European Venture Reaches All-Time High In The First Quarter Of 2021

2021 is shaping up to be a stellar year for startups in Europe.

Investment in Europe startups tracked at $21.4 billion in the first quarter, more than double funding amounts year over year and close to double over the last quarter of 2020. Funding at every stage was up with late-stage funding growing the most.

Subscribe to the Crunchbase Daily

New unicorn counts in Europe grew as well, with an unparalleled 16 new unicorns in a single quarter. In the whole of 2020, 15 new European unicorns joined the unicorn board. The European unicorn board of private companies valued at or above $1 billion tracks at 86 companies, around 11 percent of all unicorns globally.

Europe’s unicorns also raised a greater amount of capital in the first quarter, $8.2 billion compared with $3.9 billion in the fourth quarter of 2020.

Seed funding holds up

Seed funding at $1.3 billion is the highest amount yet recorded for a single quarter for European startups, up year over year by 26 percent and marginally up quarter over quarter by 10 percent.

For funding counts we see a huge data lag at the seed stage by as much as 40 percent a year out as founders add seed funding after the investment take place.

Seed funding in Europe first reached $1 billion in 2017. Since 2018, funding at the seed stage has been at or above $1 billion.

Early-stage funding is up

Early-stage funding,  at $5.8 billion,  is also at an all-time high for European startups. The next highest quarter for funding was the third quarter of 2020 at $5.4 billion. Funding is up 62 percent year over year and 49 percent quarter over quarter.

Funding counts are also up quarter over quarter. This typically trends down for the most recent quarter due to data lags.

Nine companies raised early-stage funding rounds above $100 million, including four in the grocery delivery space; three companies at Series B include German-based Gorillas with a $290 million raise, $230 million for Czech-based Rohlik, and $128 million for Turkey-based Getir; and U.K.-based Zapp secured $100 million at Series A.

Three Europe-based biotechnology companies raised supergiant funding rounds include: Netherlands-based New Amsterdam Pharma raised a $194 million Series A; Oxford, U.K.-based Vaccitech raised $168 million in a Series B; and Copenhagen-based IO Biotech raised a $154 million Series B.  In  Austria,  Bitpanda, a cryptocurrency platform, raised $170 million, and. France-headquartered Branded,which acquires top performing Amazon sellers, raised $150 million.

Late-stage funding grew substantially

Late-stage and technology-growth funding came in at $14.3 billion — up 202 percent year over year and 126 percent quarter over quarter. This is the largest amount ever recorded for European headquartered startups.

Billion-dollar funding rounds were raised by Stockholm-based e-commerce payments platform Klarna and London-based online used car marketplace Cazoo.

Funding rounds at or above $100 million reached the highest count recorded in a quarter at 54 rounds, the majority of which are at late stage. U.S.-based venture and alternative investors led a higher proportion of deals than their European counterparts.

Active investors

The most active investors in European startups highlights the connection between Europe and the U.S. venture markets. In Europe, the majority of the active investors hail from Germany and the U.K.,  namely High-Tech Gründerfonds, Business Growth Fund, HV Capital and Northzone.

Active investors headquartered outside of Europe include GV, the venture arm of Google, Accel — which recently celebrated 20 years with an investment team in the U.K. — Index Ventures,  which set up headquarters in the U.S. alongside its original offices in Europe, e.ventures and General Catalyst, headquartered in the U.S. Late-stage global investor Tiger Global Management is also U.S.-headquartered.

Exits pick up

The first quarter was  strong for acquisitions of companies headquartered in Europe. Notable amongst these are Berlin-based marketing automation company Adjust which was purchased by U.S.-based AppLovin for $1 billion, and Copenhagen-based employee success platform Peakon which was purchased by another U.S.-based company,  Workday, for $700 million.

U.S. headquartered companies led the majority of the acquisitions priced above $100 million, but only around one-third of all acquisitions in European companies.

In the single quarter, two European companies went public at valuations above $10 billion, namely electric vehicle company Arrival via a special purpose acquisition company,  and delivery service Deliveroo.

Looking forward

Following a strong fourth quarter, European startups raised funding at record amounts in the first quarter of 2021. While late-stage funding grew substantially, funding at all stages set records.

The exit markets were equally strong for both acquisitions and public debuts, with some of the largest European public debuts this past quarter.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of April 7, 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