Europe-focused VC investment rose significantly in Q1’21, driven in part by a number of $100 million+ funding rounds, including a $1 billion+ raise by Sweden-based Klarna – in what was one of Europe’s largest VC funding rounds ever.
Interest in fintech continued to accelerate in Q1’21, along with valuations for fintechs. In addition to Klarna’s raise, three UK based fintechs raised large rounds, including LendInvest ($381 million), Checkout.com ($450 million), and Rapyd ($300 million). With its $15 billion valuation, Checkout.com became the most valuable fintech company in Europe in January1 before Klarna’s raise put it at a $31 billion valuation2. Interest in B2B was also high as corporates looked to leverage fintechs not only to digitize products and enhance their customer experience, but also to improve their general operations.
VC investment in the UK remained robust in Q1’21, driven in part by investors looking to deploy a significant amount of dry powder. The UK government continued to focus on enhancing its competitiveness post Brexit, with several reviews released in Q1’21. The Hill Review recommended changes to attract investment in UK-based businesses and to encourage listings on the LSE, including modifying listing practices to allow for dual class shares3. The Khalifa Review, meanwhile, recommended changes to improve the UK’s fintech sector.4
VC investment in Germany rose to a new high in Q1’21 as investors remained focused on late-stage deals and follow-on investments. Interest in IPOs also increased, with a number of mature companies considering IPO and SPAC transactions. During Q1’21, car trading platform Auto1 held a very successful IPO, with its share prices rising 45% at opening5. During the quarter, Apple also announced plans to create a chip lab in Munich – an investment expected to strengthen the city’s innovation ecosystem. The German government also quick-started its $10 billion future fund – a new fund to help startups scale.6
The VC market in the Nordics region continued to show incredible strength in Q1’21 as later-stage companies continued to grow and attract larger funding rounds. In addition to Klarna’s$1 billion raise and Wolt’s $530 million raise, Sweden-based sound platform Epidemic Sound raised $450 million during Q1’21. Corporate investment in the Nordics increased dramatically, reaching $2.4 billion in Q1’21, compared to $3.3 billion during all of 2020. During the quarter, Denmark-based consumer review site Trustpilot also raised $655 million in its successful IPO on the LSE. Other later-stage companies in the region have also begun to consider IPO exits, with the largest expected to target foreign exchanges such as New York, London or Frankfurt.