European VC Investment

In Finance

A couple of weeks ago, i did a piece on where US Venture Capital investment was going.  Statista recently put out another great info-graphic illustrating the European VC market.  There’s been a pretty big shift in the last year when comparing the first half of 2015 with the first half of 2016.  [Note, these things do tend to jump around based on many many factors.]  In the last year, there has been a very big shift away from Germany.  The overall investment has dropped for firms based in Germany from just under 2 billion Euros down to just under 1 billion Euros (1.985B down to .957B).  This represents a decline of 52%.

VC Investment in Europe H1'16
European VC Investment comparing H1’15 to H1 ’16

One of the perceived beneficiaries was the UK.  Investment increased from 1.5 billion Euros up to 2.2 billion Euros an increase of 47%.  A lot of the other countries on the list (graphic) also had significant increases, albeit off of smaller bases.  Investment in Dutch startups increased nearly 400% from $50 million Euros to 200 million Euros.  Spain had a similar increase from 60 million Euros to 250 million Euros.

One of the implications of the graphic above is that there was something that drove investors away from Germany and TO Britain, but I tend to think about it a little differently.  If you look at the top startups to watch according to EU-startups back in 2015, the list was quite different, including several companies that were in the middle of a lot of trends that were really in the news like the Internet of Things [relayr], public WiFi [ZenMate] and ecommerce platforms [minubo].

The companies to watch from the 2016 version of this site illustrates companies that are quite honestly, not terribly interesting.  The top company mentioned is a platform for professional movers called movago and an online market for fine art called Juniqe.  I think that the issue with the German market right now is likely a function of the companies that are actually getting started.  The drought in investment might be little more than part of a cycle that has little to do with money moving elsewhere.  A recent investment in a Cologne based startup GridScale is astartup focusing on company infrastructure as a service.  Late in 2015 a company called N26 (number26) launched a borderless banking platform that recently expanded outside of Germany to France, Greece, Italy and Ireland.  This company didn’t need any funding in the first half of this year as they had recently received significant funding from Peter Thiel via his Valar Ventures.  This funding hit in April of 2015.

Taking a small snapshot like this, while interesting can lead to some conclusions that may or may not be correct.  This one I’ll opt to watch for a while.

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