4 Dec 2018

The 2018 State of European Tech Report is Live

Thanks to our partners, Slush and Orrick, our incredible data partners, and thousands of people in the region who have shared their experiences, the State of European Tech report is once again the single, most comprehensive data-driven story of European technology today. We’ve got data on everything from talent to upcoming hubs, investment to research and development.

The data geeks in us would love for you to dive into the full report here, but in case you’ve only got a few minutes, here are the main takeaways:

1. Another record year for investment into the European tech ecosystem

2018 marked record sums invested in European technology ecosystem- $23bn in 2018 up from just $5bn in 2013. There were four tech IPOs or direct listings of European tech companies in 2018 that reached valuations of more than $5B on opening day, including Europe’s largest ever venture-backed publicly-listed tech company, Spotify. In total, Europe contributed three of the top 10 largest tech IPOs globally of 2018.

“This report has become a bit of a broken record about breaking records but the facts speak for themselves. Today, European founders have access to sophisticated investors, can hire the best talent, go the full distance, stave off ferocious competition, go public and win on the global stage. Europe is now reaping the early rewards from the transformation of its tech ecosystem. The fact is the seeds of success this year were planted a decade ago. That is why we should expect even greater success in the years to come,” said Tom Wehmeier, Partner and Head of Research at Atomico, and and author of the report.

2. Europe urgently needs to fix its diversity & inclusion problem

5,000 people responded to the 2018 State of European Tech Survey, and while the vast majority agreed that diversity is a benefit to company performance, alarmingly, 46% of women reported that they have experienced discrimination in the European tech sector. Of all funds raised by European VC-backed companies in 2018, a staggering 93% went to all-male founding teams.

“Slush is devoted to ensuring European tech benefits from a more diverse pool of talent. To achieve this, we all have to fight a battle on many fronts. We need the media to celebrate a variety of different entrepreneurial role models, investors need to look for targets with a wider lens, and all of us have the responsibility to tackle unconscious bias. If we get all this right, we’ll have a much more powerful tech scene,” said Slush CEO Andreas Saari.

To respond to the challenge, Diversity VC and Atomico have joined forces to launch an industry-first resource: a practical and hands-on guide for technology entrepreneurs, that will help them build companies that have diversity and inclusion at their core. This resource is available online.

3. Europe’s tech industry is the best hope for a stalling European economy

Europe’s tech (software) industry is growing 5x faster than the rest of the European economy in terms of Gross Value Added, a level that has accelerated in recent years. The European tech workforce grew 4% in 2018, a significant difference to overall EU employment growth of 1.1%.

4. The gains from Europe’s tech boom are not yet being democratised

Elsewhere, stellar European tech growth and record success has not gone unnoticed by family offices and high net-worth individuals (HNWs). Over the last five years they have invested over $5bn in European venture capital funds. Only government agencies have invested more in European VC in that same period. Outside of the Nordics, pension funds are clearly failing to democratise European tech’s returns. Over the last five years, pension funds have invested just $1.7bn in European venture capital. In context, European pension funds alone have assets under management of $4tn.

5. Mobilising Europe’s hidden tech talent pool can unlock huge upside

Europe’s ecosystem manages to be both more distributed and more interconnected than ever — there are now 5.7m professional developers in Europe, up by 200,000 on 2017. This compares to the 4.4m in the US, a number that stayed flat year on year.

Still more European tech hubs will emerge. Cities such as Cologne, Warsaw and Vienna all have larger developer populations than Stockholm and active local tech communities, but have yet to attract as much investment. In fact, there are 15 European cities with professional developer populations of 50,000+ that have seen less than $1B in total capital investment since 2013. Unlocking those talent pools will be key in supercharging growth in European tech.

6. Europe is producing $B+ companies at a level that is 15x+ higher than a decade ago

Two companies founded in the 2000s had reached $B+ by 2008. Compare that to 31 founded in the 2010s that reached that milestone by 2018 — an increase of 15.5x. Where will the 2010s end up by 2028?

“The transformation in technology is not coming to Europe, it is being driven by European companies and their founders. This year’s report confirms that tech is THE engine of economic growth and opportunity. It also reminds us of our responsibility as a community to ensure that this transformation is inclusive in all respects. That is the only way we will deliver fully on the promise of innovation,” said Chris Grew, Partner, Technology Companies Group, Orrick.

Check out the full report here.

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