CBInsights Report: European venture capital investments in tech companies at 4-year high in 2014

CBInsights is one of the most comprehensive venture capital (VC) databases out there. It helps track 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 for 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 $5.7 billion, while deals also slightly ticked up to 855.

• Early-stage fund High-Tech Gruenderfonds was the most active VC in European technology in 2014. Index Ventures and Accel Partners rounded out the top 3. Both Index and Accel participated in BlaBlaCar’s $100 million Series C round, which was among the year’s largest European funding rounds. Other active investors included Octopus Ventures, Balderton Capital, and Northzone Ventures.

• The UK tech scene continued to attract the highest number of deals in Europe, with deal activity growing 80% since 2011. Germany was the only other country to break 100 deals in 2014, as Berlin continues to 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. From 2011 – 2012, Italy saw under 30 venture-backed deals, but this climbed to over 70 in the past two years. 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 highs in 2014, as it grew 10% YoY to $1.1 million. After a drop-off in 2012, deal sizes have increased for two years straight, as the seed investment bug takes hold in Europe. Series A deal sizes also hit four year highs in 2014. The average Series A size jumped from $5.3 million in 2013 to $5.8 million in 2014, partially due to two larger +$30 million funding rounds to WorldRemit and Blockchain.

• Four of the seven highest-funded European tech companies were in e-commerce. German unicorn Delivery Hero has received the most funding, having raised $1.22 billion in total including $523 million across three rounds in 2014.

• Investments into VC-backed German Tech companies more than doubled YoY as they totaled $1.28 billion in 2014. Berlin dominated German tech with 91 deals, with food delivery startup Delivery Hero accounting for 3 deals and $523 million in financing, half of Berlin financing. Munich saw the second highest number of deals in Germany with 28 deals made, followed by Hamburg with 5 deals in 2014. Delivery Hero’s 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 and Series A) fell drastically to a four-year low of 12%.

• Investment into VC-backed UK Tech companies topped $1.6 billion in 2014, 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 stable. Octopus Ventures was the most active VC fund investing in UK tech in 2014, with deals including Zynstra, Certivox, and Adbrain. Index Ventures was second most active, 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 this analysis from the team behind the project 1000startups.eu (Update – July 2023: The startup seems to be no longer in business under this website, and we therefore deactivated the original link).

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% from 166 in 2013. These are all good signs that mean more money flowing back into the startup ecosystem. The bad news is that most of the deals were seen in Q1 and Q2. After two big quarters, venture financing dropped 24% in Q4 compared to Q3.

More bad news is that the number of VC fund closings in 2014 fell 4% from 2013 to 76. The total amount raised dropped 18% in 2014 to $3.8 billion. The drop was especially steep in Q4, when the number of funds that had closings fell 51% from the same period a year ago, which 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 downturn.

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