US investors have pumped €10 billion into European startups in 2021 alone
Interest from US VCs in European tech companies has accelerated over the past two years, according to industry analysts. The amount of funding has reached an “all time high” in April, they say.
We are no less than halfway through 2021 and American investors have already put €10.1bn into Europe’s startups, according to investment analyst Dealroom. This level easily beats the €9.3bn invested in all of 2020.
Industry observer Sifted says the Americans have been attracted by the increasing quality of European startups and founders, as well as attractive valuations compared to the US. These two trends have led to a wave of US investment over the past two years, they say.
In 2020, Silicon Valley VC Sequoia opened its first European office in London, according to Sifted. Since then, US investors have been key in supplying capital for Europe’s burgeoning growth-stage ecosystem.
The share of US investment has equated to roughly 50% of the funds put into Europe’s startups over the past decade, according to the company. While funding overall has grown significantly, the US has continued to match the increases seen in domestic and European funding.
In 2010, US investment accounted for 65% of the funding and, in 2021, that figure stands at 55%, says Freya Pratty, Sifted’s news reporter.
So who is investing?
Out of all the American VC firms putting funds into Europe, Accel has participated in the most rounds in the past 12 months. They’ve invested in 32 rounds and have backed 31 European unicorns, including Deliveroo, UiPath, Monzo, Hopin, Doctolib and sennder.
The firm is based in California, but it opened its European fund in 2001 and now has an office in London.
Pratty says that European tech is starting to see interest from not just VCs, but PE giants such as Silver Lake.
Be careful what you wish for
Overall, Pratty says, the trend of increasing US investment into Europe looks set to continue. Indeed, 2021 is already dwarfing 2020 investment levels.
“There are those, however, who worry that a strong US investor presence, especially in later stage rounds, means that the profits from European tech exits and successes disproportionately benefit American investors.” she warns.