In the first half of the year, young European companies received more money than ever before: the total value of startup financing rose by 62 percent year-on-year to 16.9 billion euros. By contrast, the number of financing rounds increased by only 10 percent to 2,301. Despite the imminent breakthrough, Great Britain was able to maintain and even expand its leading position within the European startup scene: A total of 6.7 billion euros flowed into British startups, more than twice as much as in the same period last year (plus 112 percent). French startups received 2.8 billion euros, 43 percent more than in the first six months of the previous year. Switzerland ranks fifth in terms of investment volume, with startup investments increasing by 46 percent to almost 600 million euros.
In the European city ranking, London is in first place with 5.7 billion euros – more than in the entire previous year. The pursuers Paris (2.2 billion euros) and Berlin (2.0 billion euros) are far behind. The French capital also passes Berlin by in terms of the number of transactions: A total of 230 startup investments were made in the greater Paris area in the first half of the year. London is still ahead in this comparison with 323 financing transactions.
These are the results of the startup barometer of the auditing and consulting company EY (Ernst & Young). The study is based on an analysis of investments in European startups. Startups are companies that are not older than 10 years. “The financing boom for young companies is continuing,” observes Hubert Barth, CEO of EY in Germany. “More and more startups are receiving fresh capital, and the sums invested are also climbing to record levels. Very large deals in particular are booming: throughout Europe, the number of transactions in which 100 million euros and more have flowed has more than doubled, from twelve to 26.”
“The European startup ecosystem has become even stronger in the first half of the year,” adds Peter Lennartz, Partner at EY. “The dynamics are impressive and are increasingly reaching smaller markets that have not been so much in the spotlight so far. For example, the number of financing rounds rose by 19 percent in Sweden, 25 percent in Switzerland and 22 percent in Hungary.”
According to Lennartz, the continuing upward trend in France is particularly striking: “French politicians have made the startup sector a top priority and are pursuing the clear goal of making France the top startup location in Europe by reducing bureaucratic hurdles for young entrepreneurs and bringing investors and founders together. The massive political support for the startup scene is having an effect – in terms of the number of transactions, France is now well ahead of Germany.”
“In addition to the dynamic development in France, London’s enormous lead is particularly noteworthy”, Lennartz adds: “Every third euro of risk capital invested in Europe in the first half of the year went to a London startup. The Brexit chaos seems to have hardly anything to do with the strong development of the London startup scene. A total of 16 financing rounds above the 50 million euro mark were completed in the British capital alone in the first half of the year. “Berlin and Paris each come to nine transactions of this magnitude.”
Very strong second half foreseeable – especially in Germany
The current economic downturn appears to have hardly any effect on the risk capital market – at least the upward trend in Germany is continuing in the current second half of the year: In the third quarter, 2.2 billion euros were handed to young companies in Germany – more than twice as much as in the same period last year (965 million euros). The total financing volume in Germany is thus currently 4.9 billion euros – and already at the level of the entire previous year. “The trend towards large financing rounds also continued in the third quarter,” observes Lennartz.
British startup company receives the most money
The largest financing of the year to date went to a British company: The Internet satellite startup company One-Web received 1.1 billion euros. The second largest transaction was the EUR 885 million financing for the Swedish battery manufacturer North volt, in which Volkswagen and BMW, amongst others, participated. The largest deal in Germany – a 428 million euro financial injection for the Berlin travel platform GetYourGuide – ranks fifth in the European ranking.