European deep tech players want to scale up and, rather than look to Silicon Valley, are prepared to march to the beat of their own drum.
“There is no doubt, Europe is killing it,” intoned Tom Wehmeier, partner and research director at venture capital firm Atomico, to delegates at Slush 2017 in Helsinki.
Revealing the findings of the latest State of European Tech report, which was pulled together via 12 data partners, 3,5000 survey participants and more than 50 interviews, Wehmeier said that the destiny of Europe’s tech scene is in the hands of the Europeans.
‘Every dollar invested in every European IPO would have four times the returns delivered versus US on a weighted aggregate basis’
– TOM WEHMEIER
The report revealed that a new landmark in European tech funding was reached in 2017, with more than $19bn, compared with $14.5bn last year and $10bn in the first year of the report.
Not only that, but more than 50 investment rounds worth more than $50m were sealed this year, compared with 43 last year.
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The report also showed that there are now more than 41 European tech companies that qualify as unicorns.
“This year’s research tells us two things: that European tech is the strongest it has ever been, and marching to a beat of its own drum; and, secondly, we are now operating in an independent and virtuous cycle, building a tech ecosystem here and in our own image.”
In terms of the data, Wehmeier said the numbers speak for themselves.
There are now more than 5.5m professional software developers in Europe, compared with 4.4m in the US. “We are leaving the US behind in this regard.”
He said that in one year, Europe has produced an additional 500,000 software developers. “Our education system is producing more and this is down to STEM grants.
“Technology and the people that build it and shape it are the future of our economy, and it is supercharging growth in the region.”
Wehmeier said that overall, technology jobs are growing 10 times faster than the rest of the European economy combined. “And that growth rate is accelerating. Last year it was 2.1pc, and this is now 2.6pc.”
He said that Europe cannot afford to get complacent about tech talent and needs to keep growing the pipeline to meet the need for future tech skills. “Europe is in a war for talent on three fronts: start-ups competing with each other, start-ups competing with the tech giants, but also the tech world competing against traditional industry, which is embracing more tech than ever before. This war for talent is at its fiercest in the UK, Germany, France and the Netherlands. It’s a battle royale.”
He said that European tech firms such as TransferWise, Zalando and Spotify are absorbing the battle by building their companies in a distributed way across Europe. “Cities like Warsaw, Tallinn and Minsk are becoming a key part of the European tech landscape,” Wehmeier said.
In terms of money, he added that European VCs will make investments in 1,000 organisations that exist outside their own country.
“We are on track for $19bn invested in European tech in 2017, compared with $10bn two years ago. The good news is that this investment is spreading its way across regions in a manner not seen before.”
Wehmeier said that outside of venture capital, on a public markets front, European tech IPOs also outperformed the US by some margin. “Every dollar invested in every European IPO would have four times the returns delivered versus US on a weighted aggregate basis.”
Where Europe is gathering momentum is in areas such as AI, autonomous vehicles, robotics, big data and more, with companies such as Improbable and Unity setting the standard.
“In deep tech, Europe is going big. The European deep tech firms want to scale themselves, and the world’s biggest investors want to back them. Some $3.5bn is on track for investment in deep tech in Europe,” Wehmeier said.