Key Takeaways
- • European startups raised a record $34bn in venture capital in 2019, up 40% from 2018, according to State of European Tech, while US VC investment fell 1% to $117bn and Asian VC investment dropped by half.
- • Fintech is the fastest-growing sector in Europe, with over $9bn raised this year, driven by mega-rounds including $800m for Greensill from SoftBank, $460m for Klarna and $440m for OakNorth.
- • US-based investors put close to $10bn into European startups in 2019, roughly three times the 2015 level, and 20% of capital raised in Europe now includes at least one US investor, versus 9% in 2015.
- • Cambridge Associates data indicates European VC has outperformed US VC over one-, three- and five-year horizons and has outperformed European private equity, though US returns remain higher over 20-25 years.
Summary
European startups attracted a record $34bn in venture capital funding in 2019, a 40% increase over 2018, according to State of European Tech. The growth outpaced the US and Asia, where investment was flat-to-down: US VC fell 1% to $117bn compared with 2018, and VC investment in Asian startups dropped by half over the same period.
Sonali de Rycker, a partner at Accel, described the period as a "golden age for Europe," citing the quality of talent, the level of ambition and the availability of capital. The year produced breakthroughs for companies including Bolt in urban mobility, GetYourGuide in travel, and challenger banks Revolut and Monzo, along with mega-investments from international investors such as SoftBank.
Fintech was the fastest-growing sector, raising more than $9bn in 2019. Key transactions included $800m for Greensill from SoftBank in May, $460m for Klarna in August and OakNorth's $440m raise in February. Gaming, fashion and media were slower during the year.
Cross-border participation has increased markedly. Twenty percent of capital raised in Europe now includes at least one US investor, up from 9% in 2015, while 4% includes an Asian investor. Nine of ten rounds above $100m included at least one US or Chinese investor, and US-based investment into Europe is close to $10bn, roughly three times its 2015 level. Some funds attribute part of the interest to lower entry valuations relative to the US and Asia; Daniel Keiper-Knorr, co-founder and partner at Speedinvest, said this has produced "very capital-efficient investment opportunities."
Performance data, based on Cambridge Associates benchmarks, shows US venture returns exceed European returns over 20-25 year horizons. Over one-, three- and five-year periods, however, European VC has pulled ahead, and European VC funds have also outperformed European private equity.
Sonali de Rycker, a partner at Accel, described the period as a "golden age for Europe," citing the quality of talent, the level of ambition and the availability of capital. The year produced breakthroughs for companies including Bolt in urban mobility, GetYourGuide in travel, and challenger banks Revolut and Monzo, along with mega-investments from international investors such as SoftBank.
Fintech was the fastest-growing sector, raising more than $9bn in 2019. Key transactions included $800m for Greensill from SoftBank in May, $460m for Klarna in August and OakNorth's $440m raise in February. Gaming, fashion and media were slower during the year.
Cross-border participation has increased markedly. Twenty percent of capital raised in Europe now includes at least one US investor, up from 9% in 2015, while 4% includes an Asian investor. Nine of ten rounds above $100m included at least one US or Chinese investor, and US-based investment into Europe is close to $10bn, roughly three times its 2015 level. Some funds attribute part of the interest to lower entry valuations relative to the US and Asia; Daniel Keiper-Knorr, co-founder and partner at Speedinvest, said this has produced "very capital-efficient investment opportunities."
Performance data, based on Cambridge Associates benchmarks, shows US venture returns exceed European returns over 20-25 year horizons. Over one-, three- and five-year periods, however, European VC has pulled ahead, and European VC funds have also outperformed European private equity.
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