A breakthrough year for Europe’s tech industry

13 Nov 2015

London has emerged as the leading tech hub in Europe in terms of the sheer number of people attending tech meetups

2015 was a breakthrough year for Europe’s evolving tech sector and, if anything, European tech firms could better withstand a tech downturn than their US counterparts, according to a new study by Skype founder Niklas Zennstrom’s Atomico and Slush.

In a wide-ranging report entitled The State of European Tech,  it’s reported that the fact that European tech firms have taken on less investment than their US counterparts means that when the inevitable tech bubble bursts occurs, the carnage will be lessened.

The report shows that Europe’s tech sector has passed a number of key milestones:

  • This year, 10 European software companies reached $1bn valuations, making a total of 35 since 2003
  • The amount of capital invested by venture capitalists in Europe in 2015 reached $10bn
  • The number of active angel investors now stands at 5,000 investors
  • There are more than 1.6m software developers active in Europe and many attend the more than 25,000 tech meetups that take place across Europe
  • Europe also produced 100 tech IPOs in the last five years.

“Achievement unlocked. But not mission accomplished,” said Zennström, who co-authored the report with Riku Mäkelä, CEO of Slush, Denmark’s answer to Dublin’s former Web Summit. The study used data from CrunchBase, Meetup, Glassdoor and StackOverflow.

‘Having proven our ability to create a series of billion-dollar companies, how do we produce companies in the tens or hundreds of billions?’

“The next stage will bring its own challenges for a European tech ecosystem now in its prime. Having proven our ability to create a series of billion-dollar companies, how do we produce companies in the tens or hundreds of billions?

“How do we bridge what remains a significant late-stage funding gap? How do we ensure investors are keeping pace with the scale of ambition and technical expertise in frontier technologies like AI, as well as backing proven business models?”

“How do we unlock more of our potential by building closer links between our disparate hubs, and overcoming an alarming gender imbalance by attracting more women to become the engineers, entrepreneurs and investors of tomorrow? And, by addressing these challenges, can Europe create an ecosystem self-sustaining and robust enough to weather any future economic shocks?”

Could Europe’s tech sector survive the bubble bursting?

Although US venture capital investment is 5.4 times the amount of investment seen across Europe, Zennström said he believes companies are being built in a more sustainable way.

The study also revealed that there are 237,000 mobile developers in Europe compared with just 187,000 in the US.

The study had some interesting insights, including evidence of a greater cultural acceptance of entrepreneurship by Europeans, with the career choice finally passing the “parent test”.

Europe’s founder base currently consists of 38pc first-time founders and 62pc repeat founders.

There is also less fear of failure, with 80pc of founders and 76pc of their employees preferring to take risks rather than take the safe option.

Also, because of the limited scale of their domestic markets, European start-ups are born with a native international mindset, which is an inherent competitive advantage.

European start-ups are also increasingly diverse, with 44pc of employees at the typical start-up being non-native to the start-up’s country of origin.

The fastest growing tech hubs in Europe

More than 630,000 people have attended one of 25,000 tech-related meetups in Europe in 2015, with the majority attending events in London (160,000) followed by Paris (62,600) and Berlin (46,400). Dublin is in ninth place with 14,400 people attending tech meetups.

The top 15 fastest-growing European tech hubs – by the number of tech-related meetup communities – included: Istanbul, Lyon, Bucharest, Frankfurt, Prague, Stuttgart, Zagreb, Munich, Madrid, Moscow, Ljubljana, Lisbon, Hamburg and Copenhagen.

Also, European founders are more confident about building their companies from Europe, with 62pc saying they intend to stay where they are, compared with 12pc aiming for Silicon Valley.

One of the stumbling blocks is interconnectivity between European start-up hubs, with one founder pointing out that apart from personal relationships founders have with friends there’s very little systematic exchange going on at all, except for the odd coffee when passing through.

Europe’s key hubs for building a critical mass of developers include London (71,497 developers), Paris (40,538), Moscow (38,194), Madrid (27,333), Berlin (15,915), Istanbul (22,944), Stockholm (11,348) and Lisbon (9,990).

The study found that, while the UK has the largest mobile developer professional pool, the Nordic region is emerging as a hub for mobile development. Sweden has more than 7,000 mobile developers, half of whom live in Stockholm.

The Atomico/Slush study also found that Europe produces twice as many STEM graduates per year as the US and the cumulative difference between Europe and the US is greater than 5m graduates.

London bus image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years