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08.3

Expanding European Investor Base

One of the most critical ways in which the European tech ecosystem has evolved has been the buildout of the investor base supporting it, which has grown in depth and, importantly, sophistication. One way to demonstrate the remarkable expansion of the investor base is to look at the number of unique institutional investors that have made at least one investment in European tech per year. In 2018, this reached more than 2,500 unique institutions, up 2.8x since 2013.

# of unique institutions that have participated in at least 1 and 5 investment rounds in Europe per year

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  • Unique investors
Note:
Number of unique investors (incl. investment funds, corporate investors & accelerators, but excl. angel investors) that have participated in at least 1 investment round per year. 2018 annualised based on data to September 2018.

It's important to note, however, that more capital and more investors alone are not enough. In order to maximise the chances of success for early-stage European startups, it's important that capital is allocated to sophisticated investors best able to support young companies as they navigate the scaling journey. This is proven in data. Startups raising Seed from top investors are significantly more likely to raise a Series A.

Median conversion rates to Series A within 36 months of Seed round, by investor quartiles

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  • Conversion to Series A (%)
  • Median conversion rate to Series A (%)
Note:
Based on disclosed Seed and Series A rounds, conversion rates calculated for VC funds that made at least 8 Seed rounds since 2012, and at least 75% of first investments at Seed/Pre-Seed. See: https://blog.dealroom.co/the-journey-to-series-a-in-europe/

European banks are clearly leading the charge as the most active and frequent corporate investors in the European tech ecosystem with many having built substantial tech company portfolios in Europe.

Top 10 most active corporate investors in European tech

Corporate investors are very active in the European tech ecosystem.

Corporate investment activity

681
unique corporate investors have invested in at least one investment round in Europe in 2018, up more than 3x from 220 in 2013

The growth in the investor base has been supported by a diverse set of new entrants that are deploying capital in European tech for the first time. As in other regions, corporate investors have become active in Europe in significantly greater numbers.

# of unique corporate investors per year and number of rounds involving at least one corporate investor

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  • # of unique corporate investors
  • # of deals
Note:
Unique corporate investor count is based on number of corporate (i.e. non investment fund) investors that have participated in at least 1 round per year. 2018 annualised based on data to September 2018.

US investors continue to invest actively in European tech companies, although the number of unique institutions that have participated in at least one investment round in 2018 is down slightly on 2017.

# of unique US institutions that have participated in at least 1 investment round in Europe per year

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  • # of unique US investors
Note:
Number of unique investors (incl. investment funds, corporate investors & accelerators, but excl. angel investors) that have participated in at least 1 investment round per year. 2018 annualised based on data to September 2018.

The top US investors continue to invest actively in Europe, though they remain opportunistic and selective.

# of deals made by Tier 1 US investors

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  • # of deals
Note:
Based on investment rounds in Europe led by a selection of 22 leading US VC funds. 2018 annualised based on data to September 2018.

The influence of Asian investors in the European tech ecosystem has grown significantly in recent years and hit a new record in 2018 in terms of capital invested in rounds involving Asian investors, approaching close to a projected $4 billion, up from less than $200 million in 2013.

Capital invested ($M) by # of deals involving Asian investors

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  • Capital invested ($M)
  • # of deals
Note:
2018 annualised based on data to September 2018

Asian investors are starting to deploy large sums of capital into European tech startups.

Asian investment activity in Europe

23x
Increase in total investment into European tech companies via rounds involving Asian investors over the past 5 years, from less than $200 million in 2013 to a projected $3.8 billion in 2018

The rapid growth in investor interest in Europe from Asia has been underpinned by a large expansion of capital invested in Europe from China. Chinese investors will have participated in rounds totalling more than $1 billion in commitments to European tech companies in 2018 for the first time, a more than 10x increase since 2013.

Capital invested ($M) and # of deals by Chinese investors in Europe

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  • Amount ($M)
  • # of deals
Note:
Forecast created by Dealroom.co

The European tech ecosystem now benefits from a growing pool of active and sophisticated angel investors that are backing a new generation of European founders. In many cases, such as Xavier Niel, Alex Chesterman and Oleg Tscheltzoff, the leading angel investors in many markets for former entrepreneurs have already achieved significant success with their own companies.

Top 20 most active angel investors in Europe by number of investment rounds since 2013

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  • # of investments