A week ago, we reported that venture funding for U.S. startups is booming. Turns out, the good news isn’t for U.S. startups alone. European VC investment was also at its highest in 2014 since the dot-com boom.
According to data published this week by Dow Jones VentureSource, European startups raised $8.9 billion (€7.9 billion) last year across 1460 deals, up from €6.3 billion in 2013. That’s the largest investment since 2001, when European ventures secured €10.6 billion.
The funds are going predominantly to tech startups. And most of them are in the United Kingdom and Germany. London and Berlin are Europe’s fastest growing tech hubs, teeming with companies setting up offices in converted warehouses and startup lofts. Tech companies in London raised $1.4 billion and those in Berlin secured $1.1 billion, according to the research company CB Insights.
These numbers might be small compared to their American counterparts—tech companies in New York raised $4.5 billion in 2014—but it is, respectively, 100% and 140% more than what London and Berlin startups made in 2013. Besides, some long- and widely-held views that European venture capital financing lags behind the U.S. might be myth, per a different Dow Jones report.
In London, investers backed local tech companies such as the peer-to-peer lending company Funding Circle and the online fashion company FarFetch. It has also been a strong year for financial technology companies such as TransferWise, WorldRemit, Azimo, and Powa Technologies in London and Adyen in Amsterdam. Berlin saw two of Europe’s largest tech initial public offerings in 2014, for the e-commerce company Zalando and tech company incubator Rocket Internet; both earned multibillion-dollar valuations.
One dark lining, according to VentureBeat, is that the big funding year ended on a slightly anticlimactic note, with Q4 funding 24% less than that in Q3. Plus, the article goes on to say:
“[T]he sharp drop in the value of the euro against the U.S. dollar since last summer raises another potentially ominous flag for European startups seeking to expand overseas.”