Since we started, we've been building a proprietary dataset of European funding and exit activity in order to produce the most comprehensive and accurate coverage of what is truly happening in the European tech sector. From our weekly newsletter to Radar, we have been providing exhaustive insight into Europe's funding rounds, and have now used these resources to bring you the most accurate analysis of what Europe's fundraising looked like in Q2 of this year:
Over the course of Q2 we tracked 275 funding rounds (seed and above) totalling €3.47 billion, with 23 European countries being home to tech companies who've raised venture capital in April, May or June.
(Case in point: We've actually tracked deals worth at least €500 million more than other European Q2 funding analyses.)
The €3.47 billion raised is significantly higher than the amount of money European venture capital funds raised in Q2 (€2 billion/$2.2 billion) demonstrating the fact that Europe is still underserved in terms of venture capital available in Europe, while simultaneously showing that money from investors outside of Europe is clearly coming in, especially in the larger, later-stage rounds.
The effects of the increase in these mega-rounds was clear to see, with the average deal size coming in at $12.6 million in Q2, with over half of the money (54.84%) raised in Q2 coming from the top ten largest deals:
Four countries in particular were the recipients of the bulk of the €3.47 billion ended up:
Spotify and OneWeb heavily contributed to the totals of the two countries we see at the top of the chart for which countries raised the most, with the UK and Sweden ahead of Germany and Israel.
The UK really dominated, raising nearly twice as much as Sweden, the country who saw the second most capital in Q2. Germany's total is perhaps a little surprising in comparison to the UK's but it's worth noting that a lot of their funding rounds were undisclosed, meaning it's likely that they actually raised a fair bit more than the near €500 million that was disclosed.
Although it's easy to dismiss Sweden's appearance at the top of the charts, putting it down to Spotify's mega-round, it's worth noting that even if you removed that round, Sweden would still be sitting ahead of France and only behind the UK, Germany and Israel.
There's clearly a big divide between the above mentioned and other European countries, with only France raising more than €100 million in the quarter otherwise. Denmark's position is mainly due to Trustpilot's €65.5 million round, which accounted for 82.62% of the money that Danish companies raised in the second quarter of this year.
A pretty standard 'dealflow' in Q2, and although there were only seven Series C's, the median was a healthy €15.87 million. Although a quarter is too short a span to draw any real conclusions on this, it's worth keeping an eye on the amount of Series C's for the rest of the year to see if this is a potential bottleneck for European companies. Interestingly, despite the increase in the amount of late-stage deals, they still accounted for only 3.59% of the deals seen in Europe in Q2. Please note: 'Other' includes undisclosed rounds and additional capital to existing rounds.
These seem very low, although this is where it's worth pointing out that Europe is a large and diverse place and although countries like the UK, Germany and Israel's funding rounds are individually higher than these medians, the lower rounds from countries which attract less venture capital (of which there are a lot more) has a big impact on the median sizes.
This is the first quarterly funding analysis we've done on Tech.eu, so it's hard for us to make any strong conclusions with a lack of other quarterly data to compare this to. However, my educated guess is that this was a strong quarter for Europe, probably the strongest we will see in 2015. It also suggests that Europe will surpass €10 billion in venture capital raised in a calendar year for the first time, compared to the €7.9 billion it raised in 2014, an increase of at least 20%.
Other conclusions and trends to be drawn from venture capital raised by European tech companies in Q2 include:
- The emergence of Sweden as a magnet for serious venture capital in Europe.
- There's room for more Europe-focused venture capital funds.
- Later-stage capital is easier to raise than before for European companies, however they still can't compete with the US and Asia.
- Despite this, there were not too many Series C rounds, highlighting a potential bottleneck to the later rounds.
- Europe's diversity means that their median round sizes can often pale in comparison to the US and Asia, especially at seed and early-stage investments.
These are some of the most interesting findings that we think are worth highlighting from the data, but what about you? What was the most interesting data point for you? Let us know in the comments.
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Featured image credit: Fer Gregory/Shutterstock