European start-up investment smashes 2020 record in first six months

The Klarna logo that is displayed on a smartphone.

Rafael Henrique | SOPA Pictures | LightRocket via Getty Images

LONDON – Europe’s tech sector has already attracted more venture capital investment this year than it did in all of 2020, according to data reported to CNBC.

Start-ups on the continent raised a whopping 43.8 billion euros (60.9 billion US dollars) in the first six months of 2021, as figures from Dealroom show, surpassing the record of 38.5 billion euros, that were invested in 2020.

And this despite the fact that the number of venture deals signed so far is around half as high as agreed in 2020. According to the Dealroom, around 2,700 financing rounds have been raised in 2021, compared to 5,200 in the previous year.

The Swedish company Klarna, which has to buy now and pay later, has already raised over € 1.6 billion in two financing rounds this year.

It suggests that European tech companies are pulling in far larger sums of money per investment than in previous years to defy the economic uncertainty of the coronavirus pandemic, which has given online services a huge boost.

Guillaume Pousaz, CEO of Checkout.com, said that startups were often created during times of crisis, citing the emergence of several new financial technology companies in the wake of the 2008 global financial crisis.

“When people lose their jobs, people actually spend a lot of time at home or have to rethink their lives,” Pousaz told CNBC’s Squawk Box Europe during the Viva Technology conference in Paris.

“When there is a major upheaval in society, it is often the time when many new start-ups emerge. We are particularly pleased about this opportunity. “

On Tuesday, French President Emmanuel Macron said that by 2030 he wanted to found at least 10 technology companies in Europe, each worth over 100 billion euros, and that a company the size of American and Chinese technology giants had to emerge.

Scale-Up Europe, a group that includes the founders of UiPath and Wise, has proposed 21 recommendations to help the region build the “next generation of tech giants”. Proposals include corporate tax credits for investing in startups and regulatory changes that adapt to new innovations.

Sebastian Siemiatkowski, CEO of Klarna, said the UK is leading the way in technology policy in Europe and that a number of issues need to be addressed before the European Union can create its own tech giants.

“I am concerned about how the regulatory environment has evolved in the European Union,” he told CNBC, adding that the UK is focused on rules that make it easier for consumers to switch from one technology service to another.

Siemiatkowski highlighted the EU regulation of web cookies as an example of “bad regulation”, as users receive a large number of consent messages when they visit different websites. “It drives us to become more complacent and less concerned about privacy than the opposite,” he said.

“I hope that the European Union will now take action and start writing really good rules that will help consumer freedom and movement, increasing competition in areas such as retail banking, but also in technology in general,” added Siemiatkowski added.

However, as the number of $ 1 billion startups in Europe continues to grow, the number of exits on the continent is also increasing. There have been some notable acquisitions this year, including the $ 1.6 billion purchase by Etsy of UK fashion resale app Depop and JPMorgan’s acquisition of London-based robo-advisor Nutmeg.

In terms of listings, there have been a number of notable debuts in London in particular, including the grocery delivery app Deliveroo, cybersecurity firm Darktrace, and reviews site Trustpilot. Money transfer giant Wise, formerly known as TransferWise, plans to go public in the UK capital soon.

Siemiatkowski said it was too early to say when Klarna, which was last privately valued at $ 45.6 billion, would go public, but that it would likely happen in the next year or two. Pousaz said Checkout.com is unlikely to go public, but “of course we will one day be a public company.”

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