Tech.eu and Stripe release “Life is Growth” report

Tech.eu and Stripe have released the “Life is Growth” report, analysing Growth-stage technology funding in Europe. This is the second report Tech.eu and Stripe release after “Seed the Future” (November 2018), looking at early-stage investment in Europe.

Investment in European growth-stage technology companies is at an all-time high

European technology has been going from strength to strength with total capital invested into European growth-stage companies at €30bn and more than 2,300 rounds, between 2016 and 2018. On an annual basis, both the total investment in growth startups and the number of funding deals have roughly doubled in the last three full years.

Overall, more than 2,000 startups have reached growth-stage, with a median size of an investment round of €10M.

The UK, France, Germany, and Sweden are Europe’s growth-stage hubs, by far.

The figures revealed today that the total of financing going to British, German, French and Swedish growth startups in this time period exceeds €21 billion. This represents 70% of the investment, and nearly double the amount raised by tech companies in the next 20 countries in the ranking.

The UK remains the absolute leader in growth-stage investment (€8.82 billion), while its position is challenged by France when it comes to EST investment [2]. But France (€5.44 billion) and Germany (€4.85 billion) are catching up fast: the research shows that between 2017 and 2018, total investment into growth startups in France and Germany grew by roughly 27% and 26%, respectively, whereas the number in the UK virtually stagnated.

Preliminary data for Q1 2019 shows a continuation of the positive trend; total investment for growth-stage tech companies in Europe reached an estimated €3.7 billion, or a 14% jump compared to (close to €500 million more than) the record quarter in the past three full years (Q4 2018 at €3.25 billion).

Fintech, medtech, and Saas lead the investment charge

Similarly to what is happening with seed investment, the report found that Fintech startups such as Monzo (UK) and N26 (Germany), and MedTech startups such as PushDoctor (UK), Kry (Sweden) and Doctolib (France) have benefited most from the influx of growth-stage investment. They have each received €5.38bn and €4.22bn in investment respectively over the last three years.

Fintech is the top vertical in the UK, Germany, and Sweden by a comfortable margin, while MedTech is by far the top vertical in France.

Saas, with €2.54bn in investment, is a strong 3rd in most European countries, driven by strong B2B players such as Aircall (France) or Teamleader (Belgium). Interestingly, while France is only the 3rd country for Saas growth-stage investments after the UK and Germany, BPI France (the French State-backed VC) is by far the number 1 European investor in Saas, with 55 deals between 2016 and 2018.

“The European startup ecosystem is on the right track to create technology giants in the years to come. Seed investment is strong and growth investment is getting stronger, year after year. But while the UK, France, Germany, and Sweden are frequently seeing the birth of globally competitive tech companies, the rest of European hubs lag behind”, said Guillaume Princen, Head of Continental Europe at Stripe. “Startups are in Stripe’s DNA and we want to abstract the complexity of starting and growing a global business, regardless of where it was initially started.”

Robin Wauters, the founding editor of Tech.eu, said: “Until now, there’s never been an analysis specifically focused on growth-stage tech companies in Europe. After working with Stripe on an exhaustive report about early-stage investment activity, we’re delighted to present our latest research on European scale-ups. What it showcases is that there’s an ongoing maturation process in place, particularly in key hubs and business categories, which bodes well for the future of European tech.”