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08.2

Capital Flows by Geography and Industry

On a cumulative basis since 2013, the UK has attracted $26 billion in total capital investments, just under 2x as much as Germany that ranks second with $13.6 billion. Those two countries, together with France, account for almost 60% of total capital invested in Europe since the start of 2013.

Capital invested ($M) by country, cumulative (2013 - 9M 2018)

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  • Cumulative capital invested ($M) 2013 - 9M 2018

The UK, France and Germany dominate stories about European investment levels given the multibillion-dollar scale of capital investments into these countries, but digging beneath the surface, there is an important trend emerging whereby many other European countries are now hitting their stride and are also on trajectories to consistently surpass $1 billion+ in annual capital investment.

Capital invested ($M) by country per year

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  • United Kingdom
Note:
2018 based on 9M to September 2018 and projection for Q4 2017 based on Q3 2018.

Italy, Norway and Switzerland have seen the significant expansion of deal volume in 2018, as investment activity in these relatively less mature countries continues to grow. The overall top 5 countries in Europe by total number of deals in 2018 remains the same as in 2017 with the UK, followed by France, Germany, Sweden and the Netherlands.

# of deals by country per year

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  • United Kingdom
Note:
2018 based on 9M to September 2018 and projection for Q4 2018 based on Q3 2018.

The diversification of European tech is reflected at the city level too, as exemplified by increased capital invested into a new generation of cities that are not typically considered among Europe's most active tech hubs, such as Hamburg, Milan and Oslo.

Top 20 European hubs by capital invested ($M)

Note:
2018 annualised based on data to September 2018.

This trend is also reflected in data showing deal volume by city, where the rise in investment activities in new generation tech hubs like Milan and Oslo has been significant in 2018.

# of deals in Top 20 European hubs (ranked by capital invested in 2018)

Note:
2018 annualised based on data to September 2018.

On a cumulative basis since 2013, London has produced more than 1,800 companies that have been venture-backed, more than double the number of the next-largest city.

# of funded companies since 2013 by city

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  • # of funded companies since 2013

On a city population-adjusted basis, Cambridge has the produced the highest number of funded companies since 2013. Stockholm, Helsinki and Zurich are other leading cities that demonstrate success in generating large numbers of funded companies relative to their respective number of inhabitants.

# of funded companies per million citizens since 2013

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  • Funded companies per million citizens since 2013

On average, approximately one-third of all investments into European tech companies by European VCs involve a cross-border transaction, where an investor from one country invests into a company from another European company. The larger the investment round, the greater the share of total investment activity that happens in this way.

Share of investments made by European VCs into international (non-domestic) companies by round size

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  • 2013 - 2015
  • 2016 - 9M 2018

Fintech remained the single largest vertical for capital investment in Europe in 2018.

Capital investment by industry

$5B
projected total capital investment into European fintech companies in 2018

There is a high level of industry diversity in terms of where capital is being invested in the European tech ecosystem at scale. The dominant industries in 2018 are fintech, software for enterprise applications, digital health and transportation, all of which are on track to be in excess of $2.5 billion in total capital invested in 2018. Beyond those four industries, there are a further four industries that will all surpass $1billion in capital invested this year.

Capital invested ($M) by industry

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  • Fintech
  • Enterprise software
  • Health
  • Transportation
Note:
2018 based on 9M to September 2018 and projection for Q4 2018 based on Q3 2018.