European startups are on pace to collect a record $19 billion in investors this year, despite concerns the U.K.’s passing from the European Union will weigh on the area’s technology business, based on an annual report from the London-based venture capital firm Atomico.
The U.K. remains the largest destination for funds invested in Europe, with $5.4 billion year to date, according to the report. Germany follows with $2.5 billion and then France at $2.1 billion. The U.K. also held on to its place as No. 1 destination for skilled tech workers to migrate to within Europe, but ceded some of its share to France and Germany compared with previous years.
Since Atomico said it was clear that the separation was weighing on investors.
The U.K. was the very cynical about the future of the European technology industry, with 18 percent of respondents — which included thousands of founders and investors — stating they were less optimistic than they were a year earlier. Over the previous 12 months it has also become harder for British startups to raise new financing, based on 32 percentage of founders questioned.
The U.K. government responded in part by announcing strategies to double the amount of Tier 1 visas it issues to people of “exceptional talent,” into 2,000 since it attempts to keep the country’s attractiveness as a place to work.
While the value of investments Across Europe at 2017 is expected to hit $19 billion, it is going to accomplish that with fewer deals — 3,449 for 2017 compared with the 3,720 deals that totaled $14.4 billion in 2016, according to Atomico’s research. France is hard the U.K. for the largest number of deals closed annually.
“This is something we’ve seen on a worldwide basis complete,” Tom Wehmeier, the writer of the report and head of research at Atomico, stated in an interview. “You’ve seen bigger average round sizes this year versus last year,” he said, adding that the drop in many of investments was because of fewer being made in the very smallest sizes below $2 billion.
“It is important to concentrate on the big picture instead of smaller fluctuations,” Wehmeier stated. “We’d need to look a few years out to understand whether it’s a indication of a long-term trend.”
Russ Shaw, founder of industry body Tech London Advocates, said that the report provided further reasons to be cautious around the danger of Brexit. “More than two thirds of those surveyed were negatively influenced by the referendum outcome, with one in three losing out on a hire or a investor, mirroring TLA’s research on the topic,” Shaw said via email.
“The findings also point to some egregious lack of gender diversity in the sector, with just 9 percent of c-suite positions held by women,” he explained. “More worrying is the lack of consciousness of this issue, with 59 percent of founders under the belief that gender diversity is rather reflected in their businesses.”– work grounded in scientific study, such as artificial intelligence or robotics — had dropped to $935 million in comparison with the record $1.3 billion overall for 2015. For 2017, this sector has bounced back to reach a new record total of $1.8 billion investment in British companies, like Graphcore.
It is an area Britain was successful in already: DeepMind sold to Alphabet Inc.-owned Google in 2014 for a documented 400 million lbs, Twitter paid roughly $150 million to Magic Pony Technology, a London-based artificial intelligence startup, and SoftBank Group Corp. paid $32 billion to Cambridge-based ARM Holdings Plc..
Wehmeier said the growth of investments into deep tech, and subsequent exits, was because artificial intelligence is being embedded at the core of several businesses.
“When I was to roll the clock forward a couple of Years, we would expect to see AI at the heart of all businesses,” he said. “Like today if you were to see a consumer business that didn’t have Mobile in their center, you would be really amazed.”