The UK Remains on Top in a Record Year of Investment and Growth for the European Tech and Venture Ecosystem

February.07.2022

Record breaking growth

2021 was a record year of investment and growth for the European tech and venture ecosystem, and for the UK in particular. Building on the last five years of consecutive growth, the total amount of capital invested into European tech reached a staggering US$100B, according to Atomico’s 2021 State of European Tech (SoET) report. Our London office alone contributed to US$12B of that market.

Data from the SoET report shows the strength of the UK as a driving force behind this thriving venture ecosystem.

London remains on top as the leading European tech hub for investments, with UK companies and investors raising more than $18.4 billion in the first three quarters alone: 2.6x the total amount raised compared to our European neighbours. The growth trajectory for the UK looks strong going into 2022, as two more UK cities are making marks on the ecosystem: Oxford ranks in the top 10 European tech hubs and Cambridge produced more unicorns per capita within cities <500k people than any other in 2021 due to a high concentration of talent.

London is also leading the charge by total deal count, completing more than 3,840 deals: 2.5x higher than any other European tech hub. In fact, globally London recorded as the fourth hub for VC tech investment in 2021 after San Francisco, New York and Boston – where Orrick’s U.S. tech lawyers are strategically positioned.

Mega rounds and unicorn herds

The UK investment landscape is now flooded with mega VC rounds taking centre stage and more unicorns joining the herd than ever.

With more than 37% of the total US$100M+ rounds and several US$500M+ rounds coming from the UK, the region maintained its top spot as Europe’s leading home for unicorns, now having produced a stable of more than 100 unicorns in total.

The exit landscape

As high-growth tech companies scale increasingly quicker and have record levels of capital to deploy, they are finding their strategic exit much faster.

Record exit value across Europe is now in excess of $275B in 2021. It includes $100B from M&A, $110B+ via IPOs and direct listings, and another $62B via SPACs. In the attack of the SPACs, UK tech companies pave the way for Europe. Out of the completed de-SPAC transactions for European tech companies, 60% are UK-based and account for 53% of the total enterprise value. In 2021, Orrick advised on more EU and US tech de-SPAC transactions than virtually any other law firm.

With mega rounds becoming the norm and companies scaling to exit increasingly quicker, at Orrick we have seen more “competition” amongst VCs beyond valuation and big changes in the investment landscape, such as more founder friendly terms in VC deals across the board in Europe. Orrick’s 2021 Deal Flow report analysing its closed VC deals across Europe – and offering unique insight into the market based on the largest pool of European deals completed in a year by one law firm (as the most active in Europe for the past 23 quarters, PitchBook) – will be launched in February 2022. Contact us to receive the report on its launch here.

These highlights taken from the 2021 SoET report showcase the strength of the UK in shaping the future of European tech. We’ve seen first-hand how integral the UK will be to the continued growth in Europe as we move collectively towards developing a more diverse, equitable and purpose-driven ecosystem.

We’ve partnered with Atomico to co-launch the State of European Tech report since 2016, bringing the most comprehensive, data-driven analysis on the European tech and venture ecosystem to market.

Note: the data from the 2021 State of European Tech report was recorded up to 15 November 2021. Published by Atomico in partnership with Slush and with support from Orrick, Silicon Valley Bank and Baillie Gifford, this year’s report analyses input from nearly 5,000 founders, investors and visionaries.