Europe’s Tech Scene Is Growing And Raising Large Amounts of Capital

The Tech Narrative Is Changing in Europe

Market watchers say Europe’s tech scene is starting to break out while attracting a significant amount of new fundraising. CB Insights reports European tech firms attracted $93.3 billion of investment capital last year, breaking a record and representing a year-over-year increase of 142%. Acquisitions also surged from 5,746 to 7,051.

Europe’s tech market hasn’t had a tech giant to match those in Asia and the US, but analysts say the environment is much more welcoming at present. Observing recent funding announcements further illustrates the current investor appetite for tech across the continent. Berlin-based grocery delivery company Gorillas, UK online payment company Revolut, and Paris-based phone refurbisher Black Market have all made headlines recently with new rounds of funding.

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Recent efforts undertaken by governments in Europe are part of what’s driving investor optimism in the regional tech sector. France and Germany both launched initiatives within the past year that aimed to encourage tech fundraising. Capital raised will be funneled into venture-capital funds that target startups as well as the direct funding of software-as-a-service companies (SAAS).

Company executives mention other advantages in Europe as well, such as the cheaper cost of hiring when compared with Silicon Valley’s high living expenses. Europe’s tech IPOs are smaller when compared to those in the US, but the number continues to grow. Analysts argue they also offer tech investors a bargain when compared to the higher-valuation US IPO market.

European Tech Investors More Willing to Think Long Term

Venture capital firms describe the European tech scene as advantageous for companies right now with cash flowing into the sector. Investors believe companies that previously commanded valuations aimed at growth over a one-to-two-year period are now tied to a three-to-five-year time horizon. Reports indicate some VC firms are now looking to invest larger chunks of money on any one given deal in order to beat out the growing competition.

Local executives note that while they receive plenty of interest from around the globe, they’re encouraged by European investor activity. Investors located in Europe are reportedly showing more willingness to put money into later-stage tech startups than previously. Clearly, investor cash is pouring into the European tech scene following changes driven by what some call “envy of Silicon Valley.”

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