Home » In Europe, startups are (finally) exploding

In Europe, startups are (finally) exploding

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What comes to mind if you think of an example of a European digital giant? Among a flood of startups (or former startups) from the United States and China, our continent seems to be symbolized at the highest levels only by the Swedish Spotify; especially since the Estonian Skype was bought by Microsoft. Despite a landscape that has always been lively, Europe has long been under-represented when it comes to startups active in the social networks, fintech, e-commerce or other sectors.

However, the situation is rapidly changing. According to the data reported in the “State of European Tech” published by the London-based investment company Atomico, in 2021 the European technology sector received investments of 121 billion dollars: a growth of 200% compared to 41 billion in 2020. To have a comparison with the other side of the Atlantic, startups in the United States are expected to raise around $ 300 billion this year. In China, the figure should instead be around 200 billion. The difference with the two superpowers is still considerable, but we are no longer on different scales of magnitude.

Predictably, leading the European recovery are the nations of Northern Europe: United Kingdom, France, Germany, Sweden and the Netherlands, while Italy is just outside the top ten: ahead of Denmark, but behind Spain. Of the 321 European unicorns (companies valued at over $ 1 billion), 100 are in the UK, 51 in Germany and 31 in France. In Italy, we have to settle for the success of Yoox (6 billion dollars of capitalization, but now no longer considered a startup given that it is listed on the stock exchange) and the case of Depop, a platform for the purchase and sale of clothes recently purchased by Etsy for 1.6 billions of dollars (after being born in the H-Farm incubator in Treviso, Depop soon moved to London).

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On our continent we also host 26 “decacorns”, even rarer specimens of unicorns whose valuation exceeds ten billion. Among these are the resounding successes of Revolut and Checkout.com (UK) and the Swedish Klama: all companies active in fintech. However, it is perhaps the smallest startups that characterize our continent, given that 33% of global investment rounds that did not exceed 5 million dollars involved European companies, compared to 35% of those in the United States.

Continuing to talk about Europe, however, risks giving a wrong picture of the situation: despite the success of small Estonia (1.3 million inhabitants and over a billion in loans), only 5% of investments went to companies active in Central Europe and Eastern Europe, confirming once more the dominance of Northern Europe (also) in this sector.

One last positive piece of news concerns the constant growth of “purpose driven” startups, whose activity is considered positive for the planet. Overall, 11% of investments went to companies of this type. Among these, the Swedish Northvolt stands out: a manufacturer of sustainable batteries that has recently received funding for 2.75 billion dollars from companies of the caliber of Goldman Sachs and Volkswagen.

In a world where startup investments continue to grow relentlessly, Europe is carving out a leading role, finally stepping out of the shadow of China and the United States. The hope is that this growth will also be able to involve the many trustworthy startups that are active in our country.

Innovation

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at Alessio Nisi


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