Top 3 global areas attracting investments: the US (620 billion US dollars), Asia (174 billion US dollars), Europe (116 billion US dollars)
2021 has been a great year for the tech industry in Europe. In terms of VC investments, Europe ranks #3 behind the US and Asia.
Nevertheless, funding to European startups showed unprecedented growth in 2021, as per Crunchbase reports, with 116 billion US dollars invested. That’s up 159% compared with the 45 billion US dollars invested in 2020.
Top 3 European countries attracting the most investments in 2021: the UK, Germany, France
With 37.8 billion US dollars in funding, the United Kingdom has attracted the most investments cementing its name as The Tech Hub of Europe. The runner-up is Germany with 19.3 billion US dollars followed by France with 12.1 billion US dollars.
Before going any further with our analysis of European tech and the industries generating the most unicorns, let’s zoom out and see the Top 3 global tech ecosystems.
Top 3 global tech ecosystems by # unicorns and value
(source Dealroom)
With a tech ecosystem valued at 16.4 trillion US dollars, the US is the undisputed leader of everything tech.
And it’s not surprising. It’s the home of the Big 5 Tech giants – Amazon, Meta, Apple, Alphabet and Microsoft – which generated a combined 1.4 trillion US dollars in revenue, in 2021.
Valued at 4.3 trillion US dollars, China’s tech ecosystem is booming.
A 2021 analysis by World Economic Forum showed that the country’s 3 main drivers for startups in tech are:
- government policies,
- the collaboration between industry and academia
- high competition nurtured by the country’s immense domestic market
The tech ecosystem in Europe is valued at 3.5 trillion US dollars.
What factors are driving the success of tech European startups?
Business consulting and analysis firm McKinsey looked at the top 1,000 European start-ups founded after 2000 in 33 countries and came up with a few interesting conclusions shared in their 2021 report Winning formula: How Europe’s top tech start-ups get it right.
Here are the main takeaways:
- The most successful companies have taken one of 4 distinct paths: network, scale, product, or deep tech;
- Reaching unicorn status requires on average 100 million EURO to 200 million EURO in funding;
- 70% to 80% of the companies that receive the necessary funding become unicorns within ten years of founding;
- The network path requires winning local markets one by one and not trying to grow globally in one fell swoop;
- Scale players need to focus on building strong commercial capabilities;
- Product startups need to prioritize a compelling product and narrow use case initially
- For deep-tech startups, attracting and retaining the best talent is essential.
Top European tech ecosystems valued at 100+ billion dollars
(source Dealroom)
Top 3 tech industries in Europe by ecosystem value
The three tech industries receiving billions of dollars in funding in Europe are Fintech, Enterprise Software and Health.
In the graph below, you can see how much investment the European countries with 100+ billion UD dollars tech ecosystems pour into startups developing solutions in these industries.
Fintech is the #1 industry attracting the majority of funding money in the UK.
Developing health solutions is prioritized in Switzerland, Germany, the Netherlands, France and Sweden.
Enterprise Software comes in second in Switzerland and France.
