The year is off to a good start for European technology companies. In January 2016, Tech.eu tracked 254 funding deals, totalling €1.6 billion. This represents a 151% and 69% increase, respectively, compared to the previous year.
While monthly data can be heavily influenced by large rounds and not be entirely representative of the future evolution of an economic sector, we found certain aspects in our data worth highlighting. This week, we’ll be releasing an in-depth report on tech funding in Europe in 2015, by the way, so you might want to subscribe to our newsletter to stay updated.
Massive increase at the early stage
An analysis of the distribution of deals shows a year-on-year increase across all stages, but especially at the seed and Series A stage (funding rounds smaller than €10 million).
We’ve tracked 149 deals smaller than €5 million, compared to just 56 in 2015.
The bigger increases were seen at the pre-seed or seed level (€500,000 and lower) and in rounds between €1 million and €5 million, where the number of deals jumped from 26 a year ago, to 74 in 2016.
These significant increases were also visible when it comes to Series A deals, with more than 8 times as many €5 million to €10 million funding rounds.
Last month Europe also saw two mega-rounds of more than €100 million, from Deezer and Skyscanner. In the same period a year ago there was only one, Kreditech’s €182 million debt financing deal. Our 2016 analysis also includes SoundCloud’s €32 million debt round as the news surfaced then (even though the round dates back to early 2015).
As we highlight in our 2015 funding report, Spain surpassed the €500 million mark for the first time ever, helped by large rounds from the likes of Letgo, Wallapop, UserZoom, Jobandtalent, Typeform and CartoDB.
The country was off to a great start in 2015 – relative to its performance in previous years – with 14 funding deals and €42 million in total capital raised.
So far, the situation in 2016 looks vastly different. In January Tech.eu has only tracked 9 rounds and €5.8 million for Spain, a 86% year-on-year drop.
As we said at the beginning, monthly data should not be considered as representative of a market’s future performance, but with the country’s best startups having raised large rounds in the last 12 to 18 months, one can wonder where all the money raised by Spanish VCs (more than €500 million in 2014 and 2015) is going to go over the next few months and years.
Past leaders continue leading
Visible in the graphs above is also the fact that the European funding landscape, unsurprisingly, continues to be dominated by the UK, Israel, France and Germany.
The first three countries all posted a year-on-year uplift greater than 100%, led by UK startups, which raised more than €600 million in just one month (thanks to Skyscanner, Starling, Mubi and HighQ’s large rounds).
It’s also worth highlighting the case of France, as with two rounds alone (Deezer and Navya, €141 million combined) it surpassed January 2015’s €78 million total.
Germany saw the largest decrease of all countries, heavily influenced by Kreditech, Windeln.de and Mister Spex announcing big rounds at the beginning of last year.
FinTech is not going away
FinTech startups raised the largest amount of all in January 2015. The financial technology sector was not the top ranked vertical this year, but still attracted an impressive amount of capital: €142 million.
Travel (Skyscanner) and audiovisual (Deezer, SoundCloud) rounded the top 3.
Nowhere to be seen in the most funded verticals in 2016 was e-commerce, which ranked second in 2015 and has traditionally been a highly important European tech sector.
As previously noted, further analysis of the European tech scene will continue at Tech.eu -including not just funding rounds, but also M&A activity (buy our report here), and we’ll see whether some of these temporary changes are here to stay or are just data blips.
Photo courtesy of Patternpictures