From famine to feast, investment in European tech startups roars back
From famine to feast, investment in European tech startups roars back
BERLIN (Reuters) - With Europe in coronavirus lockdown, venture capital fund manager Fergal Mullen told his investors in April he would find it hard to back a startup without first meeting its founders.
A couple of months later, the Geneva-based co-founder and partner of Highland Europe broke his own promise and invested in Meditopia, a mindfulness app with teams in Berlin and Istanbul that he got to know over some 40 calls on video app Zoom.
“I had to eat my hat,” said Mullen, looking back on a year of deal making that, after a sudden stop in the spring, came back to life in late summer and has gathered pace since.
Highland Europe has just raised 700 million euros ($850 million) for a fourth fund, its largest, and is preparing for the sale or flotation of around 10 of its portfolio companies next year.
And, according to interviews with more than half a dozen investors, the wider recovery in European tech investment activity looks likely to extend into 2021 as venture-backed startups achieve scale.
Proceeds raised by European venture funds have already hit an annual record 17.1 billion euros in the year to date, while the amount invested in startups has reached 39.7 billion euros, according to data platform Dealroom.co.
Taking into account reporting lags, the final sum invested is on track to beat last year’s all-time high of 40.3 billion euros, said Tom Wehmeier, partner at Atomico and author of the closely-watched State of European Tech report.
“The scale of those outcomes is getting bigger and bigger, and the velocity in which value is being created - it’s getting faster and faster,” said Wehmeier, pointing to the 115 venture-backed ‘unicorns’ in Europe valued at more than $1 billion.
While Europe still lags North America by four to one in dollars invested in tech startups, the institutional money flowing into venture capital has grown threefold over the last five years.
Nearly two-thirds of venture capitalists and 70% of their investors expect European tech to gain ground on the United States and China over the next decade, according a survey by Atomico.
