European startups experienced a surge in funding during the second quarter, reaching nearly $16 billion, marking a 31% increase from the previous quarter and a 17% rise year over year, according to Crunchbase data. Both early and late-stage funding saw significant growth, with a notable uptick in late-stage investments.
For the first time in a decade, quarterly funding to European startups surpassed that of Asia, where startups faced their worst quarter since late 2015, exacerbated by tensions between the U.S. and China. Within Europe, the UK led the market with $6.7 billion in funding, followed by France with $2.9 billion, both showing year-over-year increases. Germany, however, saw a decline with $1.8 billion in funding.
The AI sector in Europe led with $3.3 billion in investments, with substantial rounds for London-based Wayve, Paris-based Mistral AI, and Cologne-based DeepL. The financial services sector followed with $3 billion, with significant funding for UK-based companies Abound, GB Bank, and Monzo. Sustainability was the third largest sector, attracting $2.5 billion, mainly from renewable energy companies securing over $100 million each.
Late-stage funding reached $7.5 billion across more than 100 rounds, showing the highest growth both quarter over quarter and year over year, though not the highest in the past year. Early-stage funding totalled $6.5 billion across over 300 rounds, while seed stage funding amounted to $1.8 billion across 900 rounds, down from $2.3 billion in Q2 2023.
Notable acquisitions included Bridgepoint’s $650 million majority stake in Paris-based LumApps, Voodoo’s $500 million acquisition of BeReal, and LexisNexis’s $160 million purchase of Belgium-based Henchman.
Three European companies joined the unicorn board in Q2: Paris-based Pigment, Berlin-based Autodoc, and London-based Builder.ai, bringing the total number of European unicorns to 208. In a positive development, fintech unicorn Revolut reported a 95% revenue growth year over year, with $2.2 billion in revenue and a $545 million profit for 2023, alongside 12 million new customers. Revolut was last valued at $33 billion in 2021.
European startups had a strong quarter, with a notable increase in late-stage funding and AI leading the funding sectors. The region also saw substantial revenue growth from one of its most valuable private companies, Revolut.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
