50 European Startups to Watch in 2021

Wednesday, 16 December 2020

Europe’s startup scene is lauded as vibrant and fast-growing with hubs popping up in every corner of the continent now. It may not have taken on the big boys in Silicon Valley just yet, but so many European cities have been taking center stage in the global startup ecosystem. Within Europe, there are so many new rising stars. At one point, it was all just about London, Berlin, and Paris. But those days are over, and now it’s tough to keep track of which city is taking over the other. We are witnessing cities such as Wroclaw, Helsinki, and Minsk appearing on international top-ranking lists such as rising startup cities to watch.

The European startup market at a glance

• More capital is pouring into Europe than ever with a record $38.6B of capital invested, close to 180 $1B+ companies, and $16B closed by European venture capital funds. That represents a big jump from five years ago at $15.3 billion in 2015.
  
• 99B+ VC-backed tech companies with a valuation of more than $1 billion in Europe compared to 22 in 2015 according to the same report on the state of the startup industry in Europe by Atomico.
  
• 20 countries in Europe have at least one VC-backed unicorn.
  
• 20% of all rounds raised in Europe now include at least one US investor. In total, the amount invested in Europe from US-based investors was close to $10B, up three times since 2015. with 19% of funding rounds including an American firm, double the portion when Atomico started tracking in 2015. Those American investors will account for about $10 billion, or nearly a third, of the total amount invested.
  
• In terms of talent, Europe contains 6.1m professional developers. The continent is home to prestigious tech and engineering universities such as Oxford, Cambridge and Imperial College in the U.K., ETH Zurich, and Delft University of Technology in the Netherlands.
  
• Top talent is less expensive in Europe. Salaries for software developers are as much as 50% lower in Europe than those in the San Francisco Bay Area or New York City according to Startup Genome.
  
• They have direct access to the world’s largest economy, of 500 million people and a GDP of €25,000 per head. Some advantages are their accessibility to so many trading partners including rapidly growing emerging markets in Africa and Asia. 

Challenges

• Historically, one of the main issues that hurt many European startups is raising money. European companies having a harder time trying to raise large funding rounds due to a lower supply of late-stage capital (Specifically at the Series D and E stages). To put the numbers in perspective, total capital invested in North America, at $141B in 2020, is approaching nearly 5x the level of investment in Europe.
  
• In general, Europeans tend to take on a revenue first approach versus growth first attitude that is seen in the USA and Asia. Hence, one of the many reasons for their difficulties raising venture capital within Europe. On the plus side, their startups have more pressure to generate profits and perform earlier to survive.
  
• Europe’s regulations are much tougher than the US. However, the tide may be changing as there have been many new recent policy changes aimed at making it is easier for startups.
  
• A big hurdle for startups is the fact that the European market is so diverse and fragmented. Although the borders are open, there are still so many different cultures, laws, and languages. To put it into perspective, for a startup to take on Europe, it must enter 28 heterogeneous countries to compete with a market equivalent to the size of the USA.   

The impact of Covid-19

• Like the rest of the world, the European startup market has experienced major damage and setback caused by the onset of the pandemic. Lack of venture capital, massive layoffs, and a drop in consumer demand have taken a big toll on them.
  
• Loosening up regulations and supporting startups in order to avoid mass extinction is the next major hurdle. Many initiatives and interventions are taking place throughout Europe. France set-up a EUR 4 billion fund to support start-up liquidity, including bridging start-up funding rounds, Germany has announced a tailored start-up aid program, expanding and facilitating venture capital financing, and the United Kingdom has announced a co-financing fund for innovative companies facing financial difficulties.
  
• 49% of European startups have turned to banks for government-backed loans in recent months, while 43% have frozen hiring. The survey also found that 40% of European companies expect to see revenues down at least 25% in 2020, compared to previous targets. 

Now, ready to meet the stars that are primed for success in 2021 and beyond? In this list, we’ve gathered 50 companies to watch from 20 leading countries in the European startup scene. But the question is, who will be their next pegasus?

Germany

France

United Kingdom

Spain

Netherlands

Sweden

Portugal

Italy

Ireland

Belgium

View all