European startup funding faltered in Q3 2024, with startups elevating a complete of $11.3 billion – down 35% in comparison with the identical time final 12 months based on Dealroom. Nonetheless, complete funding in European tech thus far in 2024 totals $40.9 billion and is on observe to equal 2023’s complete funding ($58.2 billion), fueled by a surge in AI-powered healthtech investments and the continuing energy of Generative AI, demonstrating the underlying strengths of the European startup ecosystem.
On this context, the healthtech sector skilled an surprising comeback, securing extra VC than some other sector in the course of the 12 months up to now. In Q3 alone, healthtech corporations raised $2 billion, while oncology startups, specifically, noticed a big increase, attracting almost $600 million in funding. Firms like Catalym and Myricx Bio, specializing in immunotherapies and precision most cancers medication, secured substantial funding rounds – $150 million and $117 million respectively.
AI applied sciences proceed to be a driving drive within the European startup panorama. Generative AI, specifically, has attracted important investor curiosity, with $165 million raised in Q3. GenAI corporations have raised a complete of $3.3 billion thus far this 12 months, 8% of complete European VC funding. Industrial applied sciences and hydrogen applied sciences additionally stay widespread sectors for funding. Germany-based Black Forest Labs raised $31 million to develop generative deep studying fashions for pictures and video, while London-based Raycast raised $30 million for its productiveness app in Q3.
The fintech sector demonstrated resilience, recovering from a downturn in 2023. Funding for fintech startups elevated by 45% year-over-year in Q3 2024, reaching $1.6 billion. This development is attributed to improvements in AI and embedded finance options.
Regardless of a decline in late-stage investments, early-stage and breakout-stage offers have remained regular all through 2024. Over 2,000 rounds of $2 million or extra have been raised by European startups, indicating a wholesome pipeline of revolutionary corporations.
The European startup ecosystem is well-positioned for continued development, pushed by AI-powered healthtech, Generative AI, and a powerful pipeline of early-stage corporations. With a projected $33 billion in dry powder by the top of the 12 months, the ecosystem is primed for additional momentum in 2025.
The UK took essentially the most funding of any European nation in Q3, taking in $2.9 billion in complete because of massive rounds from Flo Well being ($200 million) and CloudPay ($120 million), bringing its complete raised thus far to $12.9 billion. Nonetheless, that is nonetheless down 9% in comparison with 2023. Germany got here second with $2.7 billion, with a complete of $6.6 billion raised, up 6% in comparison with the identical interval final 12 months and France was shut behind with $1.6 billion raised, of a $6.0 billion complete, down 13%.
The Netherlands, Italy, Belgium and Eire have all seen a rise in VC funding this 12 months. Dutch tech startups have raised $2.1 billion thus far, up 31%, adopted by Italy’s $933 million, (up 22%), Belgium’s $894.7 million ( up 25%) and Eire’s $861.8 million (up 12%).
Imran Ghory, Companion at Blossom Capital, mentioned: “There’s a robust pipeline of revolutionary corporations being solid throughout the continent and it’s not stunning that AI is taking part in an enormous function on this. AI is enabling new startups to resolve advanced issues for purchasers throughout the spectrum from B2B SaaS to robotics and defence and buyers the world over are being attentive to this. We’re conserving a detailed eye on this new era of AI corporations throughout the continent and we’re excited to see the way it will make European tech extra environment friendly and impactful.”
Remus Brett, Common Companion at LocalGlobe and Latitude, added: “Europe’s fintech sector is again in full drive, as these funding figures affirm. Fintech startups, most now AI first, are additional accelerating B2C and B2B innovation and opening up extra alternatives on this $30 trillion sector. Furthermore, the emergence of ‘thoroughbred’ fintech corporations exceeding $100 million in annual income is driving development, job creation, and reshaping the panorama.”
