European Startup Pulse
European Startup Pulse

Episode 3 · 5 months ago

Pulse of the European Startup System - Update Q1 2022



Startups in Europe raises 28.2 bn US$ in Q1 2022, the 2nd highest quarterly number on record. ⇒ Is this a lagging indicator!


CB Insights wrote just a few days ago: 

But the seed funnel for startup investments is declining. 

Hot sectors are currently

· Fintech

· Deeptech

· Health

· AI & Data 

Startups Generated in the first quarter of 2022 more than 50.000 jobs. There are 90% more job openings, with the largest openings currently in fintech, health and biotech.The Exclusive Report 

A little note here: There was a glitch in the seed data – in the version we used for our YouTube recording. Please refer to the corrected numbers in the document below:

Find the complete blog post here:

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Welcome to start up bread that I own, your podcast and Youtube blog covering the German startup scene with News, interviews and live events. Hello and welcome everybody. This is Joe from start up break, to I owe your start up podcasting youtube block from the German speaking area. Today you are not only participating in a special publication, you are participating in the lounge of a new sub podcast, together with a deep ecosystem. Talking about this, Thomas, I would like to welcome you back again. Thank you very much, Joe. Hi, hear Thomas from DP ecosystems and the startup heedmanly, my pleasure. They have a year. Thomas, I have to tell you, when we keep doing this on a quarterly basis, you are soon going to unthrown Paolo Sirony as our most frequent guest. I'm sorry, Poulo. Okay, that's that. I'm we are starting now the pause of the European startup ecosystem. This is the install maq one, two thousand and twenty two. We will also pack in this podcast two episodes we did before. It will be available on our main podcast and each fitting sub podcast. If you're only interested in a bird side view of the European start up ecosystem. That is what you should look for. PAUSE OF THE EUROPEAN STARTUP ECHO system. As we said, it's a corporation between the deep ecosystem and start up radio. On a quarterly basis. Therefore, we once again share data with you that you, Thomas, put together. You wouldn't talk a little bit about who you guys are what you're doing for everybody who's not familiar with you? Yes, of course, thank you. Yes, we are very happy to be part of this initiative and we are helping the European start up ecosystem to understand where everyone is going, where the hubs are going. We're looking at data every three months to understand investment growth, job growth, meet up activity, opportunities for startups, accelerator activity, and we try to put some numbers to all of these developments and all of these opportunities that we see in Europe. The idea is simple. Without knowing what what is happening, we can't grow the ecosystem. So we really have the mission to help everyone understand what's going on on the ground, what are the opportunities, and then this will help you, in turn, to position your start up in the right trend sectors to understand, if you're running an accelerator, what is the next big wave of innovation you should get down to and, if your policy maker, of course, this helps you to understand how you compare against other cities and countries in the world. So really it's about understanding what's going on and we want to share as much data as possible. Deep Ecosystems is an accelerator for ecosystems, so we help ecosystems grow. And the startup heat map is a platform where you can find all our data publicly available to browse and to learn which are the hottest start up hubs in Europe, what are the best places to to grow a startup and more. And from my background I would also say potentially users are investment banks and consultancies that are always looking for interesting new startup or, on behalf of the client, where to start, for example, new office. We should also hint that you guys are going to have an event pretty soon from this publication day on. It's the twenty three and twenty four of June, my understanding right, that's absolutely correct. We are in Stuttgard, in Ludwigsburg, which is close to Stuttgard and there we will have a...

...great event for everyone interested in building ecosystems. We will have great speakers from robot Bosh Company, from multiple capital and niche geography and niche vertical investor. We have great people from all different places in the world. We have JOE with us. So if you want to be featured in the start up radio, definitely you can snack and Inter you there. So yeah, I think it's going to be a great event and if you want to come to d ECOSYSTEMSCOM and get your ticket, awesome. Hitting the the report, you call start up city signals. Right now it's a que one hund and twenty twenty two. It's, of course, very interesting and there is again a lot we could talk about what, but I'm sure we both decide that this is that we want to keep it short. For everybody WHO's watching this on Youtube, you can see the data. For everybody WHO's not able to see it because it's not your podcast or you listen to us on one of our own or syndication radio station, go to mediumcom forward, slash start up rate minus IO and there you'll find the blog post related to this publication and there's also an additional report you get exclusively just for our audience, and that is what we're going through now. What I found interesting is the headlights startups in your raises. Twenty eight point two building you as dollars in just one quarter, quarter twenty and twenty two. It's the second highest quarterly volume on record. I'm I was wondering, is this a leading indicator, so it's going to be awesome, or lagging indicator? Well, we already had a lot of stuff and now just a next step. Yes, that's actually really a crazy number. If you think about it. Now we're coming out of a pandemic. We are really in a difficult situation when you look at the stock market as well. We have a war valaring in in Europe and still the the investments have gone up in queue. Two Thousand and twenty two record quarter. That's pretty solid and if you look at the if you look at the the timeline, you see that the last quarters have been the strongest. Right throughout the pandemic we have seen a lot of investments in startups and I think that's that's showing that the startup ecosystem has a solid base in Europe. But it's not the small brother anymore of let's say the US ecosystem, but it really has a good positioning now and there is a recurring success cases and we see, of of course, also very big rounds happening that drive up the number to the billions, and here twenty eight point two billion. That that is really a lot. So we do see that there is really a solid, solid increase compared to the previous years. Nevertheless, your question is very valid, saying does that mean that it will stay like this forever? And that's a big question mark because, of course we see a lot of mega rounds now into startups that are also driven by recent development. So you see a lot of investments in the livery startups and ECOMMERCE, etc. Because of the dramatic changes of how we live in our consumer behavior changed throughout the pandemic. The question is, will these startups actually succeed in the long run or where these bets that were taken into these by the investors delusional and basically will break down in a few months, and that could mean that some of the investors that gave these mega rounds its volume they decide now, I'm not investing anymore... in this kind of levels and volumes and then we will see that the the numbers will go down again. So it might be actually the opposite as we expected. While many were thinking in the pandemic investments will slow down, actually it drove it up and it is remains to be seen whether that will stay on that high level. I would say to understand how healthy our ecosystem is, we need to look at a lot of other indicators, for example the activity on the ground, the meet up activity, the opportunities for startups, the early stage investments. Right there's a lot of elements that we need to look at to understand if we actually have a healthy, healthy development of our ecosystem or if it's just the mega rounds that that boost up the numbers and we all say yeah, it's great, but indeed this is maybe just a hype that passes. It comes down to Yay or Nay, I'm before we get into the other signals if this is a healthy development. I also put in a crunch based Article des populished about a week ago, at the time of recording this, on May, eleven two thousand and twenty two. Funding to you start up slows partly after brisk start in two thousand and twenty two and they are talking about March and April declining after January and February has been good. This is a little bit different because you guys have different database and you guys have a different time frame. So see, the article talks about crunch based. The article talks about everything until April and we are only talk about March here. But did you see a similar development you do? You think we just had of a cliff? So yeah, the article you shared by crunch base was looking as specifically at the large numbers, the large rounds that we just mentioned. Basically they found that in the last two months in Europe we saw fewer rounds above one hundred million then we had seen in the in the beginning of the year. That is very interesting because normally q two is one of these strong months the quarters. So normally you would expect an increase quarter over quarter. There's a lot of seasonality in investments, right. So you see that normally the beginning of the year is a little bit weaker than qto gets a bit stronger, summer is weaker and then q three in q four actually quite strong normally, and Qtwo is normally one where we expect very large rounds to come in, and the opposite seems to be true if we look at the very recent numbers. Now there is a few different explanations at play. Some say, okay, just because there is like the war going on in Ukraine, you might postpone the publication and announcement of large rounds because it might not fit the new cycle at the moment and it doesn't feel like a celebration time and you you don't want to come off as a someone that doesn't care about what's going on in the world. So it might be just like the announcement dates that are being moved. That's remains to be seen. After qtwo finishes and maybe we see more announcement in q three and it catches up again. But in principle it's a it's an interesting sign, and specifically speaking to the fact that I mentioned before that the pandemic drove up large rounds and maybe now also a bit of the dry powder is used up and and maybe we see a normalization of the of the of the activity again. In principle that doesn't mean, though, that in terms of volumes we have to expect a decline I think that we are still on a growth path.

Also here the article of Crunch Base mentions that we saw an increase in qne. They have a bit of a different way of counting. To be honest. I'm not such a big fan of how they did that, because they include post Ipoh data and I would say at some point we need to stop to call something a startup, and especially once it is on the stock market and ipowed. I would not count that kind of capital investment and as a startup investment anymore. So I would cut at latest, at the Ipoh stage. But in this analysis they did. They did discipline differently and of course that is then showing also more the overall stock market trends, which are difficult in this in this period. So of course there was like not as much of increase if you take in the stock market development. Really like your interacted graphics here because the sum of investments per quarter, you can see all of your but you can also look at Barcelona and London, Paris, Berlin amps them and Stockholm separately. I find this very awesome. We do have a few big rounds. We not going to go into them as, as I said in the beginning, before we start the recording. There is a little bit missing because you also had your decision points. How you how you included this data. For example, volicopter and hydrogen from Frankfort Rand Mine area. They are not in there, even though they raised one hundred two hundred million years and one hundred and fifty million you as dollars, I believe, for Volocopa. I'm not sure about the currency. respectively. They're not included because you do have a little bit of a different frame of reference. They're right, yes, in the top rounds. We were looking now only at the rounds up to one hundred million, which was just in a decision to how to list this, because at some point you need to make a cut and you don't want to show always the same startups, though I must say hydrogen from North Hessen is one of the surprising players here with two hundred million out of nothing. So congratulations to them. Definitely worth mension on the side. We will have an interview coming up with them sometime in late summer or all the publication. I'm actually I would also suggest there is a startup rakdo indicator, which may not function as properly as a wish because obviously I'm getting more popular, I'm getting more requests, but if you would ask me for an interview right now, admittedly I only accept two percent of the people requesting an interview, you would meet too to think about publication in October if you don't have a fixed spot like you guys, and therefore I do believe that is also very good. Indicated that there's still a lot going on in the startup ecosystem, for me, especially the German speaking are IDA is a or Dach region, Germany, Austrias with Celand and Listenstein, our key. I'm talking about the startups here, the vertical development performance, number of deals, and on on one side you have deal since twenty nineteen and on the right, on the lower acts as you have deals of the last six months. So this is the vertical axis, deal since two thousand and nineteen. And I found the hot sectors, of course, fintake, deep tech, health, AI and data. That that is basically the stable growth sector. The upcoming growth sector has nothing in there. This slow growth sector as well. I was wondering what is, like part of my language, the hottest shit..., because I've seen consumer APPS. They've been a little bit declining and this done here that one. It's some working like I wanted to all clean tech, for example. There are some that are very much in focus of media, of me attention right now and that may or may not give them a push there. HMM. Yes, it's quite interesting to see that we have a lot of stability in in the verticals. So that's always surprising when you look at the data and you compare it to, let's say, the media attention. So, for example, Fintag is out here as one of the most stable growth sectors. It's in absolute numbers, the second biggest next to deep Tang, which, we must admit, deep take is much broader. Right. But it is also surprising other you see deep tech as a category being the biggest sector in in Europe. So Fin tag being both the large, second largest and then the largest growth sector, which means that in the last six months it had over even more than it had before. Right. Proportionally, that means we see even a growth in Finn Tag that we don't see in other sectors by the magnitude that you can see here on the on the on the chart, you have many more deals coming into Fintag than you have, for example, in clean tech. So that's just the reality how it is, and it's growing the fastest the upcoming growth sectors. Box is empty because there is not like a shooting star that suddenly went through the roof in the last six months and had many more deals. So you see that clean tech is moving in this direction, but it's really not to the magnitude that you'd say there was like a complete change of heart with investors and they doubled or triple their investments in this space. Just didn't happen like that. So there is an increase, but it's not as dramatic as as we maybe want it. So definitely a growth sector. Yes, it's a big mean that we call it leg ards down here. If you compare it to Finntach, definitely a leguard. It's not comparable at all to the magnitude of investments in Fintach and even at the deal number, not only the mega rounds. It's not the volumes. This is about the individual deals that we see. Its legging and that's, of course, not where we wanted to be. Right if we see and the All the vision for Europe becoming a leader in sustainability and climate tech, it's not where we wanted to be. More encouraging is the deep tech space not? That definitely something where you see an edge, and I would also be quite confident in international comparison to other continents, Europe would have like a unique selling proposition here. Deep Tech is definitely a very strong sector in our continent. Also very encouraging. All the jobs numbers, because I'm job growth are startup Chris creating jobs. Enough seen for more than fifty thousand additional jobs. I think it's almost like sixtyzero in first quarter, more than Twentyzero in January, twenty two, Twelvezero, almost thirteenzero February, twenty two and almost yeah, a little bit over twenty four. Let's the Twenty Five Tho in March twenty two, which is just amazing. You show plus ninety percent job growth there. If I would be politician, I would totally jump on this opportunity. Have you any background on this development? Was it something like they now got the big funding and now they generate...

...the jobs. They need the people to get their work done. Yes, I think that is definitely true. You see that also the sectors that hire the most of of intach health and biotech so and then logistics, which is of course including all of the delivery startups are so we can see that they all strayed a lot of jobs. And Yeah, so definitely you you will have that that develop after development, after big rounds, you will see also hiring, because it is necessarily so that in many of the deals, the startups that we see, personnal is one of the big cost factors. So the investments would give you a budget to higher and then you will have these job openings following suite. Definitely it's the case. What interesting observation, by the way, is that sometimes we see the connection between the geography of the investment with a geography of the job creation not aligne very well. So, for example, London the biggest in job in an investment growth, but in job creation it's actually not the biggest. So you see other cities that are outperforming in London in job growth and I think that's that's a sign that London is really the place where you raise funding, but where you start up headquarters is and where your people are hired, that's a totally different story. HMM. I also had in mind the job the remote working ditch, vertice, completely remote jobs, they totally or case since the outbreak of the pandemic. Come with with I have to tell you another thing. If you agree with everything I say, this is going to be very boring. Regarding yes, and then we do have a little bit the meat, meet up activity. You kind of see it as a leading indicator for start up activity in the respect of places, but it currently looks like it's all going down a little bit. is to it? Is this normal for the first quarter, for the beginning of the year, or is it just in effect we see here, maybe still due to corona? Yeah, definitely, that's one of these effects. We saw again, which was interesting, during the pandemic, participation and meet ups actually increased, and that was interesting because no one was expecting that. Basically, people were saying the meet up scene will suffer a lot and the APP possibility for founders to meet and exchange will decrease. But what happened is that actually the meetups, we went online and people from also other places were able to join these meetups and that gave a boost to participation overall and meetups. People were bored at home and what they did was joining meetups, and they did so especially in the big hup. So they went to London online, they joined meet up in Berlin online. They went, for example, to Stockholm, which was one of the places that went really through the roof during the pandemic in terms of meet up participation. They attracted a lot of international visitors and I think now, after the pandemic ended, we see a bit of a normalization of that trend. We see that meetups are happening in person again and of course that limits a bit the number of participants in the in the meetups because they are not so international anymore and we're going down in participation level. HMM, sounds really good. One more question for you, because we're getting at the end opportunities. How active is the European startup scene? That is an aggregation of different things like accelerators, access to carpets and so on and so fourth, I have seen it once again exactly at level of q one hundred, twenty and twenty one. When do you think we are going to be back at levels off twousanwo thousand and Nineteen Pre...

Corona? So opportunities are driven main so these are calls for accelerators, these are calls for funding, prices, etc. And it's basically a message that goes, are there any awesome startups that do this and that? Exactly so someone puts some funding up and the price money and says I want to meet the best startup in ai or in Egretech or whatever, and you can apply right. So might be an accelerator program might be just funding, might be just a call for joining a conference, etc. And we're tracking this and we're showing these opportunities on the startupeed, my platform, for founders to to apply to. And basically, here you see each quarter it's around a hundred, hundred twenty when it's a big one, and then you saw like a bit of a slow down at two three and two four, two, Tho twenty, one to one again at a one hundred. I think that this has to do also with the attention to the early stage, that that has declined. A lot of actors are moving later stage, corporates and also public entities on the European level. They say they want to move to the later stage and only work with startups that already are on the market, already have a product, etc. And we see a bit of a less attention on early stage startups. And so that's why levels are where they are. And Yeah, I would wish personally that there would be even more opportunities, because one hundred opportunities per quarter. That's for Europe. That's not enough. In Mile exactly, and there's also link in the document where all the people who have calls for applications for solutions from startup can actually add in their opportunities. Exactly. Promise. It was a pleasure talking to you again. Looking forward to have you back at the next in the next quarter. Everybody would like to reach out that we look at different data, different hups, something like that. Reach out to me, Joe at start a break to dl and we will answer your question. By the way, it would be great if you do it before the next recording so we can accommodate that. Just looking at the calendar, we right now in May, so let's say to two and a half months after the end of the quarter. So that means we will be back sometime in September, late September, early October for the next recording. Fantastic. Looking forward to that and I hope everyone learned a bit and if there's questions, let us know. Awesome, great, thank you very much. Thank you as well. That's all things fine. More news streams, events and interviews at www dot's start up. Bread. Do Yo remember? Sherry is carry.

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