European tech companies that went public in 2018 saw their share price boosted by an average of 222 percent, in contrast to US tech IPOs that had average gains of 42 percent, according to a report from London-based technology investment firm Atomico.
There has also been twice as many technology IPOs in Europe than in America, with 2018 marking record sums invested into European technology companies: $23 bn in 2018, up from just $5 bn in 2013.
There were four tech IPOs or direct listings of European tech companies in 2018 that reached valuations of more than $5 bn on opening day, including Europe’s largest ever venture-backed publicly-listed tech company, Spotify.
In total, Europe contributed three of the top 10 largest tech IPOs globally of 2018, according to the 2018 State of European Tech survey.
‘This report has become a bit of a broken record about breaking records but the facts speak for themselves,’ says Tom Wehmeier, partner and head of research at Atomico, and author of the report in a statement. ‘Today, European founders have access to sophisticated investors, can hire the best talent, go the full distance, stave off ferocious competition, go public and win on the global stage.’
Wehmeier adds: ‘Europe is now reaping the early rewards from the transformation of its tech ecosystem. The fact is the seeds of success this year were planted a decade ago. That is why we should expect even greater success in the years to come.’
Furthermore, the report reveals that Europe’s tech industry is growing five times faster than the rest of the European economy in terms of gross value added, a level that has accelerated in recent years.
The European tech workforce grew 4 percent in 2018, a significant difference to overall EU employment growth of 1.1 percent.
Stellar European tech growth and record success has not gone unnoticed by family offices and high net-worth individuals. Over the last five years these groups have invested over $5 bn in European venture capital (VC) funds.
One factor cited as a negative though was Europe's regulatory environment. Respondents in Atomico's report were split on whether European regulators are acting in the best interest of tech start-ups, while 49 percent of VCs and founders said European regulation makes it harder to start and scale a technology business.
The report reveals that a vast majority of respondents to its survey agree that diversity is a benefit to company performance, but alarmingly, 46 percent of women report that they have experienced discrimination in the European tech sector, with many firms failing to get women on board as start ups. Of all funds raised by European VC-backed companies in 2018, 93 percent went to all-male founding teams.
Chris Grew, partner in the technology companies group at law firm Orrick, and one of the report partners, comments: ‘This year’s report confirms that tech is the engine of economic growth and opportunity. It also reminds us of our responsibility as a community to ensure that this transformation is inclusive in all respects. That is the only way we will deliver fully on the promise of innovation.’
