US and Asian investors stand to benefit the most from Europe’s unprecedented success in tech, after it was found capital from those regions account for 76 percent of late stage tech investment.
Late stage money is increasingly hard to come by for the tech industry, with US tech attracting 4 times the early stage money available in Europe, but a disproportionate 10 times the late stage money. And according to a recent analysts by Magister Advisors, what little late stage money that is available is mainly provided by US and Asian investors.
Whilst it’s no secret international capital has been flowing to Europe in greater amounts, surprisingly over half of all late stage rounds were driven by US or Asian capital. The unprecedented rise of the European tech industry suggests that capital will continue to flow from those areas, increasing over the next five to ten years.
However, while this interest from abroad is a huge validation of the quality and attractiveness of European tech competitors, it is also an indictment of the ‘local’ tech investment marketplace. Whilst European investors have started responding, raising one third of all $400 million later stage European tech funds since the start of 2016, evidence shows its still far short of the available quality supply.
Magister Advisors’ survey concluded that the quality of available ‘demand’ – companies looking for funding – far outstrips EU capital ‘supply.’ Unfortunately, it appears that there are far too few late stage EU investment funds in Europe to fuel the next generation of winners – a fact that may need to be addressed in 2017 to allow the EU tech scene to continue to thrive.