For the fourth year in a year, the global venture firm Atomico has produced a “State of European Tech Report,” and again this year, there’s plenty for the firm — and Europe broadly — to crow about. According to the report, total investment in European startups reached $23 billion this year. That’s one-fourth the roughly $100 billion that’s expected to be plugged into U.S. startups by year’s end, but it’s a whole lot more than the $5 billion that was showered on European startups in 2013, just five short years ago.
That’s the good news — or some of it, anyway.
Working with data partners like Dealroom, Prequin and about a dozen other companies, Atomico’s new report features a steady drumbeat of developments over which to cheer. Among them: in 2018, 17 more European companies became valued at a billion dollars or more by their investors. Three of the 10 biggest venture-backed public listings came from Europe, including that of the streaming media company Spotify, whose shares began trading on the New York Stock Exchange in April. And startups across 10 European countries have raised more than a billion dollars since 2012, underscoring that while the U.K. remains the biggest tech hub on the continent, plenty of other countries are rising, including Germany, France, Sweden and Spain.
As for Europe’s challenges, the uncertainty of Brexit is clearly at the top of mind for 5,000 founders, investors and other professionals in the ecosystem who were surveyed for the report. Access to talent is overwhelmingly the top consideration when it comes to where to plant a company, and while Europe is home to some of the world’s best business and technical schools, it also relies heavily on friendly immigration policies. Meanwhile, Brexit threatens to end free movement from Europe. In fact, many respondents said that the ongoing uncertainty caused by the Brexit vote and exit process is impacting hiring, fundraising and office location decisions.
Another challenge for European companies trying to scale up are differing regulations in different countries around taxes and data privacy, among other things.
Yet an even bigger problem for Europe — as is here in the U.S. — is that the lip service being paid to diversity isn’t resulting in the numbers you might expect. Consider that in 2013, just 2 percent of female-founded tech companies in Europe closed funding rounds. In 2018, that percentage was . . . again just a measly 2 percent.
Other alarming numbers: Atomico found just one female CTO amid the 175 venture-backed European tech companies that have raised a Series A or Series B in the past year. All-male founding teams received 93 percent of the capital invested, and all-male funding teams were responsible for funding the vast majority of deals.
Perhaps worst of all, fully 46 percent of women surveyed by Atomico said that they have experienced discrimination in the tech sector.
The research was released today at the Slush tech conference in Helsinki, Finland. It’s definitely worth poring over, too, though at 142 pages, you may want to grab some coffee first.
If you’re looking for more anecdotal information, you might also check out our sit-downs last week with investor Saul Klein of LocalGlobe, and four members of Accel’s London-based team. All talked about the state of the European tech scene at our TechCrunch Berlin event.