The State of European Tech 2018


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data-driven analysis of European technology

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2018 Key Findings

What’s changed for European tech in the past 12 months?

It’s been another record year for investment in European tech and the sector is powering growth in Europe’s stagnant economy. Yet not everyone is benefitting from the boom. The gains are not being democratized by investors. Companies need to address diversity and inclusion tools and unlock hidden talent pools.

01

Another record year for investment into the European tech ecosystem

capital invested

$23B

Record sums invested in Europe’s technology ecosystem- $23bn in 2018 up from just $5bn in 2013.

Source: Dealroom.co

tech ipos companies

4 x $5B

There were four tech IPOs or direct listings of European tech companies in 2018 that reached valuations of more than $5B on opening day, including Europe’s largest ever venture-backed publicly-listed tech company, Spotify. In total, Europe contributed three of the top 10 largest tech IPOs globally of 2018.

02

Europe urgently needs to fix its diversity & inclusion problem

capital invested

93%

93% of all funds raised by European VC-backed companies went to all-male founding teams in 2018.

Source: Dealroom.co

gender discrimination

46%

Almost half of women reported that they have experienced discrimination in the European tech sector. This is a point of clear tension with the 75% of respondents who think the culture at their European startup is inclusive. In European tech, discrimination appears to be someone else’s problem.

Source: The State of European Tech Survey, 2018

03

Europe’s tech industry is the best hope for growth for a stalling European economy

tech industry growth

5X

Europe’s tech (software) industry is growing 5x faster than the rest of the European economy in terms of Gross Value Added, a level that has accelerated in recent years.

Source: Eurostat

employment growth

4%

The European tech workforce grew 4% in 2018 (source: LinkedIn), a significant difference to overall EU employment growth of 1.1%.

Source: European Commission

04

The gains from Europe’s tech boom are not yet being democratised

pension fund investment

45X

Pension funds are not yet democratising Europe’s tech sector boom - over the last five years, pension funds have invested just $1.7B in European VC, but have invested 45x more in European buyout funds, equivalent to more than $75B over that period.

hnw investment

$5B

European tech growth and record success has not gone unnoticed by family offices and high net-worth individuals (HNWs). Over the last five years they have invested over $5bn in European venture capital funds. Only government agencies have invested more in European VC in that same period.

Source: Invest Europe

05

Mobilising Europe’s hidden tech talent pool can unlock huge upside

professional developers

5.7M

Europe’s ecosystem is more distributed and more interconnected than ever - there are now 5.7m professional developers in Europe, up by 200,000 on 2017. This compares to the 4.4m in the US, a number that stayed flat year on year.

Source: Stack Overflow

emerging tech hubs

15

Still more European tech hubs will emerge. Cities such as Cologne, Warsaw and Vienna all have larger developer populations than Stockholm and active local tech communities, but have yet to attract as much investment. In fact, there are 15 European cities with professional developer populations of 50,000+ that have seen less than $1B in total capital investment since 2013.

Source: Stack Overflow, Meetup

06

Europe is producing $B+ companies at a level that is 15x+ higher than a decade ago

$B+ companies

61

European $B+ companies founded in the past 15 years, including a record 17 new companies that first surpassed the milestone in 2018. Europe has also now produced 12 companies with a $5B+ valuation, of which 5 have grown to more than $10B.

success growth

15X

Two companies founded in the 2000s had reached $B+ by 2008. Compare that to 31 founded in the 2010s that reached that milestone by 2018 - an increase of 15.5x. Where will the 2010s end up by 2028?

07

Key figures for 20 top funded countries in Europe

Key figures for:

Talent

5.7m

professional developers

2017

5.5m

USA

4.4m

Investment trends in 2018

$23B

capital invested

# of rounds

87

#1 Hub

UK

Largest Tech Communities

  1. London
  2. Berlin
  3. Paris

$B+ Companies

61

$B+ companies

2017

44

# countries with a $B+ company

14

Source: dealroom.co

It truly has been a great year for Europe.