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

The Klarna logo displayed on a smartphone.

Rafael Henrique | Images SOPA | LightRocket via Getty Images

LONDON – Europe’s tech sector has already attracted more venture capital investment so far this year than in all of 2020, according to data shared with CNBC.

Startups on the continent have raised a whopping 43.8 billion euros ($ 60.9 billion) in the first six months of 2021, Dealroom figures show, easily surpassing the record of 38.5 billion euros invested in 2020.

That’s despite the fact that the number of venture deals signed so far is roughly half the amount agreed in 2020. Around 2,700 rounds of funding have been raised so far in 2021, up from 5,200 last year. according to Dealroom.

Swedish buy-now-pay-later firm Klarna has raised more than $ 1.6 billion in two rounds of funding already this year, German stock trading app Trade Republic pocketed $ 900 million in a fundraiser in May and British payment provider Checkout.com made $ 450 million in January.

It suggests that European tech companies are getting much larger sums of money per investment than in previous years, defying the economic uncertainty of the coronavirus pandemic, which provided a huge boost to online services.

Guillaume Pousaz, CEO of Checkout.com, said startups are often created in times of crisis, citing the emergence of several fintech startups in the wake of the 2008 global financial crisis.

“When people lose their jobs, people 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 great transformative change in society, it is often the time when many new companies emerge. We are particularly excited about this opportunity. ”

On Tuesday, French President Emmanuel Macron said he wanted to see the creation of at least 10 tech companies in Europe worth more than 100 billion euros each by 2030. While Europe is now home to many unicorns, Startups valued at more than $ 1 billion. it has yet to produce a company on the scale of the American and Chinese tech giants.

Scale-Up Europe, a group that includes the founders of UiPath and Wise, came up with 21 recommendations to help the region build “the next generation of tech giants”. Suggestions include corporate tax credits for investing in start-up and regulatory changes that accommodate new innovations.

Sebastian Siemiatkowski, CEO of Klarna, said that the UK leads Europe when it comes to technology policy, and that there are a number of issues that need to be addressed before the European Union can produce tech giants on its own.

“I am concerned about how the regulatory environment has developed in the European Union,” he told CNBC, adding that Britain 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 “poor regulation”, given the multitude of consent messages that users receive when visiting various websites. “It is pushing us to be more accommodating and less concerned about privacy rather than the other way around,” he said.

“I hope to see now that the European Union takes a step forward and begins to write a really good regulation that helps freedom and consumer movement to increase competition in spaces like retail banking, but also technology in general”, Siemiatkowski added.

However, as the number of billion dollar start-ups in Europe continues to grow, so is the number of outlets on the continent. This year has already seen some notable acquisitions, including Etsy’s $ 1.6 billion purchase of UK fashion resale app Depop and JPMorgan’s acquisition of London-based robo-advisor Nutmeg.

As for stock quotes, there have been several notable debuts in London in particular, including food delivery app Deliveroo, cybersecurity firm Darktrace, and review site Trustpilot. Money transfer giant Wise, formerly known as TransferWise, plans to go public soon in the UK capital.

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

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