Boom in VC has EU tech ecosystem growing faster than US or Asia

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Megadeals abound as the EU startup market outpaces its global market competitors

The rate of investment into European tech companies is growing faster than its North American and Asian counterparts, according to reporting by Sifted.

At its current rate, Europe will hit €95bn in VC investment by the end of the year, according to Sifted calculations and Dealroom data. That’s a year-on-year growth rate of 143% — the highest of any major ecosystem in at least the past five years.

North America is currently on track to grow by 98% this year, and Asia by 47%. The last time European tech investment was growing faster was pre-pandemic in 2019.

The growth is being fueled by major interest from the global VC community. There is also a significant increase in late-stage funding. The result: 2021 has seen the European tech industry become more of a cauldron than a simple incubator.

According to Sifted, Fintech (raised €12.3bn so far in 2021), SaaS (€9.7bn) and the fast-expanding food industry (€4.9bn) have all been major beneficiaries of the cash blitz.

The growth is fueled by deals both big and small

But that’s not all. In addition to the magadeals making headlines, there are many smaller rounds of investment, including seed rounds, that are not reported until many months after they happen. Dealroom says that this means the numbers will look even more impressive by year’s end.

Investor appetite points to the region’s startup scene hitting maturity and the ecosystem proved its resilience through the pandemic, says managing partner and CEO at Bethnal Green Ventures, Paul Miller.

“There’s such a vibrant and mature startup and investment ecosystem in Europe compared to what it was 20 years ago.”

As we have reported earlier, megarounds are a major driver of the booming EU investment growth.

The whole of 2020 saw just €4.4bn pumped into European startups in the form of €250m plus cheques. So far in 2021, that figure has more than quadrupled to €18.6bn.