. It is also high time that European tech comes to the forefront, especially since modern times are seeing unicorns produced almost every day and billions are being invested in startups across the world.
Currently, Europe has established itself as one of the fastest-growing regions for venture-capital investment. Out of the over 321 unicorns it has, 98 were added in 2021 alone.
“People have doubted whether Europe can create really big companies because it’s more fragmented and it’s more complicated,” said Zoé Fabian, who oversees growth equity investments in several European countries at private-equity firm Eurazeo. This has changed due to the rise in funding. Additionally, there were 185 European tech IPOs in 2021. While they are small when compared to US IPOs, they are hardly pushovers.
Funds holding European financial stocks have garnered $1.4bn in new client money so far in 2022, according to the Bank of America. Additionally, the total equity value of European tech startups in the public and private markets exceeded $3 trillion for the first time in 2021, and it seems that Europe has $23 trillion of potential value still to be unlocked.
The growth of the European tech sector would not have been possible if there were no favorable policies to aid them. 2021 ticked off the boxes here as well, as French President Emmanuel Macron kicked off an initiative that eyes 10 European tech champions, each worth more than €100 billion, by 2030. Two years ago, an initiative was launched by France which saw institutional investors pledged to invest €6 billion over three years to finance tech companies through private funds.
The atmosphere in Germany is a favorable one for startups as well, as the government launched Future Fund in 2021, the aim of which is to support deep-tech companies as an anchor investor on their way towards capital market maturity. €10 billion of government money and €30 billion in total with private and public partners are being used for the same.