Investment in Irish technology companies as they grow fell by 6 per cent last year, at a time when overall funding flowing into European businesses more than doubled, a new report has shown.
The Life is Growth report from technology company Stripe and media company Tech.eu, found total investment in growth startups in France rose 27 per cent in 2018, while Germany saw an increase of 26 per cent. The UK was flat, and Sweden saw funding in this sector fall by 13 per cent.
The figures indicate that although the UK is still top in terms of overall growth stage investment, France is catching up fast.
Overall growth investment in Europe rose from €6.88 billion in 2016 to more than €11.66 billion in 2018. The UK raised €3.4 billion, tech startups in France raised €2.4 billion, and €2 billion was invested in growth rounds for Germany's companies. Ireland, in comparison, raised €265 million last year.
However, Ireland’s smaller economy leads to more volatile patterns of investing compared with larger economies, the report noted. Many investors are based in Germany, France and Sweden too, the report noted.
The Strategic Investment Fund, managed by the National Treasury Management Agency (NTMA), has invested more than €3 billion since 2015, making more than 100 investments to support growing companies.
The report, which focuses on growth-stage technology funding in Europe, found medtech and fintech companies were leading the pack when it came to raising funds.
Those sectors raised a combined €4 billion in early-stage funding over a three-year period between 2016 and the end of 2018. That trend was continued in Ireland, where fintech and medtech topped the funding list during that period, raising an average of €23 million and €11 million respectively. The €23 million average deal size for fintech was the largest in Europe, the research found.
Software as a service came in third in the list of industries garnering the most growth-stage investment.
Three countries
The report looked at more than 2,000 growth startups that raised more than €30 billion between them from 2016 to 2018. Most of that money was raised in just three countries – Germany, the UK and France – which, combined, were responsible for 70 per cent of the total.
The report found investment in European growth stage companies was at a record high, notching up €30 billion in investment over 2,300 rounds between 2016 and 2018.
"The European startup ecosystem is on the right track to create technology giants in the years to come. Seed investment is strong and growth investment is getting stronger, year after year. But while the UK, France, Germany and Sweden are frequently seeing the birth of globally competitive tech companies, the rest of European hubs lag behind," said Guillaume Princen, head of continental Europe at Stripe.
“Startups are in Stripe’s DNA and we want to abstract the complexity of starting and growing a global business, regardless of where it was initially started.”
However, only half of growth-stage companies in Europe have physically expanded beyond their home markets, Stripe's research showed, despite selling abroad within two years of starting business. Of those that do expand, the United States is the most popular destination, with more than a quarter of European companies establishing a presence there. That was followed by the UK, Germany and France.
