Why there are tough times ahead for European tech

Europe has generated more new technology companies than any other region in the world but there are signs of tough times ahead due to funding, according to European venture capital fund Atomico’s latest State of European Tech report. 

The annual survey, which is now in its tenth year, showed that European tech companies raised $426 billion (€402 billion) since Atomico launched its first report in 2015, which is ten times more than the capital raised in the last decade. 

Here is a breakdown of key findings from the report. 

Top tech hubs

In 2015, London was the only European city to be in the top ten tech hubs globally – ranked by funding for early-stage start-ups.

Today, Berlin and Paris have also joined the top ten list, and London has risen to second place globally, according to the study. 

There are also currently 35,000 early-stage tech start-ups in Europe, which is more than any other global region.

The study also found there are more founders in Europe than in the United States, which has been the case every year for the past decade. 

The AI boom and sustainability

Europe has caught onto the artificial intelligence (AI) hype, with a sixfold increase in AI roles in the past 10 years. 

This year, the UK had the most AI roles in Europe (60,000), followed by the  Netherlands (50,600), Germany (50,000), and France (44,300). 

Last year, Europe was hiring for more AI roles than the US was, but the trend has reversed and shows that US start-ups are now hiring faster than those in Europe. 

Deeptech start-ups, which include AI, get a large amount of European funding, receiving 33 per cent of total capital in 2024. 

But compared to the US, Europe’s AI funding lags. The report predicts US AI startups will pick up $47 billion (€45 billion), compared to Europe’s $11 billion (€10 billion). 

Another strong area of start-up interest is in carbon management, which the report said has seen the greatest increase in its share of Seed funding. 

The report also found that 21 per cent of investments in Europe go towards building a more sustainable future, which is double the ratio for the US, which is at 11 per cent.

Tech talent

Europe’s tech talent pool is growing and currently employs 3.5 million people, 2.9 million of whom joined the sector in the past 10 years. 

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The report also found that Finland, Estonia, and Sweden had the highest number of tech employees per capita. 

But the report said Big Tech companies, such as Google, Amazon, and Microsoft, are drawing from Europe’s tech talent with the offer of high salaries being one factor that is attracting talent. 

Europe lost almost 500 technical workers to the US in 2023.

Gender diversity

The report showed that founders with more than ten years of experience said they have seen progress in diversity and inclusion in the past decade. 

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However, there has been little change toward gender equality when it comes to closing the gender funding gap. 

Meanwhile, women make up 34 per cent of tech talent in Europe, which is roughly the same as the share in 2015. 

This is similar to figures from the US, where 36 per cent of the tech talent pool is currently made up of women.

How was the survey compiled?

The survey received more than 3,500 responses from European tech and was conducted between September and October 2024. 

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It took data from across 41 European countries from founders, operators, and investors.