European Venture Funding Is Still On A Tear, With More Unicorns And A Bigger Share Of The VC Pie

There appears to be a new normal for venture funding in Europe.

VC dollars flowing into the continent reached $28 billion last quarter, Crunchbase data shows, just two quarters after hitting the $20 billion mark for the very first time in Q1 2021.

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Europe has also increased its proportion of global funding to 19 percent in 2021, up from 13 percent in 2020. And more startup hotspots are emerging on the continent too: 17 European cities have received venture funding above $1 billion so far this year, compared with just five cities in 2020.

All told, venture funding in Europe was up 138 percent year over year in the third quarter, though that represents a 24 percent dip compared to the Q2 2021 peak of $36.7 billion.

Table of Contents

• UK, Germany, France lead
• Late stage grew year over year
• Early stage held up quarter over quarter
• Seed at $1.5B
• A decacorn debut
• Acquisitions
• Europe grows its unicorn herd
• Methodology
• Glossary of funding terms

UK, Germany and France lead

The U.K. led when it comes to venture dollars to Europe with $9.6 billion invested last quarter, though that’s down from the $10.7 billion peak in the second quarter. 

Some of the largest fundings in the U.K. include an $800 million round in neobank Revolut, a $450 million round in Hopin and $382 million in funding for business loan service MarketFinance. 

Germany had $4.4 billion in funding in the past quarter, making it the second-largest funding market in Europe. Notable German companies to receive venture funding include delivery startup Gorillas, which raised $950 million and API banking platform Solarisbank and robotics company Agile Robots, which each raised funding above $200 million. 

France came in a close third with $3.9 billion in venture funding invested last quarter. Leading fundings include enterprise marketplace Mirakl, which raised $555 million, ManoMano, a marketplace for home improvement products that raised $355 million, and mobile video game developer Voodoo’s raise of $316 million. 

The Netherlands had its second quarter of more than $2 billion in venture funding. Dutch startups that raised significant venture investment include home delivery company Picnic and its $709 million raise, used car platform CarNext.com’s $473 million round, and neobank Bunq, which raised Europe’s largest Series A funding of $229 million. 

Turkey joined the leading five countries in Europe for the first time this past quarter with a single $1.5 billion investment in e-commerce shopping platform Trendyol, now the third-highest valued private European unicorn. 

Another notable large funding is ride hailing and delivery platform Bolt from Estonia, which raised a $712 million Series E. 

Late stage grew year over year

Of all funding stages, late-stage funding to European startups grew the most year over year, by over 263 percent, with $18.9 billion invested in just over 160 companies. 

The surge in late-stage funding in the second quarter was driven by a larger count of fundings over the $500 million mark. The number of companies that raised north of $100 million came in at a similar count for both quarters—just under 60 for late-stage financings. 

Early stage held up quarter over quarter

Early-stage funding held up the most quarter over quarter, and was up 38 percent year over year. More than 380 companies raised a total funding of $7.5 billion. The largest Series A fundings were in Bunq, mentioned above, and U.K.-based electric vehicle subscription company Onto and Olsam Group, acquirer of direct-to-consumer brands on Amazon. 

Seed at $1.5B

Seed-stage funding across Europe had hovered around the $1 billion mark since 2018, but since the first quarter of 2021 has been at or above $1.5 billion. 

While seed funding is up year over year by 40 percent, it’s down from its second quarter peak of $2.2 billion. 

Funding amounts and deal counts for the third quarter  will increase as seed funding rounds are added to the Crunchbase dataset after the quarter ends.

A decacorn debut

The most highly valued company to go public from Europe in the third quarter is Wise, which went public via a direct listing on the London Stock Exchange on July 7, 2021. Wise, valued as of Oct. 8 at $14.8 billion, is the fifth European startup valued above $10 billion in a 2021 public debut, including UiPath, which was founded in Romania but moved its headquarters to New York in 2018. 

Four of the top public market listings from Europe went public via SPAC deals, including used car marketplace Cazoo, electric aircraft developer Lilium, diagnostic health care company LumiraDX, and encryption platform developer Arqit. 

Acquisitions

Europe was also active on the acquisitions front. The biggest acquisition was Visa’s bid for U.K.-based Currencycloud, a cross-border payment solution, for just under $1 billion. 

The most active acquirer for European headquartered companies was Sweden-based buy now, pay later provider Klarna, which acquired U.K.-based e-commerce shopping platform HERO, Germany-based mobile wallet Stocard, and Sweden-based influencer marketing company Apprl—all in the third quarter. 

Europe grows its unicorn herd

So far in 2021, 61 European companies have become unicorns, with 19 joining those ranks in the third quarter. 

The European private unicorn board now counts 131 companies valued at $1 billion or above, with the most highly valued private unicorns being Klarna and Revolut. 

Crunchbase Pro queries relevant to this article

• European funding 2021 
• European private unicorns (131)
• European fundings above $100M in 2021 (224)

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 6, 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