The energy transition powered a recovery in European venture capital in the first quarter of 2024, as investors directed more funds to startups focused on solving the climate crisis, according to Dealroom’s Europe Q1 report.
European startups raised $13.7bn in VC funding in Q1 2024, a 5% increase on the same period last year.
The increase in funding comes despite concerns in a global slowdown in funding to early stage companies. European VC is on track to be on a similar path to 2023 when the continent raised $59.1B in total, with the UK continuing to retain its crown as the leading country for VC investment. Over 500 companies raised rounds of more than $2m in the first months of the year, with later-stage funding proving particularly resilient – up 2.1x compared to Q1 2023.
Energy tech has overtaken fintech in Europe as the strongest sector, thanks to a number of mega investments in energy startups underlining how the journey to net zero is becoming a priority on the continent. Energy was the largest sector for deals in Europe, raising a total of $3.1bn, for the fourth consecutive quarter.
This put Energy ahead of Health ($2.8bn), Fintech ($2.8bn), Transport ($1.7bn) and Enterprise Software ($1.6bn).
Deep tech and climate tech continue to attract a large share of VC funding in Europe. Deep tech companies raised $3.8bn in Q1, 27% of total funding, whilst for climate tech it was $3.5bn, 26% of total funding. The intersection of these two areas accounted for nearly 13% of all funding m $1.6bn – demonstrating the critical importance the ecosystem is placing on next-generation solutions to combat the climate crisis.
Generative AI continues to be one of the leading emerging investment segments in European tech, with companies raising $399M in the first quarter. A total of 38 companies raised funding, up from 24 in Q1 last year, including Paris-based PhotoRoom ($43m) and Bioptimus ($35m), Berlin-based Qdrant ($28m), and London-based Robin AI ($26m).
Dutch startups had a record start to 2024, with companies raising $1.3bn so far, a 107% increase in Q1 2023. This was mainly driven by large rounds for online supermarket Picnic ($385m), hotel property management platform Mews ($110m), mobility financing company Moove ($100m) and intelligent audit platform DataSnipper ($100m). In total, the country’s tech ecosystem has already raised 54% of last year’s full year figure ($2.4bn).
Nearly two-thirds of all funding in Europe was raised by the top four countries – the UK ($3.9bn), Germany ($2.3bn), France ($1.7bn) and the Netherlands. London was responsible for the majority of funding ($2.4bn), though this is down 18% compared to last year. Paris has also experienced a slight fall, down 7% to $1.2bn.
