Early-stage rounds proceed to account for almost all of investments within the European startup market, and on Tuesday one of many largest corporations within the area introduced a brand new fund to bolster that development. 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 variety 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, corporations on the continent are challenged relating to scaling. There have been quite a few exceptions through the years, 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 quite a few them. They embrace a few of the most profitable startups to return out of Europe, resembling 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 guess 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 dimension because the agency’s early-stage fund within the U.S. (introduced December 2023). Provided that the U.S. is a significantly larger market by way of general enterprise funding and variety of startups, that speaks to Accel’s confidence in what’s enjoying out right here.
“The European tech scene has really come of age,” stated Harry Nelis, a longtime accomplice at Accel in London. Present investments embrace cybersecurity corporations Cyera and Oasis, the care dwelling market Lottie, and the buzzy AI video startup Synthesia, amongst many others.
As you may anticipate from that checklist and up to date headlines, the main focus going ahead might 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 primary 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 response to analysis from PitchBook, exhibits 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 manner 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 foul factor for the long term: Proper now the market is attempting to not get knocked over by the wave of startups that had been generously funded at precipitous valuations in years previous, which are actually crashing down as they discover themselves struggling to succeed in their income projections, arise their valuations, and unable to exit on the general public markets or elevate extra funding.
Up to date to take away Skype from the checklist of startups (Accel didn’t spend money on it).