Despite the socio-economic uncertainty and other challenges created by COVID-19 in 2020, the technology sector was actually “a net beneficiary” of the accelerated shift to digital platforms and services which have become more critical than ever.
This year is notably on track to set an all-time record when it comes to capital invested into European tech firms, according to the latest “The State of European Tech” Report.
The report stated:
“We are seeing a growing interplay in European tech between venture capital, private equity and the public markets, creating more M&A opportunities, a strong pipeline of future IPO candidates and a systematic recycling of experienced talent to build new generations of companies. … Europe needs to see more of its leading tech companies find appropriate paths to liquidity in a way that benefits European builders….”
The report pointed out that last year had ended “on a high,” with a record $38.6 billion worth of investments along with nearly 180 $1B+ firms and $16B closed by European VC funds.
The report added that five years of steady technology growth and adoption has “created a solid foundation of belief in European tech, both within our ecosystem and globally.” But after this period came the Coronavirus crisis, which has led to heightened “fears of deep economic recession and retrenchment by founders and investors.”
Despite these concerns and issues, Erin Platts, the Head of EMEA and President of the UK Branch, Silicon Valley Bank, says that when looking ahead to 2021, they’re fairly optimistic that the fundamentals driving their innovation ecosystem will continue.
Platts added that “sustaining momentum” is key and it “requires policies that reduce friction around access to talent and movement of commerce.” She also mentioned that “doing business virtually, including deal-making and fundraising, may improve velocity – but not in a vacuum.”
She further noted that policymakers need to realize that promoting a healthy and thriving innovation ecosystem “requires a seamless bridge for talent across European countries and policies that level the playing field.”
The report pointed out that “if Europe has had a resilient year, the US has witnessed a return to growth and to record levels of investment.” It revealed that the total capital invested in North America, at $141B in 2020, is “approaching nearly 5x the level of investment in Europe.”
The report confirmed that Asia has “seen capital investment drop for the second year in a row.” It added that at $74B, Asia is “some way behind the $117B invested in 2018, mostly due to a continued decline of investment levels into Chinese private tech companies.” Meanwhile, Europe isn’t the “only up-and-coming region in the global tech landscape,” the report revealed. It pointed out that tech is having “a remarkable moment all over the world, including in Latin America … and [it’s] helping to drive record levels of investment in the rest of the world.”
In addition to these developments, it’s worth noting that Fintech adoption is on the rise globally. As covered, there are currently more than 250 neo-banking platforms operating in major financial markets, according to a new report.
The report from Exton Consulting reveals that entrepreneurs or new business owners are increasingly looking into launching challenger banks or other Fintech services. Exton’s data shows that a new digital or Fintech-focused initiative is now launching every five days since the last 3 years.
Fintech-focused venture capital mega-rounds ($100 million+) also reached a record high this year, according to a report from research firm CBInsights.
With just around a week left in Q4 2020, the CBInsights team took an early look at the global Fintech investment trends taking place this year. The report reveals that there were 97 Fintech mega-rounds finalized in 2020, which is up from 92 in 2019 and only 66 such rounds back in 2018.
While many sectors of the world market and economy experienced dramatic slowdowns in overall spending (like travel and hotel industry due to COVID) and deal-making, the Fintech space was quite active, the report confirmed.
The majority of the 97 Fintech mega-rounds came from the US (54). There were 47 such deals that were closed in the US last year. Meanwhile, there were 31 US-based Fintech rounds valued at $100 million+ in 2018. China had the second-highest total of any country with 7 mega-rounds in 2020 and another 7 in 2019.