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The state of investments in Europe

Christian Hernandez and Stephen Piron in their article on the TechCrunch offer their insight on the evolution of the technology ecosystem in Europe in the last five years.

According to the article, the number of European companies successfully raising seed-stage funding has increased 600 percent in the last five years. The median size of Series A rounds is steadily increasing. European exits are accelerating in volume from Helsinki and London to Madrid and Berlin.

Also, the volume of seed-stage deals has accelerated significantly in the past few years across both regions with the US increasing by 85 percent between 2009-2013 to over 2,000 seed-stage deals and the EU increasing almost six-fold to over 900 deals per year.

The authors indicate that the median amount invested at seed stage in the U.S. doubled between 2009 and 2014 to $500,000. In Europe, on the other hand, it decreased every year between 2010 and 2013 to $150,000. The first eight months of 2014 saw this increase to a much healthier $300,000 (driven by larger seed deals in Sweden and Germany), but the dataset is too small to conclusively indicate a broader upward trend.

In other words, for most of the past five years, seed-stage companies in Europe were under-capitalized relative to their U.S. competitors. This could imply that European founders are building businesses with only one-third the potential of their transatlantic counterparts, but we would strongly disagree with that assumption.

Follow this link to the full article on TechCrunch.