Report: European seed investors jump at AI and SaaS startups but shun e-commerce

More than 60 percent of European seed-stage investors are most excited about artificial intelligence, SaaS, and marketplace applications, according to a new “Sentiment of Seed Investors in Europe” report launched today by Mosaic Ventures, a London-based VC firm. At the same time, some two thirds of the 60 surveyed investors name e-commerce as the sector they're not interested in or even would actively avoid.

About half of the investors are excited about digital health and fintech, while the crypto sector triggers strong opinions on both sides: 26 percent are bullish about it but 24 percent would rather avoid investing.

More than half of the investors said that the quality of seed-stage startups improved over the past 12 months (the survey was conducted in the second half of 2017). About half also stated that they made more investments in B2B projects in the same time period. In a perfectly consistent fashion, another 49 percent said they invested less in B2C startups.

Investment in repeat entrepreneurs has become more common, and so has investment in female founders: about a third of the survey participants stated they had had an increased number of deals with either one or both categories.

Geographically speaking, about a third of the surveyed investors have increased resources in France and/or the UK, though it's worth mentioning that 43 percent of the participants come from the UK, 11 percent from France, and another 11 percent from Germany. Only one in seven investors are more likely to invest in non-UK startups because of Brexit, while 23 percent are less likely to invest in Blighty-based companies. Almost half of the investors do, however, admit that Brexit is making it harder for their portfolio companies to recruit talent.

Mosaic has estimated the seed deal volume across Europe to have reached about 30­ to 40 percent of that in the US, growing more than twofold from 2013 to 2017. The median seed ticket size has increased to $1 million, the firm noted in the report—still some 30 percent smaller than on the other side of the Atlantic.

On a meta note, about a third of the investors believe that it has become easier to raise funds from both existing and new LPs, with only 16 and 23 percent, respectively, stating they're having a harder time raising.

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