Early-stage rounds still make up the bulk of investment in Europe’s startup market, and on Tuesday one of the region’s largest firms announced a new fund to reinforce that trend. Accel has raised $650 million to support startups from seed to Series A in the UK, the continent and Israel. This is Accel’s eighth fund of its kind since it ventured into London in 2000.
So far, Accel has invested in over 200 startups in the region, which makes it one of the most dynamic VC funds on this market.
One of the repeated laments heard across Europe is that despite the fact that the region produces exceptional talent and ideas, firms on the continent face challenges when it comes to scaling. However, there have been many exceptions over the years that testify to this thesis, and Accel’s authority as an investor is partly due to the incontrovertible fact that it has supported many of them. These include some of the most successful startups from Europe, reminiscent of Supercell and Spotify (incidentally, also a duo of Nordic startups, founded in Finland and Sweden, respectively).
Over the years that have passed since these investments, Accel assumed that the development of startups in Europe was strong enough to increase the pool of money it collects to support them. It is price noting that the amount of $650 million announced on Tuesday is the same size as the company’s early-stage fund in the US (announced December 2023). Given that the U.S. is a much larger market in terms of overall enterprise funding and the number of startups, this shows Accel’s confidence in what’s playing out here.
“The European tech scene has really come of age,” said Harry Nelis, a long-time partner at Accel in London. Current investments include cybersecurity firms Cyera and Oasis, care home marketplace Lottie, and thriving AI video startup Synthesia.
As you would possibly expect from this list and recent headlines, the future focus shall be on just-in-time firms that meet the needs and interests of the day. This includes people who develop creative solutions to pressing problems (cybersecurity being a prime example), smart trade solutions (including markets that address social and community needs) and – do I want to write this? — Artificial intelligence, artificial intelligence.
Venture investing is showing modest but still encouraging signs of recovery in the first quarter of this yr, according to PitchBook research. In total, roughly EUR 16.3 billion was pumped into start-ups across Europe in the first three months of this yr. This is greater than in the first quarter of 2023, when EUR 13.7 billion was transferred to start-ups’ bank accounts, but in each cases this amount is many billions lower compared to the vigorous and Internet-filled years of 2021 and 2022.
This decline is probably not so bad in the future: the market is currently struggling to avoid being swept away by a wave of startups that were lavishly funded in previous years at skyrocketing valuations and are now failing when they find themselves in distress. they are struggling to meet their revenue projections, maintaining their valuations and unable to exit public markets or raise more financing.