European technology investment is on track to bust the $100bn threshold in capital raised in a single year for the first time.
Driven by funding rounds in excess of $250m, European tech is set to raise $121bn by the end of 2021, close to three times the amount recorded in 2020.
According to Atomico’s latest annual State of European Tech report, these bigger $250m+ rounds accounted for 40 per cent of all money invested invested in European technology in 2021.
During the first nine months of 2021 alone, there were 68 rounds of $100m+ in just the UK, equating to 37 per cent of all rounds of this size across Europe.
The biggest investment deals in the UK this year have been second-hand car platform Cinch, which raised $1.3m in May, and fintech Revolut, which raised $800m in July.
This has been also a year of record growth for unicorn generation.
Europe is now home to 321 billion-dollar “unicorn” companies, 98 of which were created this year.
The UK leads the field hosting 100 unicorns, with Germany and France making up the top three with 51 and 31, respectively.
The decacorn herd ($10bn plus) also doubled in size: 26 European companies now hold that status including Klarna, Revolut and Checkout.com.
Despite venture-backed companies raising record levels of European technology investment, early-stage firms are being squeezed, according to Atomico.
Less than 1 per cent of venture capital invested in the first nine months of 2021 went to companies that were founded this year, a figure which has typically ranged from 1-3 per cent in earlier years.
Funding rounds of $5m or less – meaning pre-seed and seed-level investment — were flat year on year, which some have called the “seed squeeze”.
Nevertheless, the volume of <£5m investment going into companies is nearly same as that of the US, accounting for 33 per cent of all money invested in European tech.
One hurdle for Europe to overcome is the dearth of pension funds backing European tech start-ups, Tom Wehmeier, Atomico’s head of insights, told CNBC, with European pension funds earmarking less than 0.02 per cent of their $3tr for venture capital funds.