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Tech business owners from Europe have arrived. The ecosystem of digital businesses has expanded twice as quickly as it did in the United States over the past seven years, and in 2021, private company funding in Europe will surpass USD 100 billion for the first time.
FREMONT, CA: The tech entrepreneurs of Europe have arrived. Over the past seven years, the ecosystem of digital businesses has expanded twice as quickly as in the US, and in 2021, private company funding in Europe will surpass USD 100 billion for the first time. At Goldman Sachs’ Disruptive Technology Symposium last week, nearly a fourth of the 220 unicorns in the area were present at the occasion, demonstrating how rapidly Europe’s startup ecosystem has expanded. When the symposium began in 2016, there were fewer than 20 privately held, venture-backed technology companies in Europe with a USD one billion or higher valuation.
In total, more than USD 150 billion in M&A and financing deals in 2021 were for European tech and tech-enabled businesses, setting an all-time high for activity. One of the important indicators—the USD 100 billion in capital invested in European enterprises in 2021 indicates two primary aspects.
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First, businesses are expanding and receiving excellent funding. When the market was booming last year, several of these private businesses raised money. Second, the existence of 220 unicorns indicates that there are numerous private, extremely large businesses that will eventually list, engage in transactions, conduct M&A, carry out financing, and go public. Even though the first half of 2022 will undoubtedly be slower than 2021, a very significant activity from that group of unicorns and the continuous capital that goes into Europe over the next two to five years could be witnessed.
These tech companies are gaining access to private financing in greater quantities and for longer periods than ever before. This is not simply a European phenomenon; it is a worldwide phenomenon. The typical IT business raises more private financing each year and delays going public for long periods. Primary investors, who are on the institutional side of the company, prefer to access these companies before they go public. Therefore, it makes sense to support or facilitate these enormous private businesses that, ten years ago, based on their size, probably would have gone public by this point; yet, in this environment, they can continue to operate privately and generate money.
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