For 10 consecutive years, GP Bullhound has released its annual report analysing and highlighting the growth trends in the European technology ecosystem. This year’s report,Tech Giants – An Unparalleled Era of AI-Driven Innovation in European Technology” ” highlights the resilience and growth of Europe's technology sector, setting the stage for a new era of innovation and investment.
The report noted that despite macroeconomic uncertainty from mid-2022 onwards, funding levels appear to have normalised over the past 12 months at €15 billion per quarter, around 52% higher than the average in 2019. This growth highlights the strength of investment in technology, which appears to be stronger than ever.
Europe reacts to headwinds
Since the first report in 2014, the number of European billion-dollar companies has increased by almost 11 times, while the total ecosystem valuation has increased nearly 14 times to over $1.2 trillion. The number of European unicorns now stands at 323, with 14 new billion-dollar companies created in the past year alone. The overall unicorn valuation has quadrupled since 2019.
“In the 10 years since we published the Titans of Tech report, we have witnessed the ups and downs of the European tech ecosystem. A year ago, the funding environment was not so optimistic due to macroeconomic uncertainties and companies focusing on layoffs rather than growth and innovation. Today, against a backdrop of negative headlines, we have laid the foundations for the next wave of innovation, with funding levels stabilizing and surprisingly 50% higher than pre-bull market levels.” – Manish Madhvani, Managing Partner, GP Bullhound
Mega rounds normalize through 2023
Access to funding rounds above $50 million is becoming tougher. However, investors remain interested in backing innovators. The number of deals has fallen by 68% in the past two years. Only 17% of European unicorns will have secured funding in 2023, after 93% had already secured funding during the 2021-2022 bull market.
AI as a key funding area
The power of AI will be so important and impactful as it becomes available to any business or consumer willing to embrace it. That's why, despite funding challenges, technological developments continue to drive automation and cost reduction. According to reports, AI companies raised over €11 billion in funding last year, and 36% of new unicorns are AI/ML businesses.
Regional leadership remains the same
As stated in the report, the UK and France lead the way in the startup space with three unicorns each. The UK unicorns are valued at $3.4 billion. AI leaders Synthesia and Builder.ai made significant contributions.
France's three companies reached a combined valuation of $7 billion, with innovators such as Mistral AI making an impact. Germany and the Netherlands added two unicorns each, while Sweden and Italy added one each.
“As Europe's engineering talent base matures and the world latches on to its productivity-boosting potential, Artificial Intelligence offers a unique opportunity to create global leaders in record time. There is no shortage of funding for the best entrepreneurs and companies, as evidenced by Paris-based H's record $220 million seed round announced this week. What's remarkable about this round is the diversity of the investor syndicate: from strategic firms such as Amazon, Samsung and UI Path to big names such as Bernard Arnault, Eric Schmidt and Xavier Niel, as well as leading VC firms. We expect the next few years to be a period of unprecedented innovation in the European ecosystem. Innovation is flowing, enormous capital is available to the strong and the talent pool is expanding. Europe has no more excuses!” – Manish Madhvani, Managing Partner, GP Bullhound
