According to promising data shown in the report “Seed the Future”, published by Tech.eu in collaboration with Stripe, investment in European startups in the last few years is in very good shape. This is also the case for Spain, which has been showing good levels of growth in investment despite being at a distance from more attractive countries for investors like the United Kingdom, France, or Germany.
From 2015 to 2018, investment in technology companies in their initial phase has quadrupled, from approximately € 875 million invested in the first semester of 2015, to more than € 3,600 million in the first semester of 2018. Total financing of these enterprises increased by 36 percent from 2016 to 2017.
Data also shows that sectors with the most investment are “fintech” and “medtech”, generating over € 4,000 million in initial funds in the last three years. Meanwhile, investments in transport (mobility) rank fifth on the same list.
The amount of investment in European companies in the initial phase is higher than ever. However, while private investment in startups continues to grow, the reality is that many of them depend on government support at their earlier stages. Fortunately, the European Commission is one of the best startup investors in the world and continues to innovate to support new enterprises in the continent. Governments have tried to fill the gaps to create better conditions for the growth of these companies, although startups are also fundraising through other channels, like crowd investing, venture debt, tokenisation/ICOs as well as the more traditional capital rounds.
Nevertheless, against all this growth, is the threat of Brexit and, with it, the separation from the strongest technological center of Europe and the European ecosystem, which generates strong technical talent, investment, and experience.
The fact that the value of these investments have quadrupled in just three years, means the birth of a new generation of worldwide competitive technology companies, led by France, Germany, Switzerland and Spain.
Startups: a motor of high-skill employment
In Europe, more than 4.5 million people work in 830,300 enterprises across the main startup ecosystems. A report made by Startup Europe draws data from 15 European cities and highlights the vibrant scenery of European startups. The report reveals that 830,000 enterprises are operating in these ecosystems, which jointly generate a revenue of over € 420,000 million.
In terms of revenue, the five main cities are London, Berlin, Munich, Rome, and Paris. Among them, they have generated revenue of more than € 326,000 million, and employ almost 3.5 million people. In the case of Spain, Madrid stands out and ranks 7th.
A total of 290,000 startups are less than 5 years old, which reveals the type of corporate culture that is being created all over Europe. These young enterprises employ 1.1 million people and have combined revenue of € 87,000 million, and have fundraised over € 10 billion. The report identifies a series of ways in which corporate culture in Europe is changing and the different initiatives that are being implemented to support this.
Key aspects of invesments in 2018
2018 was a record year for financing through venture capital in Europe and Israel; approximately € 28,000 million.
Financing has never been so widely distributed; it was mostly split in small investments. Last year, 89 percent of venture capital funds were invested outside of the 10 most important agreements. In 2017, this figure was 85 percent.
Spain is the 5th country that attracts the highest level of investment in Europe (Israel included). Additionally, alongside Italy, Belgium, and Denmark, it’s the country that has seen the highest increase in funding with respect to last year.
Europe is attracting more international investors every year, except for those from Asia. Although 2018 showed a large increase in financing from the U.S.A and the rest of the world (outside Europe), it also marked a fall in investment from Asia; from € 2,500 billion in 2017 to € 2,200 billion in 2018. The positive side is that the global trend is increasing.
Investments in startups within the transport (mobility) sector are the ones that have seen the highest increase of last year and ranked fifth in terms of the volume of investment, with € 361,000 billion.