European VC-backed investments in tech companies at 4 year high in 2014 – summary of the CBInsights report

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CBInsights is one of the best and most comprehensive Venture Capital databases I know. It helps tracking the world’s most promising private companies, their investors, their acquirers and the industries they compete in. CBInsights just published a data-driven review of 2014’s financing activity to VC-backed European tech companies. Here are some of the most interesting facts:

  • Investment activity in VC-backed European tech companies reached a four-year high in both deals and dollars in 2014. Funding saw 78% growth YoY, reaching $5.7B, while deals also slightly ticked up to 855.
  • Early-stage fund High-Tech Gruenderfonds was the most active VC in EU Tech in 2014. Index Ventures and Accel Partners rounded out the top 3. Both Index and Accel participated in BlaBlaCar’s $100M SeriesC which was among the year’s largest European financings. Another active investors included Octopus Ventures, Balderton Capital, and Northzone Ventures
  • The UK tech scene continued to attract the highest number of dealsin Europe with deal activity growing 80% since 2011. Germany was the only other country to break 100 deals in 2014, as Berlin continuesto be a budding tech hub in Europe. In Italy, the number of deals saw the highest growth, by 208%. No other EU country has seen more growth in tech deals over the past two years than Italy. During 2011 – 2012, Italy saw under 30 venture-backed deals, but this climbed to over 70 in the past twoyears. Switzerland and Finland, which is home to Rovio Entertainment, rounded out the top 3 in terms of growth with deals climbing by nearly 170% in both countries.
  • Seed deal sizes hit new highs in 2014. The average seed deal size reached four-year highsin 2014, as it grew 10 % YoY to $1.1 M. After a drop-off in 2012, deal sizes have increased for two years straight as the seed investment bug takes hold in Europe. Also series A deal sizes hit four year highs n 2014. The average Series A size jumped from $5.3M in 2013 to $5.8M in 2014, partially due to two larger $30M+financings to WorldRemit and Blockchain.
  • 4 of the 7 most well-funded EU tech companies were in eCommerce. German unicorn Delivery Hero is the most well-funded, having raised$1.22B total including $523M across three rounds in 2014.
  • Investments into VC-backed German Tech companies more than doubled YoY as they totaled $1.28B in 2014. Berlin dominated German tech with 91 deals, with food delivery startup Delivery Hero accounting for 3 deals and $523M in financing, half of Berlin financing. Munich saw the second highest number of deals in Germany – 28, followed by Hamburg with 5 deals in 2014. Delivery Hero Series E+ deals accounted  for 41% of all dollars invested in VC-backed German tech companies in 2014. On the other hand, early-stage dollar share (Seed & Series A) fell drastically to a four-year low of 12%.
  • Investment into VC-backed UK Tech companies topped $1.6B in2014, up 78% YoY. London dominated both in deals and dollars, accounting for 65% of all funding and 67% of all deals to UK tech companies. Seed deal share fell in 2014, as only 36% of all deals to VC-backed UK Tech companies were at the seed stage versus 53% in 2013. Series A deals reached a four-year high at 30%, while the rest of stages remained relatively range-bound. Octopus Ventures was the most active VC fund investing in UK tech in 2014. Octopus’ investments included Zynstra, Certivox, and Adbrain deals. Index Ventures was 2nd, while Notion Capital, Accel Partners, and Balderton Capital tied for third.

Europe’s growth of VC investments was  stronger compared to similar stats from CBinsights for the US, but the gap is still significant as you can see from an analysis who is behind the project 1000startups.eu.

Country Population VC investments per capita $
California 38,802,500 690.68
Israel 8,238,300 412.71
US 320,000,000 147.81
EU 507,000,000 11.24

According to other data, from Dow Jones VentureSource on venture capital, Europe saw 55 venture-backed IPOs in 2014, triple the number in 2013. In addition, there were 201 acquisitions completed in 2014, up 21 percent from 166 in 2013. Good signs that mean more money flowing back into the startup ecosystem. Bad news is that most of the deals were seen in Q1 and Q2. After two big quarters, venture financing dropped 24 percent in Q4 compared to Q3. And more bad news: The number of VC fund closings in 2014 fell 4 percent from 2013 to 76. The total amount raised dropped 18 percent in 2014 to $3.8 billion. The drop was especially steep in Q4, when the number of funds that had closings fell 51 percent from the same period a year ago. This could be a worrisome sign. The Q1 of 2015 could well tell us whether the European VC scene just hit a bump in late 2014 or whether it is headed toward a bigger dropdown.

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