Startup funding in Europe on track for record year

Europe is set to see its biggest year for startup investment, with US investors especially keen to back companies.

Startups received three times more funding in the first half of this year compared to that of 2020, according to data from Dealroom reported by Politico.

While Europe’s start up scene has lagged behind that of other regions, the continent made up a record 18 per cent of global startup funding in 2021.

Nordic countries have particularly shown strong numbers, with Sweden outperforming the US in per capita terms.

While a lot of this funding comes from European backers, US investors have poured money into the continent.

Investment from the US this year has already overtaken that of last year according to the European Commission. Startups received €10.1bn (£8.6bn) in US funding from January to May this year.

While this appears positive on paper, it has raised some red flags at the Commission.

Speaking to Politico, a Commission official said: “There is a big increase of investment from U.S. investors in digital startups, but there is also a direct relation with brain drain.

“Startups with foreign investors are more likely to relocate.”

Europe has also been the fastest growing region for venture capital investment, attracting €48bn, according to Dealroom.

The surge in cash injections has sparked a boom in billion-dollar companies, with Europe now home to 268 unicorns. Almost a third of these are based in London.

Of the 170 cities around the world with at least one unicorn, 65 are in Europe.

“Tech continues to be a major economic driver, attracting investment and jobs at a time when the rest of the economy slowed down as a result of the Covid-19 pandemic,” said Yoram Wijngaarde, founder and chief executive at Dealroom.

“Investment into startups are at an all-time high because investors see tech as a safe asset and innovation is continuing as entrepreneurs are identifying gaps in the market and are bulging with ideas. This is a huge vote of confidence in the global tech sector.”