2021: A Boom Year For European Funding

This blog is part of our Tech In Review: 21-22 report series. Head to the hub to access the reports, insight and analysis.

2021 was a boom year for investment into European tech, both in number of rounds and size of round. Europe’s technology sector has found itself awash with capital. 

European Corporate venture capital has also driven this boom.

The pandemic shone a spotlight the gap was between where corporations were and where they needed to be.

British retailer Marks and Spencer allocated more than £20 million to a technology fund, while Visa (into Klarna) and Salesforce (into Hopin) took part in big-ticket rounds. 

2021 was being pitched as the year of the SPAC. While Europe saw an increased number of these acquisitions, the market still trails behind the US.

Reuters reported Refinitv data showing that while European SPACs have raised almost $7 billion this year, that’s just 5% of the value of US SPAC deals this year.

Access to funding 

While the top level numbers point to good things on the cards for European tech, in 2021 we’ve also seen more attention put on how that funding is spread between different entrepreneurs.

All parts of the tech ecosystem have a diversity problem – within VC firms, on boards, and which founders are getting funding. 

Diversity is a strategic imperative. Without it, we lose. We lose game-changing innovations, great ideas and brilliant thinkers – from projects that could change the world to those that make life more manageable.

We lose out on results – the evidence is clear that homogeneous teams perform worse. There’s been a lot of conversation on the topic this year.

2022 must bring be a lot more action and results.

Is the market overheating?

The level of funding in the market has naturally given rise to claims that the market is overheating. Can this level of investing be sustained in the long-term? 

2021 has shown the market for tech services is expanding.

The pandemic has created lasting changes in how we live. It’s creating new, sustainable business models that create revenue and profit.

Consumers and businesses won’t be going back to life as normal after the pandemic. 

Whether it’s increased cybersecurity threats from a remote workforce, FinTech apps that replace the branch experience, or and many, but not all, of the new businesses and services will find permanent homes and markets within the European economy. 

Where has the money gone? Six hot markets from the year 

 1. Food and grocery start-ups thrive as market appetite soars

With much of Europe still in lockdown as 2021 began, it is no surprise that the food-delivery market has come under intense consumer and industry scrutiny as the year has progressed.

With a myriad of new start-ups chasing the same lucrative market, the only path to long-term survival is to secure customer loyalty and firms are realising that this involves careful attention to both employee and customer experiences.

2. Quantum computing emerges from the shadows

While the technology is still in its infancy, the quantum-computing segment started to come into the light in 2021.

The development of the European quantum ecosystem has seen new research, funding and start-ups all looking to lead progress in the space. A surge in start-up firms in Europe this year, combined with Europe’s excellence in academic quantum research, is creating enticing opportunities. 

3. NFTs drive interest in cultural assets

2021 was the year that non-fungible tokens (NFTs) hit the mainstream, fuelled by headlines boasting of multi-million-dollar sales and a maturing ecosystem.

The development of the market in 2021 has been divisive, however, with critics questioning the sustainability of the market and suggesting it might be a bubble waiting to burst.

4. FinTech strives for mass adoption, but regulators scramble to keep up

Once again, FinTech has led the pack in terms of funding in 2021. A case in point was N26’s October funding round.

The landmark Series-E fundraising set its market valuation at $9bn, putting it slightly ahead of another German banking giant, 151-year-old Commerzbank.

Regulators are still scrambling to try to get ahead of changes in the sector and find a balance between protecting consumers and allowing innovation to flourish. 

5. GreenTech developments create hope around climate change

The climate crisis is forcing a reconfiguration of our economic structure and systems, from energy generation and physical infrastructure, to food supply chains and how we consume products, services and content.

However, European investment and start-up trends are positive.

The European tech sector can be at the forefront of both industrial transparency about current emissions levels and building the solutions to tackle the problem head on. 

6. AI breaks through, as governments set out regulatory frameworks 

The funding, development and use of AI has become far more prevalent and tangible this year. We’ve seen breakthroughs in technology, funding and significant regulatory developments. AI is moving from the lab and into our homes and workplaces. 

Ultimately, Europe and the UK need to ensure their research and implementation programmes keep pace with those of the powerhouses of China and the US.

This requires a cohesive, empowered and well-funded start-up and tech ecosystem.

2021’s Biggest Funding Rounds

Company: Gorillas

Raised: $1,000,000,000

Date: Sep 24, 2021

HQ: Berlin

Round: Series C

Industry: Grocery 

Company: Celonis

Raised: $1,000,000,000

Date: Jun 2, 2021

HQ: Munich

Round: Series D

Industry: Business Intelligence

Company: N26

Raised: €775,000,000

Date: Oct 18, 2021

HQ: Berlin

Round: Series E

Industry: FinTech 

Company: Trade Republic

Raised: $900,000,000

Date: May 20, 2021

HQ: Berlin

Round: Series C

Industry: FinTech 

Company: Revolut

Raised: $800,000,000

Date: Jul 15, 2021

HQ: London

Round: Series E

Industry: FinTech 

Company: MessageBird

Raised: $800,000,000

Date: Apr 28, 2021

HQ: Amsterdam

Round: Series C

Industry: Messaging

Company: Mollie

Raised: €665,000,000

Date: Jun 22, 2021

HQ: Amsterdam

Round: Series C

Industry: FinTech

Company: Bolt

Raised: €600,000,000

Date: Aug 2, 2021

HQ: Tallinn

Round: Series E

Industry: Transportation & Food

Company: Picnic

Raised: €600,000,000

Date: Sep 15, 2021

HQ: Amsterdam

Round: Series D

Industry: Grocery 

Company: Sorare

Raised: €580,000,000

Date: Sep 20, 2021

HQ: Paris, France

Round: Series B

Industry: Blockchain

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