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European Startups Got A Bigger Share Of Record Global VC Invested In H1 2021

European startups got a bigger slice of a bigger venture funding pie in the first half of 2021.

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Venture funding to startups in Europe totaled an unprecedented $59 billion, Crunchbase data shows, up from $18.5 billion for the first half of 2020 and $24.5 billion for the second half of that year.

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For the first half of 2021, European startups captured 20 percent of global capital, up from around 13 percent to 14 percent since the first half of 2019.

The lion’s share of funding was invested in late-stage venture — Series C and beyond funding rounds — and private equity into venture-backed startups. This totaled $41.4 billion, up over 300 percent year over year and more than 200 percent compared to the second half of 2020.

All other funding stages were up year over year as well, with early-stage funding up 96 percent and seed capital up 66 percent, per Crunchbase data.

Growth investors

Investors that led or co-led fundings in the first half of 2021 in European companies by amounts are headed up by the Softbank Vision Fund, followed up by Goldman Sachs and third on the list is General Catalyst, all growth-stage investors. Sequoia Capital is the single multistage venture firm to make this list. The firm set up shop in London in 2020 and has been flexing its growth fund.

Late-stage funding

Late-stage funding in the second quarter of 2021 is up by a massive 466 percent year over year. Europe’s late-stage funding is half the size of late-stage funding invested in North American companies in the second quarter.

Lithium ion battery company Northvolt, headquartered in Sweden, raised a $2.7 billion funding last quarter. Execution management company Celonis, headquartered in Munich, raised a billion-dollar funding round. Berlin-based Trade Republic, a commission-free broker, raised a $900 million Series C. And cloud communications company MessageBird from Amsterdam raised an $800 million Series C.

“It’s an excellent time to be an entrepreneur. The abundance of capital is pushing early stage funding rounds to increase in size, sometimes skipping what used to be seed; and we are also seeing a proliferation of stage agnostic funds, both European and U.S.-based, actively prioritising the region,” Luca Bocchio, a partner at Accel, told Crunchbase via email. “The normalisation of remote dealmaking has truncated the fundraising process (at least in the initial stages) and given European founders access to a greater range of investors than ever before.”

Accel is an investor in three of the companies that raised large fundings this past quarter: Celonis, Trade Republic and MessageBird.

The funding pace for European startups has also accelerated. Austria-based online tutoring platform GoStudent raised a $245 million Series C after raising its Series B in March 2021. In our global funding report we noted that Turkey-based Getir, an on-demand delivery service, raised three sequential funding rounds this year so far from Series B through D, totaling $983 million across these three funding rounds.

All told, more than 300 unique European companies have raised late-stage and growth-equity funding in the first half of 2021.

Early-stage funding

Early-stage funding tracks at $7.6 billion for the second quarter of 2021, more than doubling year over year. This funding stage trails behind, by the greatest proportion, at just under a third of funding compared to North American amounts.

Online grocery company Flink Food from Germany raised pre-seed, seed and a Series A funding of $240 million, all in 2021. And Turkey-based Dream Games raised its Series A earlier this year and closed on a $155 million Series B in June.

Seed funding

Seed funding was up this quarter at $2.1 billion — not far from the North American market, which raised $2.9 billion at seed in the second quarter.

Leading countries in Europe

Alongside record funding, larger amounts have been invested outside of the top three markets. Eight countries in Europe raised funding this past quarter at or over a billion dollars compared to three to four countries since 2018.

To understand how much has changed: In 2016 for each quarter, the U.K. was the only country that raised quarterly funding above $1 billion.

All of the five leading countries raised substantially more funding this past quarter compared to a year ago. New to raising billion-dollar funding in a quarter per Crunchbase data, are Netherlands, Switzerland, Ireland and Turkey.

Exits

UiPath, headquartered in New York, but hailing from Romania in Bucharest, is one of the most successful companies to come out of Europe and debut on the public markets. Accel in London led its Series A in 2017, amassing the largest stake for an institutional investor before UiPath went public. Earlybird Venture Capital, based in Berlin, invested at seed, and was the second-largest institutional investor.

European unicorns

New European companies joining the unicorn board totaled 37 in the first half of 2021, bringing the total number of private European unicorns to more than 100. This contrasts with 15 companies that joined from Europe for the whole of 2020.

The number of companies raising funding at or above $100 million in the first half of 2021 tracks at 128. The second-highest half-year count for Europe is the second half of 2020 with 49 funding rounds. 

Moving forward

“The increase in investment we are witnessing today is the result of a decade’s worth of groundwork being realised. Europe has built tech giants Adyen and Spotify, which have surpassed $50bn market capitalisation, and has fostered exits with Wise, Deliveroo & Trustpilot, to name just a few,” Martin Mignot a partner at Index Ventures, said via email. “International investors have taken note and we are seeing tremendous interest in tech companies built from the continent.”

Europe posted historic highs in funding in the first half of 2021, with many leading European companies choosing to stay in Europe rather than head over the pond. Substantial funding has spread beyond the three leading countries the U.K., Germany and France. And stage-agnostic investors are looking to Europe  for growth companies as well.

“Europe is truly at an inflection point,” confirmed Bocchio. “In the 21 years we’ve been on the ground in Europe, we’ve really seen the tech ecosystem mature and close the gap with the U.S., but the pace we’re experiencing now is unprecedented. We’re seeing an incredibly high number of high-quality companies experiencing lightning-quick growth and development.” 

Crunchbase Pro queries in this article

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 12, 2021.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

The most recent quarter/year will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by as much as 30 percent to 40 percent a year out.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

For M&A transaction analysis, we include venture-backed companies and exclude companies that previously went public. 

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

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