The State of European Tech 2019

10.12.2019

If you’re looking for good reads in the holiday period, look no further. The state of European Tech 2019  is here, and it’s a must-read for everyone with an interest in the tech industry, be in founders, investors or policymakers.

To ease you into the yuletide here are some key highlights and thoughts on how this applies to the Norwegian tech scene.

Investments in European Tech is taking off: $35B invested in 2019 

The world of capital has indeed opened their eyes for European tech, and more capital than ever before is pouring into the industry. In 2019 alone, a total of $35B was invested, the region saw 40 mega-rounds (rounds raising more than $100M), and 99 companies achieved a valuation of more than $1B – meaning more European unicorns than ever are now around. New of 2019 is that pension funds are entering the game, with nearly $1B invested, up 3x from 2018.

The numbers are impressive and tell an important story about European tech. A surge of funding like this only happens when the ecosystem of founders, teams, hubs and early-stage companies has reached a certain level of maturity and professionalism.

Diversity: Only 8% of investments to not all-male founding teams

Even if investments are growing, the report paints a sad picture when it comes to diversity. Only 8% of the capital invested in 2019 went to founding teams that are women or mixed gender. This represents absolutely no change from 2018. In an industry screaming for talent, and with stats proving that female founders yield a higher return to investors, this status quo is depressing. Let’s hope the continued focus on diversity leads to a change in number for 2020.

Capital invested (%) by founding team gender.
Green: Men only teams
Orange: mixed-gender teams
Black: Women only team

Purpose: The unique differentiator of European Tech

On a more positive note, this is the year that purpose-driven startups truly emerged on the scene. $4.4B has been invested in purpose-driven tech in 2019, and a growing amount of founders are working to solve climate challenges and connecting their startups directly to the UN SDGs.

This clearly sets us apart in the global tech industry and shows that European tech is different from its bigger brothers in the East and West. In the words of Margrethe Vestager:  China has data, the US has money, but Europe has a purpose.

How about Norway?

The trends laid out in the report are most certainly also relevant to Norway.

The surge in investments and interest from international investors is something we see happening also back home.  As international investors are now scrutinizing every corner of Europe to look for interesting deal flow, Norway is getting its share of attention. During the last year, Finstart Nordic has introduced several international investors to Norway. While impressed with the level of tech, the investors often miss global growth plans. Our advice to ambitious founders is to plan for growth outside of Norway as early as possible. Since investors new to a market often let local partners lead, it can be smart to look for investors with a global network even in your first round.

When it comes to purpose-driven start-ups, the trend is again clearly visible in Norway. 2019 has for sure been a year of purpose and impact in the Norwegian tech scene – going hand in hand with the general discussions in our society about sustainability, clean energy and the development of new industries. In terms of investments, the investment fund Nysnø – exclusively investing in companies with smart solutions to climate changes is an interesting company to follow with an investment strategy that might become the new norm.

Finally. As one of the most equal opportunity countries in the world, we might think that diversity numbers might look different in Norway and the Nordics. Sadly, the opposite is true. In fact, only 1% of investments in the Nordics went to all-female founder teams. In the year to come, Finstart Nordic wishes to set this on our agenda, specifically addressing female and diverse founders in fintech.

Stay tuned for more on this topic, and let’s all make 2020 the year when all founders have equal access to the funding necessary to grow impactful businesses.

About the author

Cathrine is Chief Product Officer and Head of the Lab at Finstart Nordic. She is a designer and strategist, specialising in digital product development. She has more than 15 years of experience combining design and business thinking.