For the tenth year in a row, the GP Bullhound published its annual report, analyzing and highlighting the growth trends in Europe's tech ecosystem. This year’s report “Titans of the Tech – Unrivalled era of A.I. led innovation for European Tech” highlights the resilience and growth of Europe’s tech sector, setting the stage for a new era of innovation and investment.
According to the report, despite the macroeconomic instability since mid-2022, funding levels now seem to have normalized at €15 billion per quarter over the last twelve months which is around 52 per cent higher than the 2019 average. This growth underscores the strength of investing in technology, which appears stronger than ever.
Europe responds to headwinds
The number of European billion-dollar companies has increased approximately 11 times, and the ecosystem's total valuation has grown nearly 14 times, to over $1.2 trillion, since the first report in 2014. Europe has now reached 323 unicorns, with 14 new billion-dollar companies emerging in the past year alone. The total valuation of the unicorn landscape has quadrupled since 2019.
"After ten years of issuing our Titans of Tech report, we have witnessed the highs and lows of the European tech ecosystem. A year ago, the situation was less encouraging for the fundraising environment, with macro uncertainty and with businesses more focused on layoffs than on growth and innovation. Today, against the backdrop of negative headlines, we have cemented the building blocks for the next wave of innovation. Funding levels have stabilised, and are amazingly 50% higher than pre-bull market levels." - Manish Madhvani, Managing Partner at GP Bullhound
Megarounds normalizing through 2023
Access to capital rounds surpassing $50 million has become more stringent. However, investors continue to show interest in backing innovators. The number of deals has declined by 68 per cent in the last two years. In 2023, only 17 per cent of European unicorns secured funding, as 93 per cent had already done so during the 2021-2022 bull market.
AI as a key funding sector
The power of AI become very significant and impactful, as it becomes available to any business and consumer willing to embrace it. Thus, despite funding challenges, technological developments, continue to drive automation and cost savings. According to the report, the AI companies received over €11 billion in funding in the last year, with 36 per cent of new unicorns being AI/ML businesses.
The regional leaders still remain the same
As stated in the report, the UK and France lead the startup arena with three unicorns each. The UK’s unicorns are valued at $3.4 billion. A significant contribution came from AI leaders Synthesia and Builder.ai.
France’s trio reaches a collective valuation of $7 billion, highlighted by innovators like Mistral AI. Germany and the Netherlands added two unicorns (each), while Sweden and Italy added one unicorn (each).
“With Europe’s maturing base of engineering talent and the world’s fascination in its potential productivity gains, artificial intelligence offers a unique opportunity to create global leaders in record time. There is no shortage of funding for the best entrepreneurs and companies, as evidenced by the record $220m seed round for Paris based H announced this week. What was noticeable about the round was the range of the investor syndicate: from strategics such as Amazon, Samsung and UI Path, household names such as Bernard Arnault, Eric Schmidt and Xavier Niel, and leading VC’s. Looking ahead, we expect the next few years to represent an era of unprecedented innovation in the European ecosystem. Innovation is flowing, vast amounts of capital are available for the strong and the talent pool is expanding. No more excuses Europe!” - Manish Madhvani, Managing Partner at GP Bullhound
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