Early-stage rounds proceed to account for almost all of investments within the European startup market, and on Tuesday one of many greatest corporations within the area introduced a brand new fund to bolster that pattern. Accel has raised $650 million to again startups from seed to Collection A throughout the U.Okay., the Continent and Israel. The fund is the eighth of its sort for Accel because it first put down roots in London in 2000.
Accel has invested in additional than 200 startups within the area thus far, making it one of many extra prolific VCs on this market.
One of many recurring laments you hear in Europe is that even when the area produces distinctive expertise and concepts, firms on the continent are challenged on the subject of scaling. There have been a lot of exceptions over time, nevertheless, that check that declare, and a part of Accel’s gravity as an investor comes from the truth that it’s been a backer in a lot of them. They embody a number of the most profitable startups to come back out of Europe, corresponding to Supercell and Spotify (additionally by the way a duo of Nordic startups, respectively hatched in Finland and Sweden).
Within the years since these investments, Accel’s wager has been that the expansion of startups in Europe has been robust sufficient to develop the pot of cash that it’s elevating to again them. Notably, the $650 million introduced Tuesday is identical measurement because the agency’s early-stage fund within the U.S. (introduced December 2023). On condition that the U.S. is a significantly larger market when it comes to total enterprise funding and variety of startups, that speaks to Accel’s confidence in what’s taking part in out right here.
“The European tech scene has really come of age,” stated Harry Nelis, a longtime associate at Accel in London. Present investments embody cybersecurity corporations Cyera and Oasis, the care house market Lottie, and the buzzy AI video startup Synthesia, amongst many others.
As you may count on from that record and up to date headlines, the main focus going ahead will likely be on well timed companies tapping into the wants and pursuits of the day. That features these which can be constructing inventive options to urgent issues (cybersecurity being a major instance of that), good commerce options (together with marketplaces that faucet into societal and social wants) and — want I write it? — AI, AI, AI.
Enterprise investing in Q1 of this yr, in line with analysis from PitchBook, reveals slight however nonetheless encouraging indicators of restoration. In complete some €16.3 billion was ploughed into startups throughout Europe within the first three months of this yr. That’s up on Q1 of 2023, when €13.7 billion discovered its approach into startups’ financial institution accounts, however each are down by many billions from the exuberant, internet-heady days of 2021 and 2022.
That drop may not be such a nasty factor for the long term: Proper now the market is making an attempt to not get knocked over by the wave of startups that have been generously funded at precipitous valuations in years previous, which at the moment are crashing down as they discover themselves struggling to succeed in their income projections, rise up their valuations and unable to exit on the general public markets or increase extra funding.
Up to date to take away Skype from the record of startups (Accel didn’t spend money on it).
