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Tuesday, July 16, 2024
HomeCategoriesStartupsAre European Tech Startups 2020 Winners?

Are European Tech Startups 2020 Winners?

European tech startups may be the ultimate winners of the 2020 and the pandemic that has put several industries on the verge of collapse, exposed malfunctioning healthcare systems around the world, and will impact the global economy for years to come. Meanwhile, European tech startups have reported a record investment level. 

$500 Million Increase Of VC Investment

The tech companies are expected to close the year 2020 with approximately $41 billion in venture capital investment which is a $500 million increase from the year before. 

That is not to say that the Covid-19 pandemics did not have any effect on the tech industry in Europe. The overall investment did drop around March when the initial worldwide lockdown started. However, the investment level started increasing again during the summer when a lot of regulations were easer up. During the fall, although many countries were hit by the second wave of Covid-19, the European tech sector thrived with the highest ever monthly investment level, reaching $5 million invested. 

Increased Interest In European Tech Startups

The European tech startup sector is still relatively small as compared to the US which attracts five times more capital than is seen in Europe. Having said that, the foreign investors based in U.S and Asia have an increased incentive to invest in European startups, with an increased number of investors from these continents participating in funding rounds in Europe this year, as reported by Bloomberg.

With the current, record-high growth, the overall valuation of European tech firms that have been founded since 2000 has grown to almost $1 trillion, with 115 venture capital-backed “unicorns” whose values is more than $1 billion and Swedish Klarna and Romanian UiPath that have managed to achieve valuations above $10 billion. 

Health Tech As A Definitive Winner Of The Pandemics

The unsurprising winner of the pandemics has been health tech, attracting more than $3 billion until September. The German travel startups GetYourGuide and Omio have also been thriving and have just secured investments. That is a huge achievement considering the state of travel tech that has been hit by the pandemics.

Remote Work As A Reson For Increased Investment

Some investors claim that the possible reason for larger investments is …. remote working. When the whole world switched online and most companies are not back to the office now, location becomes a secondary issue when it comes to finding and backing entrepreneurs. 

Tough Time For Early-Stage Startups

It is not all positive though and early-stage startups continue to struggle with getting funding. The European companies that are attempting to raise a second round of funding have been limited by Covid-19 that has slowed down their growth. 

Moreover, as the EU government becomes more and more strict about tightening regulations aimed at the big tech, it gives startups another competitive advantage and possibility for more uninterrupted growth.

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