European start-ups received 127% more growth capital than in 2016 according to a new infographic from Block-Builders.net. It was also found that young entrepreneurs experience increasing opportunities on the European continent – and fewer see the need to relocate to the US.
This year, $34 billion has flowed into European start-ups, compared to just $15 billion over the whole of 2016. Financing rounds are also showing clear signs of change in other respects. This year, 33% of firms entered the US market before their first major financing round. Just a decade ago, this figure was significantly higher at 59%.
The research also found that Europe presents attractive conditions for start-ups. There are currently around 6 million trained software developers, compared to just 4.3 million in the USA. Rental price trends for business incubators in the US are also increasingly impacting on young companies. Fewer and fewer start-ups have been born out of necessity in Germany in recent years. The proportion of such start-ups fell from 30% in 2013 to 23% in 2019, but it remains to be seen to what extent the pandemic will impact on business development. Currently, 74.2% of entrepreneurs emphasise the negative impact of the corona crisis on their business activities.
“Most of the big tech companies are still based in the USA or China,” said Block-Builders analyst Raphael Lulay. “But numerous innovations are also coming out of Germany or Europe. In the past, promising start-ups quickly moved to the USA – but this trend seems to be gradually coming to an end. Young entrepreneurs are increasingly enjoying the opportunities that Europe has on offer, and companies such as Spotify, Delivery Hero and Adyen serve as role models.”
