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Tech drives Europe’s €2 billion VC funding frenzy

Spotify is the biggest VC deal of the quarter.

By Alexander Sword

The venture capital market in Europe is booming, in a trend driven in large part by the burgeoning technology sector.

Venture capital firms in Europe raised €2.04 billion from April to June, representing an increase from €0.87 billion in the previous quarter.

According to figures from Dow Jones VentureSource, this shows a 30 percent increase year-on-year.

The report revealed that technology firms were driving much of this growth, with 23 percent of the deals in information technology.

The single biggest venture capital investment, meanwhile, was Spotify‘s 7th round of funding, which generated €488.67 million, nearly a quarter of the total amount.

According to data from GP Bullhound, Europe has produced 13 unicorns (start-ups valued at $1 billion or over) in the last year. In the UK, which has produced 17 unicorns since 2000, companies to join this list in the last year include Skrill and Farfetch.

The first six months of 2015 saw nearly $1.5 billion of venture capital investment into London’s tech sector, according to figures released by London & Partners. Venture capital investment into UK tech firms far eclipse the same period in 2014, which saw just over $1 billion raised.

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Andy Moseby, Corporate Partner at Kemp Little, explains that this represents something of a turnaround for London’s technology sector: "Five years ago, investment into the UK tech industry looked very different to today.

"The vestiges of the dotcom bust hung over the sector and European venture funds were one of the worst performing asset classes worldwide. VCs were looking elsewhere.

"However, the tech start-up explosion in London which happened around 2010 has started to bear fruit for investors, with some high-profile exits such as DeepMind (acquired by Google in 2014), SecondSync (acquired by Twitter last year) and the recent Sophos IPO (which valued the cybersecurity firm at over £1bn).

"With exits comes interest, and growing confidence. This may be anecdotal but, as technology lawyers, we’re certainly seeing an up-tick in the number of VC deals and the value of those deals.

"Just as we’ve seen the UK tech industry develop and spread to include areas such as financial services, life sciences, healthcare and retail, we’re seeing funds – which may have previously only considered investing into a few select verticals – now diversifying across the whole range of sector which technology touches."

Eileen Burbidge, MBE, Partner at Passion Capital and the Mayor of London’s tech ambassador for the city, said: "Last year it took London tech firms 9 months to reach the billion dollar mark, this year they’ve done it in six months. The city has become such a tech powerhouse because it excels over other tech hubs around the world.

"London combines the technology and digital innovation of Silicon Valley with the Wall Street financing heritage of New York and the policy making of Washington DC – all in one phenomenal city."

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