Since Atomico introduced the State of European Tech (SoET) in 2015, the continent’s tech ecosystem has raised $426 billion – ten times the $43 billion collected between 2005 and 2014. This year’s edition projects European companies to raise $45 billion, aligning closely with the $47 billion secured in 2023.

The report, which spans Europe’s 41 countries, blends quantitative data with insights from thousands of founders, operators, and investors, offering a comprehensive view of the region's tech landscape. It captures not just the successes, but also the hurdles shaping the industry today.

The findings of this year’s report

Europe’s early-stage startup ecosystem is showing resilience and, in some areas, outperforming its US counterpart:

• In 2015, London was the sole European city featured in the global top ten hubs for early-stage startup funding (rounds under $15 million). By 2024, London had climbed to second place worldwide, with Berlin and Paris also securing spots in the top ten
• Europe continues to see more founders launching companies annually than the US – a trend consistent over the last decade
• With 35,000 early-stage tech startups, Europe leads the world in sheer numbers, cementing its position as the largest hub for emerging ventures

Europe’s tech ecosystem faces a pressing challenge: bridging the funding gap for growth-stage companies.

• Over the past decade, the number of growth-stage companies in Europe has grown eightfold. However, an uneven landscape persists. While European and US startups often begin on similar footing, US companies are twice as likely to secure funding rounds exceeding $15 million
• This disparity has led to half of European scaleups seeking funding from US investors, creating a significant drawback for the region. Talent, knowledge, and economic opportunities are increasingly being drawn away from Europe, weakening its innovation ecosystem
• Addressing this issue requires action at the institutional level. European pension funds, managing assets worth $9 trillion, currently allocate just 0.01% of their capital to European venture capital – a negligible amount that highlights the urgency for reform

Without strategic intervention, this funding gap risks undermining Europe’s potential as a tech powerhouse.

The report also highlights other strengths of the European tech landscape:

Tech continues to be a powerful magnet for talent in Europe

• The number of people working in funded tech companies has increased sevenfold in Europe since 2015.
• Both Europe and the US have seen their tech talent pools expand at similar rates. Today, Europe’s tech sector employs 3.5 million people – the same number the US reached in 2020.
• Since 2015, over 2.5 million new tech jobs have been created in Europe, with the talent market growing at a 24% Compound Annual Growth Rate (CAGR), matching the pace of growth seen in the US.

This rapid expansion underscores the sector’s crucial role in driving employment and economic progress across the region.

European tech remains committed to tackling some of the world’s most pressing challenges, with climate innovation emerging as a key priority for founders, investors, and talent.

• Carbon management has experienced the most significant rise in Seed-stage funding over the past decade, climbing 39 spots in Atomico’s rankings since 2015
• Sustainability-focused ventures now account for 21% of all investment in Europe – equivalent to one in every five dollars – twice the proportion seen in the US, where the figure stands at 11%

This strong focus on climate and sustainability highlights Europe’s role as a leader in driving solutions for a greener future.

Europe has the potential to lead in deeptech innovation, but realising this opportunity requires a shift in both investment and mindset.

• Deeptech, including AI, accounted for 33% of all European funding this year, reflecting growing interest in this transformative sector
• Over the past decade, European deeptech startups have raised $94 billion. While significant, this lags behind Asia’s $123 billion and the US’s $300 billion, highlighting the need for greater financial backing
• Europe’s AI talent pool stands out as a major strength. The adoption of AI has driven a sixfold increase in AI roles across the continent, with the UK alone hosting 60,000 active positions. Europe’s renowned academic institutions ensure a steady supply of talent to meet this growing demand.

Sarah Guemouri, Principal at Atomico and Co-Author of the report, added: “This lookback should encourage everyone in the ecosystem as to how far we’ve come and how much further we can go. The next step for Europe now is to develop its growth-stage ecosystem. To do this, we need more pension fund and government LPs, so that European later-stage companies can build a better world.”

Tom Wehmeier, Head of Insights at Atomico and Co-Author of the report, said: “While our survey participants called out a range of issues that might impede the continent’s progress - from R&D to regulation, we believe that unwarranted pessimism is the central barrier to Europe’s success. When you take the long-term view, it’s clear that the continent has made huge progress in the last ten years, and this should encourage us to re-discover our confidence and ambition. We must not undo the very thing that has been key to our success.”

In this retrospective edition of the State of European Tech report, Atomico examines the evolution of the European tech ecosystem over the last ten years. The report forecasts that in ten years’ time European tech could have an ecosystem value of $8 trillion and a world class talent pool of 20 million employees.

It found:

• Europe’s tech landscape is regionally varied, with countries like Finland, Estonia, and Sweden leading in tech employees per capita
• 17 of the 30 countries globally with the highest ratio of VC investment to GDP are in Europe, with Estonia topping the list
• Founders with over a decade of experience reported progress in diversity and inclusion, a sentiment echoed by under-represented groups
• However, the gender funding gap remains significant. All-women founding teams have doubled their share of pre-Seed funding to 4.9%, but their representation declines at later stages, receiving only 1.7% of Series B and beyond funding

Funding growth stabilises but remains on track

• While 2024 hasn’t seen record-breaking funding levels, Europe’s progress is clear
• UK tech companies raised $15 billion between 2005 and 2014, but since 2014, they’ve secured $143 billion
• Europe has outpaced global VC funding growth over the past decade, achieving a 13% average annual growth rate compared to the US (8%), China (2%), and the rest of the world (10%)

Europe’s investor pool is growing and maturing

• This year, eight European funds raised over $500 million, compared to just one a decade ago. The ten largest funds in 2024 collectively secured $7 billion across early and growth-stage strategies
• European VCs have raised $154 billion since 2015 – nearly triple the $54 billion raised in the decade before

IPO opportunities could restore confidence

• The global IPO market remained muted this year, with only one tech IPO exceeding $1 billion (Planisware)
• Over the past decade, nearly $1 trillion has been released into Europe’s ecosystem through tech exits
• Despite challenges, Europe’s younger public companies are thriving. Arm, for instance, now boasts a market cap of over $150 billion following its IPO last year

Jon Jones, VP and Global Head of Startups, AWS said: “This landmark report certifies Europe’s role in the future of technology. Combining commercial ambition and a commitment to solving fundamental societal issues, the region is pioneering a new model for technological progress. Having powered some of the most exciting European startups in recent years, AWS is excited to be part of this journey.”

Simon Bumfrey, CEO, HSBC Innovation Banking UK said: “Atomico's report highlights the impressive transformation of Europe’s tech sector and the significant potential it holds for the coming decade. Europe has generated more new technology companies than any other region in the world, dramatically increased investment levels, and positioned itself as a frontrunner in sustainability and an established global leader in fintech. The region’s ability to push forward and continue cementing its status as a global superpower is dependent on the provision of suficient funding for startups and scaleups to innovate and thrive. We are excited to see what’s on the horizon and remain focused on supporting the growth of European tech firms throughout their life cycles, to ensure they reach their full potential.”

Shawn Atkinson, Partner and Co-Head of Global Technology Companies Group, Orrick (London) said: "This year’s report makes it clear: Europe’s capital and talent are converging right as we’re on the brink of transformative technological change. With the right pro-innovation policies in place across Europe, the next decade promises unprecedented growth for this ecosystem."

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