Atomico’s 2021 State of European Tech report has just been published. Along with Slush and with support from Orrick, Silicon Valley Bank, and Baillie Gifford, this report outlines the most significant improvements of the European startup ecosystem during the last year.
The report provides an insightful and comprehensive analysis of 45 different European countries. The key findings of the report showcase that Europe is becoming the next global player in tech, with a record of $100B of capital invested in one year and 100 new unicorns consolidated.
Most importantly, this report outlines the improvements of the Dutch startup ecosystem against competitors within the European continent. Data shows that The Netherlands has experienced 2.6x as many startups per 1M population - ahead of the UK and France. Additionally, the report reviews in detail the characteristics that are making the Dutch startup ecosystem stronger than ever: solid foundations for new startups and companies scaling up.
On December 7th, the report will be presented by various actors in the startup ecosystem, including Janneke Niessen from Capital T. You can register for the event here.
The Netherlands emerging as Europe’s hottest tech hub
As Europe looks set to hit the milestone of $100B invested into its technology industry in a single year, the latest data shows a continent solidifying its place as a global tech power, according to Atomico’s annual State of European Tech 2021 report. With early-stage investment levels now on par with those of the US for the first time, and the number of new unicorns soaring, Europe’s tech industry is growing faster than it did before the pandemic, adding $1T of value in the first 8 months of 2021 alone.
The report, an annual deep dive into European tech industry data across 45 countries, is published in partnership with tech conference organizer Slush, and with the support of Orrick, a global tech law firm, Silicon Valley Bank, and Baillie Gifford. “Europe is undergoing a technological revolution with profound effects across economies, societies, and the environment, driven by two irreversible trends: one, which is not unique to Europe, is the relentless march of technology. The other is what we call the European tech flywheel -- a set of incredibly strong foundations including a deep talent pipeline, exceptionally strong founding teams, and a healthy pool of investors at all levels -- that spins out unicorns and creates value at ever-increasing frequency and magnitude,” said Tom Wehmeier, Partner at Atomico, and co-author of the report. “These two trends set up Europe's tech ecosystem to prosper even if macro conditions change.”
“The market is also becoming more liquid with the convergence of different types of investors and increasing appetite from the public markets,” added Sarah Guemouri, Senior Associate at Atomico, and co-author of the report. “Even in a conservative scenario, we expect European tech to at least double in the coming decade and add trillions of dollars worth of value.” The report outlines 5 key trends:
1. Europe solidifies as a global tech player; the Netherlands strengthens its position further
- After years of building the ecosystem, European tech is on track to cross the $100B milestones of capital invested in a single year, close to 3 times the level in 2020. $5B was invested in the Netherlands. (Source: Dealroom)
- The total number of tech companies that have scaled to $1B+ in Europe has jumped from 223 last year to 321. 20 of those originate from The Netherlands. (Source: Dealroom, Atomico)
- Europe has its strongest ever pipeline of early-stage startups with the region accounting for 33% of all capital invested globally in rounds of up to $5M. This makes Europe the second region globally when it comes to early-stage investment, with a total of $3.8B vs the US at $4.1B. (Source: Dealroom)
- The era of billion-dollar funding rounds has now arrived in Europe. So far this year, the top 10 funding rounds by size have accounted for more than 10% of all capital raised. Two of those were from companies based in the Netherlands: MessageBird and Mollie. (Source: Dealroom)
- The count of startups in Europe continues to rise. On a per-capita basis, The Netherlands occupies the 8th position in Europe with 2.5x as many startups per 1M population than the European average, ahead of the UK and France. Estonia and Ireland both maintain their position in the top three. (Source: Dealroom)
- Europe has now seen unicorns emerge from 28 different countries across Europe. In 2021, With 20 $1B+ VC and non-VC backed tech companies, The Netherlands maintains its position in the top 5, behind the UK, Germany, France, and Sweden. (Source: Dealroom)
2. Outcomes are exceeding projections in both public and private markets; The Netherlands represents nearly half of the value added by companies on European public markets this year
- Over the past 12 months, Europe has added over $750B of public tech market cap value and currently sits over $2T. (Source: CapIQ)
- Europe continues to produce more tech IPOs than the US with 122 IPOs versus 89 for the US in 2021, however, more needs to be done to address the impediments to large-cap IPOs taking place in Europe. (Source: CapIQ)
- Blockbusters IPOs ($10B+) are becoming the norm. The largest IPO of 2021 is Romanian company UiPath, debuting at around $35.6B after opening day gains. Other large-scale public listings included Auto1, Wise, and Deliveroo, which all traded above $10B on their first day. (Source: Atomico)
- 15 European tech companies have gone public via SPACs in 2021 for a combined EV of $62B. 14 of the 15 companies are now listed on US exchanges. 13 of the 15 were VC-backed. They cover key tech areas, such as quantum computing, electric mobility, semiconductors, fintech, and digital health. 9 out of 15 companies from the UK - all of them went public in the US on US exchanges. (Source: CapitalIQ)
- The top 10 countries in terms of public market cap remain the same, apart from the Netherlands ($0.85T) which shot up to fourth place above South Korea ($0.79T) and Japan ($0.66T) - due to the large spike in Adyen's market value over the past year. (Source: CapIQ)
- The Netherlands is now home to European public tech giants (including Proses, ASML, Adyen), contributing to the spike. The value added by companies headquartered in the Netherlands in the last 12 months represents 47% of the total European gains, followed by Germany. (Source: CapIQ)
3. European fintech is soaring; ‘Planet Positive’ startups gain traction
- In absolute terms, fintech had the most significant increase (+132%) with investments growing from $9.4B in 2020 to $21.7B in the first nine months of 2021, followed by enterprise software at +$5.9B (89% increase) and transportation at +$4.9B (95% increase). (Source: Dealroom)
- 1 in 5 European unicorns is a fintech company (and that number rises to 1 in 3 for private unicorns). This also includes 4 of the 10 most valuable tech companies in Europe. (Source: Atomico)
- Crypto and blockchain deal count is up 5x in Europe over the past 5 years but lags behind the US. Still, Europe already has 8 crypto unicorns. (Source: Pitchbook, Atomico)
- Over $34B has been invested in purpose-driven tech companies in Europe in the last five years, representing 17% of all funding. Purpose-driven companies are defined as companies building a sustainable future for all by addressing one or more SDGs. (Source: Dealroom)
- Planet Positive investments -- defined as companies working to make sustainable use of the planet’s resources -- captured 11% of total funding overall in 2021, with Clean Energy and Climate tech startups capturing the lion's share of funding with 24% and 19% respectively of all capital invested in purpose-driven tech companies in 2017-2021 YTD. (Source: Dealroom)
4. Access to funding and talent are key challenges for European tech founders, but a virtuous cycle of talent is well underway; filling tech jobs is particularly difficult in the Netherlands
- Although the depth of the talent pool is improving, there is a pipeline problem as it becomes increasingly more difficult to acquire talent for close to half of the founders. This is particularly true once again in the UK, but also in the Netherlands, and Spain where 61%, 60%, and 59% of respondents respectively indicate a harder time in acquiring talent. (Source: State of European Tech survey 2021)
- The large share of hard-to-fill tech jobs (tech jobs that have been unfilled for over 60 days) stands in the way of the future progress of the European tech industry. The issue is particularly bad in the Netherlands where 56% of tech jobs in October 2021 were hard to fill, compared to only 37% in the UK. (Source: Indeed)
- Based on Extend Ventures analysis of a sample of 4,684 tech companies headquartered in Europe that have raised more than $2M of total funding since 1st of January 2020, only 0.7% of the total capital raised to date has been raised by Black women founders, 1.1% by Black men founders, 22.7% by white women founders (Source: Extend Ventures)
“European tech is at an inflection point. The current record level of investment is a culmination of many years of groundwork that is now paying off,” said Chris Grew, a London-based partner at Orrick, the leading European tech legal advisor for 23 consecutive quarters. "We are experiencing amplified interest from global investors seeking access to the European tech ecosystem, and significant exits are giving founders access to more opportunities than ever before. These are extremely exciting times and Orrick is proud to play its part.”
Miika Huttunen CEO, Slush: "It seems like only yesterday that Slush and Atomico co-authored the first State of European Tech report in 2015. Back then, we felt rather alone in our belief in the European tech ecosystem. Six years later, the story couldn't be more different. In our inaugural report, we celebrated $10B invested in European startups. Today, we're on track to $100B. We also regretted the lack of a big European technology company. Now, it's only a matter of time before Adyen, Spotify or Klarna will break $100B in market cap. To have reached these milestones amid a global pandemic is one of the greatest displays of human perseverance in history. Most importantly though, even we couldn't have dreamt of a future in which Europe compares to the behemoth that is the US. To that end, it is striking to see that we are now on par with the US in the volume of early-stage investments. This squarely proves that the heydays of European tech remain ahead of us.”
Erin Platts, Head of EMEA & President of the UK Branch, Silicon Valley Bank: “The European Innovation Economy has proven itself as a leading global hub for innovation over the past decade and is now at a pivotal point in its maturity. We believe we are at the start of a golden era for European innovation. 2021 has been without a doubt the finest year for the European innovation ecosystem with a record $100bn expected to be invested by the end of the year. Our ecosystem is flourishing, we now have the depth, breadth, and international demand that has made Europe a tech powerhouse. We’re optimistic that we will see our innovation ecosystem go from strength to strength as it becomes more attractive and, the larger it becomes. It is possibly the most exciting time within the innovation industry and the center of gravity is shifting with Europe taking a prominent role on the world stage.”
The report’s key trends will be discussed at a digital event on December 7th at 16:00 GMT with insights from some of Europe’s most prominent founders and investors including Janneke Niessen (Capital T), Corinne Vigreux (TomTom), Sebastian Siemiatkowski (Klarna), Karl Lokko (Black Seed), Ilkka Paananen (Supercell), Miki Kuusi (Wolt) and Niklas Zennström (Atomico). Registration is available here.