Three countries dominate Europe’s technology venture capital, exit and IPO landscape, providing the dominant share of the region’s digital deals. While business transfer agents are increasingly looking to smaller markets as well (Israel and Sweden, for example), Germany, France and the UK provide more fertile territory, as recorded statistics over the past five years demonstrate.
The UK: London corporate finance drives regional leader
The UK’s position as the tech finance capital of Europe is almost unassailable. Led by its hub in London, not only do UK-based venture-backed tech start-ups raise more money than those in either France or Germany, but over the past five years there were more exits by UK companies, according to data collected from Dow Jones VentureSource, Go4Venture Advisers and Ernst & Young.
London continues to have the most advanced digital landscape in Europe, having become a hub for those who know how to build Internet companies. At the same time, Silicon Valley companies are expanding their presence in London, with Facebook having an engineering team and Google opening an office in the city.
Germany: Local major drives activity
Over the past five years, UK companies did more deals and raised more money in total than either France or Germany, but German VC deal sizes over this period have been consistently larger, by around 7%. This suggests that the German market attracts strong investors, in part driven by strong local capital. What Germany has that both France and the UK lack to some degree is an international Internet-focused major – Rocket Internet. According to a report by The Wall Street Journal in 2013, Rocket has raised $1 billion for its numerous companies, including $500 million from its partners since May 2012.
However, Germany’s lead in fund raising does not translate to a lead in exits. Over the last five years, Germany saw 188 tech M&A deals, compared with 304 in the UK, raising $13 billion compared to $24 billion in the UK. That gives an average M&A deal size of $80 million in the UK, compared with $71 million in Germany.
France: Delivers in IPOs
In total, France is by some distance the third largest tech player in Europe. While completing more deals than Germany, it raised considerably less capital ($13.2 billion vs. $7.9 billion), meaning average exits were half the size of deals in Germany. Nonetheless, there is one area France led both Germany and the UK: IPOs. Over the past five years, France has competed three: Criteo in 2013, Inside Secure in 2012 and Sequans Communications in 2011. This is compared to two in the UK and just one in Germany. However, the UK’s Just Eat and King IPOs raised more than VC-backed tech IPOs in France and Germany combined.
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