More investment opportunities, more exits, more funds dedicated to technology, more hubs. This is the picture that emerges from two reports that have been published a few days ago and offer a panoramic of the US and UK start-up markets, respectively: State of Startups 2016 by the US venture capital firm First Round and The State of European Tech 2016 by the British Atomico Ventures.
For the second consecutive year, First Round has published its research into the sentiment of entrepreneurs, interviewing more than 700 start-up founders and CEOs to understand what, in their opinion, have been this year’s most significant trends. Just a few days before, the British VC firm Atomic published an overview on the state of the European tech in 2016.
On both continents, 2016 has been a banner year for growth and positivity: according to 9 out of 10 entrepreneurs, now is a good time to be starting a company. Not just that: 43% expect the IPO market to improve and 72% predict increased M&A activity in the year to come. What is more, nearly 1 in 5 founders say they’re raising a unicorn.
Investment has been flourishing too: 35% of CEOs and founders claim they raised their last funding round last year, and many of them are in charge of young start-up companies that have concluded seed funding rounds (31%) or series A rounds (26%). Perhaps even more significantly, 36% of start-ups raised more than they targeted. This is a sign that investors are increasingly more inclined to invest in the companies that they think are valuable.
And in Europe? In the old continent, too, entrepreneurs are confident that 2017 will be a good year for the start-up ecosystem (88% of respondents), and 71% of them have a growing confidence in European ventures as a source of capital – after all, getting a loan has become easier than in the past (especially for early stage companies), as evidenced by the number of rounds that have been concluded between European start-ups and VCs in 2016 – more than last 2,400, against 2,077 in 2015.
Moreover, as we had the opportunity to explain before, technological hubs are expanding throughout Europe, not only in cities like London or Berlin, but also Paris, Stockholm, Lisbon, Barcelona, Copenhagen. The number of events that attract the international tech community towards Europe is also growing: more than 1.3 million people have attended one of 54,000 meetings organized in the course of 2016. In particular, the tech community is thriving outside of the Berlin and London top hubs: today, in Europe, there are 153 hubs and more than 50 meetings per year, compared with 19 meetings in 2011. Among these, Lisbon, Toulouse, Prague and Bucharest are the most active. The industry that attracts more investment is deep tech: 2.3 billion dollars have been invested in the fields of artificial intelligence, internet of things, virtual reality and frontier hardware over the past two years.
Europe and the US are not impermeable environments, on the contrary: exchanges, collaborations and acquisitions have increased in the last few years between the two markets. From 2011 to date, there have been no less than 53 European tech company acquisitions by US giants such as Apple, Amazon, Alphabet, Microsoft, Facebook. But Europe “beats” the United States when it comes to IPOs: in 2016 there have been 29 European tech start-up IOPs, and only 16 US IPOs, a trend that had already begun in 2015 – although we must not forget that European public companies are still far behind US tech giants in terms of market value.
These findings are very strong indicators that something is happening. They reveal that entrepreneurs are aware of the potential of the start-up ecosystem – not only overseas but also “at home”. In Europe, just as in the Silicon Valley, the start-up system is getting increasingly better at supporting young, innovative companies. This system also includes Italy, if not in the forefront, certainly no longer bringing up the rear: the premises for 2017 are excellent.