In the second quarter of 2024, European startups have done well, gathering $15.6 billion. This is up 14% compared to the first quarter and 12% over the last year. The industry has seen over 1450 funding rounds exceeding $2 million each, the highest activity level since before 2021.
Investment has seen a rise with later stages (like late-stage investments), reaching the highest point in the last six quarters. The main cities leading this investment push are London, two German hubs, and Cambridge.
UK’s Lead In European Tech Sector
With the UK’s lead in tech investment across Europe, we know that funding reached £7.4 billion in the first half of 2024. This is a 16% increase from last year and is a third of all venture capital funding in Europe.
London and Cambridge are the top cities causing this growth, with increases in their funding. The sectors benefiting most include AI, fintech, and energy, each seeing great investment flows. Crunchase’s Q2 report confirmed AI’s lead in investments, saying, “AI was the leading sector for the first time since the launch of OpenAI’s ChatGPT, based on an analysis of Crunchbase data. Q2’s total of $24 billion was the largest amount raised in a quarter in the AI sector in recent years, despite investor concerns about revenue and high valuations.”
The Sectors And Technologies Driving Investment
2024 has seen the energy sector attract the most funding in Europe, which is no different from last year.
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There has, for the most part, been a change in priority from sectors such as fintech and health, with generative AI having a record-breaking quarter, now taking up 18% of all VC funding. Other sectors like hydrogen and electric mobility are also seeing more investment with more companies moving towards sustainable technologies.
Innovations And Growth With Tech
Startups focusing on Generative AI, like Wayve, Mistral, and Poolside AI, have seen large amounts of funding recently. There’s also been a notable shift towards investing in new energy technologies. For example, the UK is developing new liquid air energy storage facilities, which are part of a move towards sustainable energy solutions. This reflects a broader interest in supporting innovations that offer greener alternatives.
Where Are Investments Going?
There’s a strong push towards investing in the later stages of startup development, showing trust in the European market’s capacity for growth. The main focus areas for this investment are the UK, Germany, and France, which have seen continuous and heavy investment.
The Dealroom report also shares, “60% of European venture capital was raised by the top four countries in Q1 2024.” This makes Europe and the UK perfect for startups to find opportunities, as investors are confident in assisting startups in these regions.
The tech industry and its investors are also trying to create a skilled workforce to back up these tech advances. If there is enough investment, the technologies can work together with startups to create more skilled workers and overall better operations. The more a startup keeps up with tech changes, the more likely the business will succeed or look attractive to investors. It also goes without saying, the more startups are funded, the more job opportunities are created.
