🇪🇺 5 things to remember about European Tech this quarter
A selection of major Tech trends in Europe in Q1 2022
Good evening everyone 👋
Today is April 1st 2022, and it is time to bring you a short selection of the few exciting trends that shaped European Tech this quarter, as part of the 22nd edition of our weekly newsletter.
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Thanks for reading!
Here we go ⬇️
🇪🇺 5 things to remember about European Tech this quarter
1. Funding is up again 📈
2021 has been a record breaking year in terms of VC investments in European Tech companies. And 2022 is keeping up the pace, as European startups have raised a combined $29.2B, up from $26.5B from Q4 2021, and $20.1B from Q1 2021.
Healthtech, B2B SaaS and Fintech are sthe top 3 industries receiving the most funding from VC investments in Q1 2022 still. But they are seeing very different trends:
VC funding in Healthtech is down to $3.1B, its lowest level since Q4 2020
VC funding in B2B SaaS is up +47% from Q4 2021, and +55% from Q1 2021
VC funding in Fintech reached its highest level since Q2 2021, with a total $8.6B.
It is interesting to note that all sectors are noticing a significant drop in their total number of rounds, which shows that average round sizes are increasing.
Total funding amounts are powered up in Fintech and B2B SaaS by a small number of significant rounds (e.g., Checkout.com or Qonto in Fintech).
2. The crazy megaround race was on in France 🔥
The least we can say is that Frenchtech got off to a flying start in 2022, with 5 companies reaching unicorn status in January. The happy few joining the club were:
Payfit, a payroll and HR SaaS platform for SMEs raised a $289M Series E to reach $2.1B post-money valuation
Ankorstore, the anti-Amazon wholesale marketplace for independent retailers raised a $283M Series C to reach $2B post-money valuation
Qonto, the business banking startup raised $552M Series D to reach a $5B post-money valuation (becoming for one day the highest valued French startup ever)
Exotec, a robotics platform turning regular warehouse into a partially automated logistics platform raised a $335M Series D to reach $2B valuation
Spendesk, the all-in-one corporate spend management platform raised $114M from Tiger global, to reach a $1.14B valuation
This crazy month deserved a special congrats from the French president don’t you think? 😉
In the wake of these newly acquired unicorn status, some “veterans” — everything’s just moving so fast — carried down the road of success as they competed for “the most valuable French startup” award.
Backmarket, an e-commerce marketplace focused on refurbished electronics, first took it from Qonto one day after the latter announced their Series D with a $5.7 billion valuation.
But the e-commerce player was overtaken recently by Doctolib, as it reached $6.4B valuation two weeks ago.
It might be worth taking a look at the recently published Next 40 list which crowns the highest performing French Tech champions each year…
3. The landscape of instant delivery has started changing 🛵
If there is one trend suming up 2021 in European tech, it’s the rise of on-demand grocery delivery apps.
A few weeks ago, in My predictions for European Tech 2022, I was anticipating a wave of consolidations in instant delivery as better funded companies would outcompete the other ones, and fuel their expansion plan through acquisitions.
The assumption proved pretty accurate as we’ve seen some acquisitions from big players across the industry:
Gorillas 🇩🇪 announced in January that it was planning to acquire Frichti, a French startup delivering both ready-to-eat meals and groceries.
Delivery Hero 🇩🇪 bought majority stakes in Glovo, taking 83.4% control, as the Spanish company lately reported struggling to make good on its heavy investments into quick commerce and grocery delivery as big players such as Getir and Gorillas got there fast.
Delivery companies have a track record of investing in each other (e.g., Delivery Hero backed Gorillas, Getir bought Weezy, DoorDash invested in Flink, GoPuff acquired Dija and Fancy…) so that wasn’t rocket science.
I was too quick on stating that crazy rounds would slow down though. Companies like Zapp or Getir snapped up crazy funding rounds again this quarter (Getir even reached decacorn status this month).
But the instant delivery landscape is evolving as the “old” players (Gorillas, Flink, Getir, Zapp) are now facing competition from a new generation of recently founded startups including: Oja, Alorfaim, Mixe.Store, Wutzu… This new generation is focused on “catering for specific communities and delivering specialised produce” rather than delivering a wide range of products as old players would do.
So, on top of consolidation, there is a trend towards verticalization as some players expect to insulate from the fierce competition ongoing in the grocery delivery market by focusing on niche segments. There is also a trend towards more horizontal positioning, as startups like Deliverect — which raised $130M this quarter, help restaurants making sense of the market by supporting the adoption of delivery methods in their daily operations.
Exciting… isn’t it?
4. European Fintech could be showing signs of slowdown 💸
For the past two years, Fintech has been the largest contributor (along with B2B SaaS and Fintech) to European Tech funding and the expansion of the ecosystem.
There have been some great Fintech news during this quarter:
Checkout.com raised a massive $1B Series E round in January, becoming the second most valuable European fintech behind Klarna
Qonto and Payfit in France raised megarounds which I told you about already
GoCardless became UK’s 22nd Fintech unicorn in February
Scalapay became the first Italian unicorn since the dotcom boom with a $497M Series B, allowing them to compete with the likes of Klarna or Alma on the buy-now-pay-later trending segment.
Though the overall picture doesn’t seem to degrade as European fintechs raised $8.6B in Q1 2022, according to Dealroom data — up from the $7B raised in Q4 2021, the reality is less rosy.
Further down the fundraising chain, European fintechs raised their lowest cumulative total ($9.1M) in Pre-seed rounds in Q1 2022 in almost a decade, down almost 60% from Q4 2021. Similar story at Seed stage, as European fintechs raised a total of $11.6M funding — the lowest total at this stage in almost five years
Additionally, the total number of rounds (258) is the lowest since Q3 2016, down from more than 405 in Q1 2021.
There’s always a reporting lag in Venture Capital, which particularly affects early stages but the trend seems to confirm as the macroeconomic situation and dips in valuation multiples at growth stages bring uncertainty for early stage European startups, Sifted reported.
Let’s see how it goes next quarter ⌛
5. European tech companies have shown solidarity with Ukraine ☮️
It was difficult to do a quarterly wrap-up without talking about the number-one thing that shook up the whole continent.
The Russian invasion of Ukraine has triggered a number of initiatives from European Tech companies that are worth mentioning here. I’ve selected only a few, but Techcrunch is holding a more exhaustive list with regular updates that you can find over here. Initiatives fall into five categories:
Supplies on the ground
Companies like Sennder or Gorillas have collected donations in their home countries and driven them to the Ukrainian border. Uber has published a list of codes allowing people to get a free ride in Poland to deliver goods to Red Cross donations…
Transporting refugees from Ukraine
Flixbus is offering free tickets to refugees. Uber has been providing free rides between the Poland-Ukrain border. Bolt is incentivizing drivers in Poland and Slovakia to accept rides on the Ukrainian border…
Housing refugees
Station F is offering Ukrainian entrepeneurs free accommodation. Wunderflats is helping refugees find temporary homes. Jobgether launched a platform (EU4UA) to math refugees with people who can offer shelter…
Providing tech jobs for Ukrainians
Jobs4Ukraine was launched to help Ukrainians find jobs. Techfugees is working with European VCs to pool some money to help displaced person to work remotely. Google has launched a $5 million fund allocating equity-free cash awards and Google support to Ukraine-based startups…
Equipping Ukraine with an IT army
Techfugees developed a website to map out current conflict zones and safe areas. Tech to the Rescue, matches tech companies with Ukrainian nonprofits. Google is sending air raid alerts to Android phones in Ukraine…
There’s been a great solidarity movement in European Tech towards Ukraine this month, which deserved to be showcased.
BONUS - Exciting Upscalers-related news 💥
There has been some pretty exciting news in Upscalers’ portoflio this quarter:
Sosyncd was named one of the top 15 tech startups to watch globally in 2022 by Fast Company 👏
Trezy was named one of the Top 100 startups to invest in (2022) by Challenges magazine
Flexa announced they’re raising a new round led by a British VC fund 🚀
Landscape have launched Landscape Lists, which are the only investor lists on the market powered 💯% by founder feedback
Exciting! 😍
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There are many other interesting developments and news that haven’t been covered here. Selecting 5 only to make the newsletter digestible was difficult. Among those I dropped:
European legislators going after Big Tech companies with the Digital Market Act
Electric-powered vehicles fueling European mobility growth 🛴
Foreign investors going for European early stage rounds (e.g., Sequoia launching an accelerator program in Europe)
Saving them for the next editions 😉
Thanks again for reading
See you next week
Tim 👋