Best Time To Be A Tech Entrepreneur in Europe: The State of European Tech Report
“Europe’s tech ecosystem is ready. We have strong, established, tech hubs from London and Paris to Berlin, Stockholm and Helsinki- but we’re now seeing talented European entrepreneurs building companies across European cities, even in places that might surprise you” starts a new report, The State of European Tech, published on the 29th of November by Atomico and Slush. It’s the best time to be a tech entrepreneur!
Slush is now the leading startup event in Europe, attracting more than 10,000 people from investors and entrepreneurs to journalists. The investment firm Atomico released the first State of European Tech report to coincide with the event in 2015, but has now published a more comprehensive one.
A wide range of people were interviewed for the report including European investors, thought leaders and startup entrepreneurs amongst others and it found that while still facing a myriad of challenges, the face of European tech is maturing and that it’s positioned itself at the forefront of global innovation.
The report analysed data from partners such as LinkedIn, Stack Overflow, the London Stock Exchange, Dealroom.co, and Invest Europe and further found evidence that shows that the current European environment for tech startups has been improving since 2011. It’s evident from the findings that it’s easier now than ever before for young tech companies to secure investment, grow their businesses and attract talent.
Europe: The Acquisition Capital
The report shows that there’s been a slow-down on investments and deals in the last quarter of 2016 compared to last year, but the start of the year saw a great kick off with investments totalling $4.4 billion in Q1. However, there have been some record acquisitions with Tencent buying Supercell for more than $10 billion and Softbank acquiring ARM for $32 billion. Regardless of the dip in Q4, the projections of the report show that the year will end on a record high in terms of deal volume and capital.
“We should not play the game of quarterly capitalism and obsess over short-term metrics. We should focus on the long-term trend and the fact that capital is being deployed in Europe at a level that is nearly five times bigger than 2011,” said Vice President for the European Commission’s Digital Single Market (DSM) Andrus Ansip.
Furthermore 2016 was also the year of the first $100 billion valuation for a European company for SAP and deep tech has reached $88 billion in the last 12 months.
Mattias Ljungman co-founder and partner of Atomico and Slush CEO Mariann Vikkula says “All of this would be good in any kind of year, but for it to happen in 2016 – let’s all agree it hasn’t been any ordinary year – is particularly impressive”
“While Brexit hasn’t happened yet, the vote itself and the uncertainty it has unleashed looms over many a conversation in European tech. Still, entrepreneurs are taking it in their stride, optimistic, and making the necessary plans they need. Meetup shows us that there’s been a big boost in related networking events in Bucharest, Lisbon and Prague.”
The perceptions regarding tech talent in Europe don’t reflect reality. Half of the world’s highest rated 10 computer tech schools are found in Europe, while the report found that one in five grads from business schools are transitioning into tech.
European developers are mainly found in hotspots such as London and Berlin, however according to LinkedIn there is a rapidly growing tech talent pool in 2015 and 2016 in countries such as Ireland. Still the UK is the number one location for tech talent.
While the numbers are steadily growing, 29% of founders stated that tech talent is “poor”, 25% said it’s “adequate”, 31% said it’s “good” and only 10% said it’s “very good“.
The report also found that there’s a growing number of women organising tech meetups. Marianne Vikkula, CEO of Slush said “I think this is the first step. This trend will eventually spill into women entrepreneurship too”. The talent landscape in Europe is still mainly male dominated, with 80% of emerging start-ups having an all-male team.
Deep Tech Focus
The trend in Europe is shifting towards a focus on deep tech such as AI, driverless cars, VR, IoT, etc. International companies such as Facebook and Google are setting up deep tech engineering centres around Europe, with the majority of specialised professionals clustering in areas such as London and Berlin.
Funding activity is extensive, with $2.3 billion being invested in it in the last two years. That is a 50% increase compared to 2013-2014 with the UK seeing most capital invested, followed by Germany, Netherlands, Finland, Sweden, Germany, and Norway.
Optimism is High
Co-founder of Cherry Ventures, Filip Dames said “The European ecosystem has matured a lot. There’s no reason why a European company couldn’t be as successful, or even more successful than any US company. The infrastructure is here, the success stories are here, the exit market is developing, the availability of capital has improved significantly.”
While European businesses have a lot to be optimistic about, up to 40% of respondents said things such as funding, risk aversion and talent could be a problem. Furthermore 30% said regulation and the economy could be an issue and 22% raised concerns about EU and Brexit affecting the free movement of workers. Lastly, 8% said that international conflicts are a worry.
Regardless of all of this, optimism is high.
For further information you can view the entire report here
What are your thoughts? Is it the best time to be a tech entrepreneur in Europe? Let us know in the comments.
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