A record amount of money is set to be invested in European tech businesses this year despite growing fears about how Brexit could hit Europe’s biggest tech hub, according to a report published on Tuesday.
European tech companies are on track to raise at least $23bn (£18bn, €20bn) this year, up from $19.6bn in 2017. The figures come from the fourth annual “State of European Tech” report produced by London-based venture capital firm Atomico.
The report, which draws on a survey of 5,000 people and data from the likes of EuroStat and Dealroom, shows:
Europe’s software industry is now growing at least five times faster than the rest of the European economy
Tech contributes around $400bn to Europe’s economy each year, around 2.5% of total economic output
17 companies reached “unicorn” status — a valuation of above $1bn — this year, including Monzo, iZettle, and Darktrace
Tom Wehmeier, a partner and head of research at Atomico, said in a statement: “Europe is now reaping the early rewards from the transformation of its tech ecosystem. The fact is the seeds of success this year were planted a decade ago.”
However, the report highlighted a growing fear about the possible impact of Brexit on European tech, with increased mentions of Brexit in the press and legislatures.
Brexit-related fears cited by entrepreneurs include investors being put off, heightened uncertainty, and trouble attracting talent.
Wehmeier told Yahoo Finance UK: “London has historically been one of the few hubs that tech talent has chosen in Europe, but this was changing even before Brexit.
“Until recently, tech workers were ten times more likely to move country than the average citizen in Europe, but we’ve reached a new phase in talent where talent can and will build from home. Building barriers to movement, whether real or imagined, will simply compound these macro trends.”
Jimmy Wales, the founder of Wikipedia, was quoted in last year’s report as saying he is “more pessimistic” about European tech as a result of Brexit.
“I am deeply concerned about – frankly – the train wreck of Brexit,” Wales said. “I am afraid of it spiralling out of control.”
The report, authored in tandem with tech conference Slush, also uncovered serious problems with sexism in tech. 46% of women who responded to the report said they have experienced discrimination. Data analysis also found that all-male founding teams received around 93% of the capital and were behind 85% of the deals in Europe.
Atomico has partnered with Diversity VC to launch a “toolkit” for tech investors to try and help them combat biases within the industry.
Andreas Saari, the CEO of Slush, said in a statement: “All of us have the responsibility to tackle unconscious bias. If we get all this right, we’ll have a much more powerful tech scene.”
Yahoo Finance UK recently revealed that Atomico is trying to raise a new venture capital fund at the moment, hoping to raise at least $750m. The fund, its fifth, will focus on European tech.
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.