Amid a hectic year, the continent’s VC momentum appears set to continue in 2022
Europe, long viewed as a relative backwater to the U.S. startup market, has been on a tear in recent quarters and years. Akin to many startup markets around the world, Europe has seen its venture capital totals rise, its unicorn ranks swell, and even a few major public exits.
How hot is the market for European startups this year? This morning, TechCrunch reported that Flink raised $750 million. The “Berlin-based startup that sells food and other essentials at supermarket prices and aims to deliver them in under 10 minutes,” as we described it, is now worth $2.85 billion. And unless you are very familiar with the instant grocery market, we doubt that you were too aware of Flink.
The European startup market is now sufficiently robust and varied that it’s easy to lose track of its unicorns.
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The Exchange has been tracking Europe’s startup acceleration for years now. So, consider our general delight when Atomico, a European venture fund, and Dealroom, a data-tracker with a solid European data set, dropped a huge sheaf of numbers concerning its performance earlier this week.
Tied up as we were with our book guides (here and here), we’re just now getting to the data. So, instead of snagging just high-level numbers that paint a more general picture, we’re teasing out a few things that you might have missed in your own read. If you care about the state and the health of the European startup market, this is for you.
We’ll take a look at exit volumes and what we can infer for 2022, how talent issues aren’t landing equally around the continent, why there’s good and bad news for gender diversity in Europe, how pension fund money is still on the sidelines, and which collections of former employees are founding the most companies.
Sounds good? Let’s rock.
Good news for 2022 European exits
European technology M&A is having a good year. The Atomico/Dealroom report details that the total value of tech M&A in Europe through the third quarter of 2021 has crossed the $100 billion mark. For reference, that figure was below $10 billion in Q2 2019, Q3 2019, Q4 2019 and Q2 2020.
But not every tech exit fits into the venture capital model. Venture-backed exits for European tech companies are a smaller figure, but one that is still rising. Per the same data set, in the first three quarters of 2021, VC-backed tech M&A worked out to $54.9 billion. That’s a hair more than the full-year 2020 number of $54.8 billion. Throw in Q4’s numbers, and not only will 2021 be a record year for VC tech exits – this data doesn’t include IPOs, mind – it will be one by a comfortable margin.
But all that’s the past. We care more about the future. And that’s where the data set pushed our eyebrows higher. Atomico wrote the following:
In the third quarter alone, the aggregated value of tech M&A activity exceeded $45B, making it the largest Q3 on record. At time of publication, preliminary numbers for Q4 imply at least another $50B in aggregate value.
If those numbers hold up, we could see roughly 50% of the 2020 total European M&A in Q4 2021 alone. That, and incremental gains from quarter to quarter, implies that Europe is starting 2022 on its strongest non-IPO exit footing in history. Bullish!
The UK’s talent issues are notable, worsening
Remember Brexit? If you don’t live in the U.K., the political and economic decoupling of the island from the continent may have receded into the back of your mind. It’s an SEP to some degree: someone else’s problem. But while we may think about it a bit less, U.K.-based startups have not forgotten.