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Funding for European tech appears to have brace in 2024 after devolve sharply in 2023 , but the signs go forward to point to more tough time ahead , harmonise to the latestState of European Techreport .
The one-year survey , grow by European VC firm Atomico , notes that startup in the region are on track to raise $ 45 billion this year . While far from the50 % drib of 2023 , the figure is still down by $ 2 billion compared to a twelvemonth ago . Atomico originally projected $ 45 billion for 2023 ; it has since revised 2023 up to $ 47 billion .
The declension this year is slim but is famed because the narration post - pandemic had been that the drop we saw in 2023 was only a return to “ normal ” emergence curves .
That narrative goes something like this : financing and other tech market indicators have been steadily rise for almost as long as they have been tag . The class 2021 and 2022 were outlier , resulting from a outburst of activity from more multitude using cloud , mobile and other digital services at home and at work during the pandemic , and 1000 of companies and investors rushing to meet the chance . But by the terminal of 2022 , it was clear that the “ new normal ” was not here to continue . So , things settle back to “ old normal ” and we are back on track .
Well , 2024 figures now show us we may need to rethink all that , again .
Atomico has been producing these reports p.a. for the last decade , so this up-to-the-minute version makes a lot of noise about how much things have improved .
It ’s undeniable that the technical school ecosystem in Europe has blown up : Atomico enunciate there are now 35,000 tech companies in the region that could be classified as “ early stage , ” with 3,400 belated - stage companies and 358 valued at over $ 1 billion . Compare that to 2015 , when there were a mere 7,800 former - degree startups , 450 late - stage startup and just 72 tech companies valued at over $ 1 billion .
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Yet there is a mint of sobering reading , too , about some of the challenges of the moment and sign of the zodiac of how geopolitical and economic unrest — despite shiny stories about the boom in AI — continue to weigh down the market .
Here are some of the breakout stats :
passing have fall off a cliff
This is one of the more stark tables in the report , underscoring some of the liquidity press that in the end filter down to earlier - phase technical school company .
Put plainly , M&As and IPO are comparatively non - existent right now in European technical school . This class , at the meter of the report being published in mid - November , see just $ 3 billion in IPO value and $ 10 billion in M&A , according to S&P Capital figures . Both of these are big drops on the overall trend , which had otherwise seen steady rises in both , “ systematically pass the $ 50 billion per year brink . ”
Granted , sometimes all it takes is one big deal to make a year . In 2023 , for example , ARM ’s $ 65 billion IPO account for a full 92 % of total initial public offering note value , and distinctly it did n’t have the roast - on core many had hop for in kicking - get going more bodily function .
Transaction mass , Atomico take note , are at their lowest points in a decade .
Debt is on the rise
As you might expect , debt financing is filling in the funding gap , especially for startups raising growth troll . So far this year , debt financing made up a full 14 % of all VC investments , totaling some $ 4.7 billion .
That ’s a big jump on last year , according to Dealroom ’s figures : In 2023 , debt made up just $ 2.6 billion of funding , account for 5.5 % of all VC investiture . Debt at its best is raised when company are in strong financial positions and do not want to give up more equity to raise money to grow . The other side of the coin is when debt , often more easily raised than equity , is picked up because fairness rounds are harder to come by .
So the vainglorious doubt on debt rest as ever : will all the companies racking it up decidedly make good on pay it down ?
middling orotund sizes have improved
Last year , the average size of every stage of funding , from Series A to D , declined in Europe , with only seed - stage rounds keep on to increase .
However , amid the overall decline in the number of support bout in the region , the startups that are handle to conclude deals are , on mediocre , stir more . The median Series A round is now $ 10.6 million ( 2023 : $ 9.3 million ) , Series B is at $ 25.4 million ( 2023 : $ 21.3 million ) , and Series C is at $ 55 million ( 2023 : $ 43 million ) .
The U.S. continues to outpace Europe on round sizes overall .
But do n’t gestate round to be raised in warm successions
Atomico observe that the number of startup , on average , raising within a 24 - calendar month time flesh declined by 20 % . It has also taken longer for companies to go from Series A to Series B in what the business firm calls “ compressed ” time frames of 15 months or less — just 16 % raised a Series B in that flow in 2024 .
As you could see in the table below , the telephone number of round this year is low than what we saw the yr before .
AI continues to lead the pack
As with 2023 , artificial intelligence continued to reign conversations . Atomico spells this out with a graph showing the burst of AI mentions in earnings calls .
That has been a strong theme among private companies . Between companies like Wayve , Helsing , Mistral , Poolside , DeepL , andmany others , AI startups have head the pack when it come to the biggest venture deals this year in Europe , raising $ 11 billion in all .
Even so , Atomico points out , “ Europe has a retentive way to exit the opening with the U.S. in terms of AI support . ” Thanks to outsized round for company like OpenAI , all told , the U.S. is shaping up to have endow $ 47 billion in AI company this twelvemonth — that ’s right-hand , $ 2 billion more thanallstartup investment in Europe .
The U.K. ( thanks in braggy part to Wayve ’s outsized raise of the class in Europe , but also because it merely has more company raising more cycle across more stages ) is presently the bragging market for AI financial support in the region , Atomico said .
Valuations are improving …
After startup evaluation “ bottomed out ” in 2023 , Atomico sees them heighten again , lagging behind the dense return of activeness in the public markets . Some of that is likely also due to the outsized rounds grow by certain caller in certain fields like AI .
More by and large , it appears that beginner are more open to dilution on larger turn in earlier stage , which plays out as higher rating . Startups raising at later microscope stage are picking up the patch of that early enthusiasm and are raising down - rounds , Atomico said .
European startups preserve to see lower valuations than their American counterparts , on modal between 29 % and 52 % lower , Atomico note .
In the graphical record below , charting Series C , the average valuation of U.S. startups is $ 218 million , equate to $ 155 million for startups in Europe .
… but view is not
If confidence is a strong indicator of a market ’s health , there might be some workplace beforehand for the motivators out there .
Atomico has been polling founders and investors annually , asking how they feel about the state of the securities industry compare to a year ago , and 2024 is likely a gamy - water mark for lowly trust .
In a plainspoken assessment of how founding father and investors are view the market at the moment , a record proportion — severally 40 % and 26 % — say they felt less confident than 12 months ago .
