European Tech is hot. Very hot. The European startup ecosystem just experienced the most extraordinary year in its history with a record amount of $93.3 billion of fundraising (compared to $38.5 billion in 2020). Years of wondering when the region’s entrepreneurs would get global respect were washed away by a tidal wave of investments, a significant part of those arising from US based investors and/or non traditional players in the VC game.
In this context, European founders and investors must recognize the underlying trends that are reshaping the ecosystem. Bigger rounds, more money, and increased attention bring greater responsibility and expectations, and the need to have the right playbook for growth.
As public valuations are hit, the question of private market valuations is again at the center of the table. We think the fundamentals of a continuing growth of the ecosystem are here to stay. However, as investors invest in European champions, the fundamental traits of the business model and the relevant unit economics and legal risks shall be carefully assessed to avoid costly mistakes.
Here are 7 predictions for 2022 intended to offer some insight into the road ahead so that founders can attain those still lofty valuations that are making the headlines, while investors make the right investment decisions as regards to European Tech companies.