At the end of November, an international investment firm Atomico, together with Slush organizers, presented a magnificent report
Capital deployment beats records
Although investments in tech companies have dipped from $4.4 bln in Q1 to $3 bln in Q3, 2016 is down to become a record year in terms of both investments and deals volumes. This actually draws a positive long-term trend.
More and more new industries are emerging across European ecosystem, with fintech bringing the biggest number of deals. It becomes easier to raise early-stage investments, which is why there is a “healthy and growing pipeline” of early stage companies.
The funding gap between Europe and the US is being narrowed
No secret, Europe has always lacked funds that take actions and encourage late-stage companies’ development. However, the situation is changing: if the local funds are not as big in number, they are becoming truly impressive in size.
Worth mentioning, American funds have been actively participating in European venture deals during the last two years as well: Andreessen Horowitz, Sequoia Capital, and Bessemer Venture Partners. American colleagues explain this with the vision of Europe as an influential market able to provide an excellent prediction of consumer behavior.
Deep tech in focus
The report shows a significant rise within the developer base across such high-tech industries as AI, AR, VR, IoT, machine learning, driverless cars and many more “hot” trends widely discussed in the media these days. Deep tech talent is clustered across the continent in hubs like Berlin, hosting engineering centers of the global tech giants.
What badly prevents deep tech innovation in Europe is the lack of funding, even despite some positive results (since 2015, $2.3 bln has been invested in European deep tech).
Corporations steal the show
According to the report findings, the largest corporations in Europe have acquired over 50 tech companies since 2011, thus signing over 250 investment deals. Meanwhile, the Silicon Valley also made a number of vital acquisitions in the region.
Up to now, European IPO listings fall behind their US counterparts in terms. However, in 2016, European tech IPOs have outrun US ones in number, coming from a wide range of economy sectors such as IT services, software, hardware, semiconductors, and internet services.
Tech talent is rising
People’s perceptions of the tech engineers’ activity in Europe is slightly controversial. This could be a consequence of the irreversible process of the tech community migration from one hub to another. For now, the UK is a top destination for engineers. At the same time, many respondent founders claimed they would like to set up their companies in home countries. And this can only be stimulated if more promotion is done for emerging tech hubs. Despite some misunderstandings, European tech talent is definitely booming, with women actively joining tech entrepreneurs.
A positive outlook
Mostly, the report results arise optimistic expectations in terms of tech entrepreneurship development in Europe, which is supported by the well-organized infrastructure, capital availability, numerous market exits and success stories. Of course, there are many challenges to overcome: funding, talent aversion, taxation and regulation issues, free movement of workers. However, the positive trend will definitely prevail in the nearest years.
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