Wefox, the Berlin-based insurtech, raises $110M Series B extension at a $1.65B pre-money valuation

Wefox Group, the Berlin-based insurtech startup behind the consumer-facing insurance app and carrier One and the insurance platform Wefox, is disclosing $110 million in a second tranche of Series B funding. Sources tell TechCrunch that this gives the company a pre-money valuation of $1.65 billion. WeFox Group declined to comment on the financials.

The Series B extension is led by Omers Ventures, the venture capital arm of Canadian pension fund Omers. Merian Chrysalis and Samsung Catalyst Fund, also participated, along with existing investors.

It follows an earlier Series B of $125 million in March, led by Abu Dhabi government-owned Mubadala Ventures, with participation from Chinese investor Creditease. Wefox’s other existing investors include Target Global, Salesforce Ventures, Seedcamp, Idinvest and Hollywood actor Ashton Kutcher’s investment vehicle Sound Ventures.

In a call, Wefox co-founder and CEO Julian Teicke told me the Wefox Group has grown revenues to over $100 million, and now services more than 500,000 customers, claiming that this makes it Europe’s “leading insurtech”.

He also revealed that the company has grown to 400 employees, which, he says means he can no longer remember every employee’s name. “That sucks,” he tells me, revealing that it was only this summer when the company was smaller that he won a company-wide bet for being able to do just that.

Breaking WeFox Group’s revenue down further, the company’s direct to consumer insurance brand, One Insurance, has increased annual revenues by nearly tenfold this year to $30 million. It also claims to be Germany’s fastest growing provider for household and private liability insurance.

Perhaps more significantly, Teicke says One’s loss ratio (what percentage of premiums earned is subsequently paid out in claims) is below 40%, which is much better than the industry as a whole. He pinned that on WeFox’s use of data, which, he says, enables One to understand risk in a much more technology-driven and granular way.

Meanwhile, Teicke says the new funding will be used to continue ramping up international expansion in 2020. Wefox is active in Germany, Austria, Switzerland and Spain, and I understand has quietly launched in Italy.

Adds Henry Gladwyn, principal at OMERS Ventures, in a statement: “We are thrilled to continue our support of Julian and the incredibly ambitious Wefox Group team as they continue to disrupt and re-invent the insurance industry. We believe wefox Group’s approach to revolutionizing insurance – empowering the consumer and prioritizing solutions for secured data-driven experiences – will deliver significant value for the entire trade”.

Former Uber exec Jambu Palaniappan joins Omers Ventures in Europe

Earlier this year, Omers Ventures, the venture capital arm of Canadian pension fund Omers, outed a new €300 million fund aimed at European technology startups, having recruited local VCs Harry Briggs, Tara Reeves and Henry Gladwyn.

And now the firm is adding a fourth member in Europe: Jambu Palaniappan (pictured centre), the former head of Uber’s food delivery business in Europe, Middle East and Africa, has joined Omers Ventures as a Managing Partner.

Palaniappan joined Uber in 2012 when it was a 75-person startup focused primarily on the U.S. market. He led the ride sharing behemoth’s expansion throughout the EMEA region and India, before becoming Regional General Manager for Eastern Europe, Russia, the Middle East, and Africa. He then went on launch Uber Eats in EMEA.

In other words, Palaniappan brings even more operational experience to Omers’ European VC team, although he isn’t new to the world of venture capital, either. His most recent gig was at London-based venture capital firm Atomico, where he spent 12 months as Executive-in-Residence (news that TechCrunch broke back in July 2018).

Unsurprisingly, Palaniappan has also been an angel investor, and is said to have backed a number of startups in the U.S., Europe, the Middle East, and Africa.

Meanwhile, the recruitment of Palaniappan marks a decent debut half year for Omers Ventures Europe, seeing the Canadian investor put together a team of faces well-known to the London and broader European tech and startup scene. Briggs’ resume includes stints at BGF Ventures and Balderton, as well as founding and exiting Tonics, a health drinks company. Reeves was at seed firm LocalGlobe and also co-founded Turo, the car-sharing marketplace. And Gladwyn previously managed seed investments for the founders of DeepMind.

The Omers Ventures Europe team have already invested more than €76 million into the European ecosystem. Investments to date include FirstVet, Resi and Quorso.

French e-grocery app Jow raises $7M additional funding

Jow, the French e-grocery app — which combines recipes, recommendations and online grocery ordering — has raised $7 million in new funding.

The round is led by Stride.VC, alongside Caterina Fake and Jyri Engeström from Yes VC, and Shan-Lyn Ma, the co-founder and CEO of Zola. Previous seed backers, DST global partners and eVentures, also participated.

Launched in 2018 and now supporting five of France’s leading grocery retailers (Monoprix, Carrefour, Auchan, Chronodrive, and E.Leclerc), Jow’s app claims to let you complete your weekly online food shop in as little as a minute (once you’ve been on-boarded, of course).

It does this by creating customised menus, tailored to each user and household, and then automatically fills your online shopping cart with the required ingredients. The idea is to answer the question: “what’s for dinner tonight?” while providing a more cost-effective alternative to recipe kits such as Blue Apron or Hellofresh, and less reliance on take-outs from the likes of Deliveroo or Uber Eats.

“Doing your weekly shopping online can take you up to one hour,” says Jow co-founder and CEO Jacques-Edouard Sabatier. “You waste a lot of time looking for the right product category, sub category, scrolling through hundreds of references, you finally find your product, put it in your cart, and repeat this process up to 40 times (the number of items in your cart)! It’s a horrendous experience, with no added value at all for the customer”.

That’s in contrast to brick ‘n’ mortar grocery shopping, argues Sabatier, where there is an opportunity to “feel, taste and smell the products”. He says it’s the terrible user experience of grocery shopping online that has limited its e-grocery growth. Jow aims to change that.

“Jow creates a customised menu, just for you, with simple and delicious recipes,” explains Sabatier. “Our food recommendation engine considers your tastes, your kitchen appliances, whether or not you have children and checks the availability of the ingredients in your supermarket. Jow then automatically fills your cart with all the ingredients you need to cook the meals”.

In addition, Jow offers a customised list of your repeat purchases, and its recommendation engine claims to help you choose the exact quantities needed to avoid waste. You can also check out with a single click, and the app will synchronise with your chosen supermarket delivery or pick up service.

Noteworthy is that the app’s recipe to cart feature represents on average 75% of the products Jow users add to their cart. Staple products such as toilet paper, beverages, toothpaste etc. make up the remaining 25%.

The app is free for end users, seeing the Paris and New York-based startup generate affiliate revenue from supermarkets that want to use the service to acquire younger, mobile-first customers. The business model is asset light, too, since Jow is largely built on top of the existing infrastructure and capabilities of larger supermarkets.

“Apart from the 50x improvement on the e-grocery funnel, it’s unbelievable to see that to date, in a world where you have tailored and recommended experiences around music, video etc., you have no strong recommendation engine or experiences around food,” adds Sabatier.

In addition, the startup believes that more broadly it has created a mobile e-grocery experience that actually works. “E-grocery is one of the only e-commerce segments where desktop still prevails,” says Sabatier. “[Bucking this trend], 90% of Jow’s customers shop using their mobile devices, the experience is so smooth and fast that you can do your weekly shopping in just one minute on the subway or the bus”.

By Miles, the UK pay-by-mile car insurance app, adds ‘connected car’ policy for Tesla drivers

By Miles, the U.K. pay-by-mile car insurance provider, is launching a “connected car” insurance policy specifically for Tesla drivers.

The new insurance product pulls real-time mileage information directly from a car owner’s Tesla account and uses the distance they have driven to price their insurance each month. It claims to be the first car insurance policy to take data from a car without the need for a “black box” or aftermarket device.

The new policy — created in partnership with digital insurer La Parisienne Assurances (backed by Swiss Re) — offers lower mileage Tesla owners in the U.K. (those that drive under 7,000 miles a year) the opportunity to save significantly on their annual car insurance, according to By Miles.

More broadly, the insurtech says it is bucking the trend of car insurance not keeping pace with changes in technology, including the move to connected and electric cars. It cites industry figures that suggest 1 in 10 new cars sold in the U.K. are now electric.

James Blackham, co-founder of By Miles, says the insurance industry needs to “catch up and launch policies as smart as the cars themselves”.

To activate the pay-per-mile Tesla policy, drivers simply connect their Tesla with their By Miles account, with no need to install a separate so-called “black box”. Via the By Miles app, they are then able to instantly see the cost of each day’s miles and pay for what they’ve driven monthly.

The new policy also claims to provide electric-first policy coverage, including covering items often not included on insurance policies as standard, such as “damage or theft of charging cables and accessories as well as electric car batteries”.

Meanwhile, in other ways the By Miles connected car policy isn’t so much of a deviation from the company’s existing By Miles coverage. It first launched a pay-by-mile policy in July 2018 enabled by its “Miles Tracker” device that plugs into your car to count mileage, and now claims over 10,000 policyholders.

Prolific wants to challenge Amazon’s Mechanical Turk in the online research space

Prolific, a U.K.-based startup that wants to make it easier to conduct online research, has raised $1.2 million in seed funding.

The round is co-led by Silicon Valley-based Pioneer Fund, and Altair Capital, with support from various angel investors based in the Bay Area. Prolific is also a graduate of Y Combinator and presented at YC’s demo day this past summer.

Founded in 2014 by Ekaterina Damer and Phelim Bradley, doctoral students at Sheffield and Oxford universities respectively at the time, Prolific offers an online tool to easily recruit and pay research participants and conduct what it calls “ethical and trustworthy” research. The idea was born out of Damer’s own frustration with existing options, including Amazon’s Mechanical Turk (MTurk), when carrying out research for her own PhD.

“I was struggling to recruit participants for my research,” she tells TechCrunch. “None of the available tools were fit for purpose because they were either obscure, expensive or really slow! By ‘obscure’ I mean: It wasn’t clear who the participants were, how they were treated and whether the data quality would be any good! I considered Amazon’s Mechanical Turk (MTurk), the most widely used tool for academic research, but it only had U.S. American and Indian participants and a distinct lack of European ones”.

This led her and Bradley to create Prolific as a better alternative to MTurk and it wasn’t long before other colleagues at Sheffield and Oxford started using the product. Just a year in, Prolific was being used by researchers globally, including those from Stanford, Oxford, Yale, and UPenn.

“It’s grown from there almost purely through word-of-mouth, with over 3,000 customers now from researchers and companies around the world!’ says Damer.

Prolific also counts the World Bank and several Fortune 500 companies as customers, and claims to reach a network of 70,000-plus active research participants from a wide range of backgrounds.

“The problem is that behavioural research on the internet is broken,” Damer explains. “Finding participants is difficult and slow and the data you get from other platforms is often low quality because incentives are not aligned or you’re dealing with legacy platforms that don’t leverage tech.

“Customers want participants and data they can trust, but they typically have to resort to platforms which provide disengaged people who sign up for pennies. Or they even end up collecting data from fraudsters and human-assisted bots. Researchers across academia and industry are desperate for higher quality sampling solutions”.

To fix these issues, Damer says that Prolific is building research technology that makes people-based research “more effective and efficient” than existing solutions, from sourcing participants, to prescreening for the right target demographics, to automating participant payments. The startup also employs what it calls proprietary user validation technology that uses statistical algorithms and machine learning to catch bots and bad actors, which Damer says plague many of the company’s competitors.

“It’s actually quite shocking how competitors often squeeze their participants (or ‘workers’) because they see them as a commodity,” she adds. “This means that participants are either disengaged or try to game the system. In contrast, we have many positive incentives built into our platform. Participants can prequalify for studies so they never get kicked out randomly, we encourage and collect two-way feedback… researchers love that they can talk to participants directly through our interface in case questions, feedback or concerns arise, and we mandate a minimum pay of $6.50 (£5) per hour. All of this creates trust and virtuous cycles that power our growth”.

Damer frames Prolific’s broader mission as making “trustworthy data about people more accessible”. “Our core belief is that access to high quality psychological and behavioural data is the foundation for great research and ultimately, for progress in business, tech, and society,” she says. “The bigger vision is to build the most powerful and flexible infrastructure for research on the internet”.

That’s not to say that Prolific doesn’t have competitors that are also attempting to make online research and insights more accessible and of better quality.

Companies like CloudResearch, and Positly utilise MTurk’s API, but Damer says that has limitations since “great data and great research starts with a great community,” which, arguably, MTurk isn’t.

There are also well-established operations such as Nielsen, Dynata (formally Research Now SSI), YouGov, Cint, IpsosMori, Qualtrics Panels, and SurveyMonkey Audience, along with newer players like Attest, and Respondent.io.

Otta picks up £850,000 seed to match you to relevant jobs

Otta, one of the latest startups aiming to fix what it sees as a broken job search and recruitment market, has picked up £850,000 in seed funding. Backing the young London company is LocalGlobe, along with a number of U.K. angel investors and founders.

The latter includes Paul Forster (co-founder of Indeed), Shakil Khan (an early investor in Spotify and founder of Student.com), Matt Robinson (co-founder of Nested and GoCardless), Duncan Jennings (founder of VoucherCodes), and Carlos Gonzalez-Cadenas (COO at GoCardless).

Founded in June this year by former Nested employees Sam Franklin, Theo Margolius and Xav Kearney — all of whom are 25 years of age or under — Otta wants to make it easier to find suitable skilled jobs at fast-growing companies. The startup does this via an initial online quiz, followed by a UI that shows you one potentially suitable job at a time, with a matching algorithm claiming to get more personalised as you provide feedback.

“Job seekers are frustrated by the amount of noise from most job search experiences,” CEO Sam Franklin tells me. “LinkedIn returns 25,000 software engineering jobs in London. There is very limited opportunity to filter these results down to what you care about. Plus the recommendations are ordered by how much companies are paying, not by what results are truly best”.

He says that while working at Nested he would often see engineers receive 50 or more messages or emails per month from recruiters, and yet those engineers would never engage. Digging a little deeper, he was told that potential candidates felt they couldn’t rely on recruiters because they aren’t in your corner. “They only push you the roles where they have commercial agreements in place,” he observes.

That has seen Otta “handpick” over 300 of London’s most innovative companies, says Franklin. From well-known brands like Revolut and Spotify to emerging companies such as WhiteHat and Cuvva. “The curation of quality companies alone adds a lot of value to job seekers,” he says.

Otta surfaces information such as whether the company hiring has a visa sponsorship licence, the exact office location (not just London), recent funding and founder profiles.

“For individual jobs we label the tech-stack used and pull out the most important requirements,” explains Franklin. “Jobs are shown one-at-a-time (instead of in a list format) and this means we collect more feedback on what candidates like and dislike. This feedback and additional data is really helpful for us to deliver better recommendations. Similar to how Spotify makes recommendations based on what you listen to, we use machine learning to recommend you jobs based on which jobs you like and dislike. Recommendations improve as our collection of users spend more time on the platform”.

Since launching in August 2019, Otta says that “thousands” of job seekers using the platform have shortlisted over 20,000 roles, although the company is yet to attempt to monetise this engagement.

“We currently aren’t monetising the platform, despite being asked by plenty of companies to help them recruit for certain roles,” says Franklin. “We have committed to only making money in a way that improves the experience for candidates. So this means we won’t charge companies to post jobs, as we want candidates to see all the fantastic roles suited to them. We also won’t allow companies to pay to influence our search results, as we want to show candidates their best roles first”.

Instead, the plan is to charge companies to proactively engage with Otta’s “high-quality pool” of candidates. The idea is to try and add value to both sides of the marketplace, akin to a much more targeted LinkedIn Recruiter. “Companies will get to reach out to active candidates that are interested in their company, and candidates will get directly contacted by their favourite companies without being spammed by recruiters,” promises the Otta CEO.

Fronted, from former Bud, Monzo and Apple employees, wants to make life easier for renters

Fronted, a new London-based startup aiming to make life easier for renters, is breaking cover today.

The company, founded by Jamie Campbell, Simon Vans-Colina and Anthony Mann — former employees at Bud, Monzo and Apple, respectively — will launch early next year with a fintech product to help renters finance their rental deposits.

The plan is get accepted into the FCA “sandbox” program (run by the U.K. financial services regulator) to begin lending cash that can only be used for a rental deposit.

The thinking is that by using Open Banking and other financial technology and offering a credit product designed to finance deposits directly, Fronted can lend more cheaply than existing options, such as credit cards, pay-day lenders and overdrafts, or insurance-backed membership schemes, and at lower risk.

“Renting sucks — anyone who rents knows it,” Fronted CEO Jamie Campbell tells me. “There are so many problems to solve and we intend to tackle them all bit by bit. But first, we are going to pay people’s rent deposits for them so they can pay us back in bite-size manageable amounts. Deposits are a large upfront expense and most people either use mum and dad to sort it out or stay where they are (in the worst cases they do to pay-day lenders).”

In a call late last week with Campbell and CTO Vans-Colina, the pair explained that renters that apply to use the Fronted service will be asked to link their bank using Open Banking, therefore sharing their recent transaction data, and provide details of the property they wish to rent. Then, once Fronted has run the required checks and agreed to provide credit, the startup sends the money directly to the estate agent to be placed in the U.K.’s Deposit Protection Scheme, meaning that the loan never touches the renter’s hands (or wallet).

“Customers will have a direct debit to pay us back over a set schedule, or they can pay it all off when they have the money to do so, [and] we don’t charge any fees,” says Campbell. There is also a planned “holiday mode” that will allow customers to temporarily reduce their monthly payments in order to help avoid falling into financial difficulty.

“Ultimately this first product is designed to be very convenient and we believe people will opt for this more manageable alternative to a normal deposit,” adds Campbell. “There are customers of ours that will be in ‘hidden households’ unable to move because of the upfront fees… Deposits can [also] sometimes take a long time to be returned from the schemes (something the government recently launched an enquiry into). Fronted wants to serve people who might otherwise be ‘double-exposed’ by deposits. We hope this first product increases social mobility by providing liquidity when people need it.”

Initially, Fronted will generate revenue through interest charged. It then plans to extend its fintech product offering with additional money-advance services “to help smooth out the bumps of renting.”

“We also intend on rolling out a ‘turn up and turn on’ service for utilities and internet,” says the Fronted CEO.

Salv, the anti-money laundering startup founded by ex-TransferWise employees, picks up $2M seed

Salv, an anti-money laundering (AML) startup founded by former TransferWise and Skype employees, has raised $2 million in seed funding.

The round is led by Fly Ventures, alongside Passion Capital and Seedcamp. Angel investors also participating include N26 founder Maximilian Tayenthal (who seems to be doing quite a bit of angel investing), Twilio CTO Ott Kaukver, and Taavi Kotka, former CIO for Estonia (the actual country!).

Founded in June 2018 and initially offering consultancy, Estonia-based Salv has built a software platform that helps banks find and stop financial crime. The idea, says co-founder and CEO Taavi Tamkivi, is to move AML beyond just compliance to something more proactive that actually does defeat crime. That’s quite the promise, although he and his co-founders have a lot experience to draw from, both within fast-growing startups and AML.

Tamkivi built the AML, fraud, and Know Your Customer (KYC) teams at TransferWise and Skype. COO Scott McClelland also worked in the anti-fraud team at Skype, followed by a stint at TransferWise, first as an analyst and then in HR. And CTO Sergei Rumjantsev was also formerly at TransferWise, leading the engineering team responsible for KYC and verification.

“This was a highly demanding role, especially given how fast TransferWise was growing, how many new markets were coming online, and how central user verification is for compliance,” Tamkivi tells me. “Under Sergei’s leadership, the team made the verification process incredibly smooth over time for genuine customers. But also robust enough to protect TransferWise from on-boarding bad actors”.

Bad actors within financial services are aplenty, of course. Yet, despite the European banking sector spending billions tackling the problem, it is estimated that only 1-2% of global money-laundering is detected.

“AML should be all about stopping money laundering but, particularly in the last decade, layer upon layer of regulations have been added for banks to comply with,” says Tamkivi. “This would be great if that meant that there was no more money laundering, but sadly, that’s a long way off. Today, between $1-2 trillion a year is still laundered. But the excessive regulations mean that nearly all of a bank’s compliance team’s effort goes into compliance. They have very little energy left to actually focus on improving their financial crime-fighting abilities. The software they’re using is similar, focused almost wholly on compliance, not crime-fighting”.

That is where Salv wants to step in, and Tamkivi says the main difference between the startup’s AML software and other existing solutions is a much greater emphasis on crime-fighting rather than a box-ticking compliance exercise.

“We’re aiming to create a transformation similar to what’s happened in virus scanning,” he says. “10-15 years ago virus scanners on everyone’s PCs were an enormous hassle, consumed tons of resources and stopped you from getting work done. The same is true in financial institutions today. They’re using outdated, heavy software and processes to handle AML. But today, virus scanning still happens, but nobody’s worried about it. It happens in the background, with few resources. We’ll do the same in the AML world”.

In addition, the Salv CEO claims that the company’s software is faster than competitors’ offerings, both in terms of set up time and integration, and making changes to the rules the system adheres to.

“Our system, by contrast, takes a month or less to set up and minutes to modify the rules,” he says. “As a result, our customers can take everything they learn today from new criminal patterns, encode it in automated rules tomorrow, and repeat that cycle every day to protect their bank. Moving fast is the only way to keep up with the innovative organised criminals moving millions or billions around the world”.

To that end, Salv already counts Estonian bank LHV as its first customer. “They offer a full suite of banking products across Estonia,” says Tamkivi. “They’re also active in London, in particular, supporting fintechs. We have another couple of customers in the Lithuanian fintech scene. One of those is DeVere e-Money”.

More generally, Salv’s product is said to be suitable for Tier 2 and Tier 3 banks, as well as regulated fintechs and challenger banks.

Meanwhile, the business model is straightforward enough. Salv charges a monthly subscription, while the price varies based on the number of active customers a bank or fintech has.

Xometry acquires European on-demand manufacturing marketplace Shift

Xometry, the U.S.-based marketplace for on-demand manufacturing that raised $55 million in Series D funding this summer, has acquired Munich-based Shift as a path to European expansion.

Exact terms of the deal remain undisclosed, although the exit sees at least some of Shift’s investors, such as Cherry Ventures, picking up shares in Xometry . I also understand the Shift team is staying on and the company’s founders, Albert Belousov, Dmitry Kafidov and Alexander Belskiy, will now be heading up Xometry’s newly formed European business.

Specifically, via this acquisition, Xometry says will accelerate international expansion into 12 new countries, leveraging a now worldwide network of over 4,000 manufacturers. The company’s on-demand manufacturing marketplace is already used by global companies like BMW and Bosch, which are Europe-based, and so it makes sense to have a much stronger operations in the continent.

“We’re eager to leverage Xometry’s technology to continue to scale our business in Europe,” says Shift’s Kafidov in a statement. “We look forward to providing our customers additional manufacturing capabilities, including additive manufacturing and injection molding”.

Shift claims to have built the largest on-demand manufacturing network in Europe and a customer base that includes some of the leading manufacturing companies in the region. Now operating as Xometry Europe, the subsidiary will continue to be headquartered in Munich in Germany, an area known for its manufacturing heritage.

Cue statement from Christian Meermann, Founding Partner, Cherry Ventures: “The custom manufacturing industry is a massive global market of over $100 billion. We’re excited for Shift to utilize Xometry’s industry-leading technology as well as leverage the global manufacturing expertise from other Xometry investors, including BMW i Ventures and Robert Bosch Venture Capital”.

Xometry has raised $118 million since being founded in 2013. Over the past two years, the company has grown from 100 employees to over 300 while more than doubling revenue each year. Via its partner manufacturing facilities, the company offers CNC Machining, 3D Printing, Sheet Metal Fabrication, Injection Molding, and Urethane Casting.

Contrast that with Shift, which was founded in 2018 and had raised around €4 million (~$4.4m) to date. Sources also tell me that the startup had nearly closed a Series A round before Xometry preempted the investment by making an acquisition offer.

Atomico Partner Tom Wehmeier reviews ‘The State of European Tech’ 2019 report

Atomico, the European venture capital firm founded by Skype’s Niklas Zennström, has released its latest annual The State of European Tech report, published in partnership with Slush and Orrick.

As part of the report, the authors surveyed 5,000 members of the ecosystem — including 1,000 founders — as well as pulling in robust data from other sources, such as Dealroom and the London Stock Exchange .

This year, the report reveals that the European tech ecosystem continues to mature and shows no sign of slowing — particularly highlighting the contrast from five years ago when the The State of European Tech report made its debut. Almost every key indicator is up and to the right, except, rather depressingly, diversity.

The data shows, for example, that competition for talent and access to the best founders has increased ferociously. And from a funding perspective, European founders have more choice than ever, especially with U.S. and Asian VC firms investing more and more in the region. Progress with gender diversity stalled, however, such as 92% of funding going to all-male teams.

I caught up with the report’s author Tom Wehmeier, Partner and Head of Insights at Atomico (also sometimes jokingly referred to as the “Mary Meeker of Europe”), where we discuss in more detail some of the key findings and why, it seems, that the rest of the world has finally woken up to Europe’s tech potential.

But first, a few headlines from the report:

  • European technology companies are on track to raise a record 30$B+ in funding in 2019, up from $25B the year before. (Source: Dealroom)
  • Despite failing to match the level of venture-backed exits of 2018, there was a record number of 40 $100M-plus deals as of September 2019, a size that many European tech sceptics did not believe was possible. (Source: Dealroom)
  • A number of multi-billion-dollar non-venture backed companies like Nexi and Trainline made their debut on the public markets.
  • European tech policymaking remains a mystery to many European founders.
  • When asked to describe the top priority of the European Commission in terms of tech policy, 40% of founders and startup employees say they don’t feel informed enough to comment. (Source: survey)
  • Despite this reported lack of awareness on policy issues, all respondents voted EU competition commissioner Margrethe Vestager as the person who had the most influence on European tech in 2019, good or bad. (Source: survey)
  • European parliamentarians aren’t talking about fintech and digital health, two sectors which investors poured a combined $12.7bn into last year (Source: Politico and Dealroom)
  • Europe’s diversity figures are still grim reading.
  • In 2019, 92% of funding went to all-male teams, a similar level to 2018. (Source: Dealroom)
  • There is still only one woman CTO in the 119 companies (<1%) based on a sample of executives in CxO positions at 251 European VC-backed tech companies that raised a Series A or B round between 1 October 2018 and 30 September 2019 with more than $10M funding, even though 7.5% of software engineers are women. (Source: Stack Overflow, Craft, Dealroom)
  • Looking beyond gender diversity, ethnic minorities in tech experienced discrimination at a much high rate than white peers. (Source: survey)
  • At least 80% of Black/African/Caribbean respondents who reported experiencing discrimination linked it to their ethnicity. (Source: survey)
  • 63% of women VCs reported increased focus on attending events with stronger participation from diverse founders. The corresponding number for men VCs was only 33% of female respondents suggested that their male counterparts are leaving female VCs to fix Europe’s diversity problem. (Source: survey)
  • European founders aren’t just aiming for commercial success — they are trying to solve some of the world’s largest problems.
  • One in five European founders states that their company is already measuring its societal and/or environmental impact. (Source: survey)
  • Only 14% of founders don’t believe it’s relevant for their company. Founders that are women are much more likely to be advanced in their approach to measuring impact. (Source: survey)
  • Employees are placing a greater emphasis on corporate social responsibility, with 57% citing its importance in the State of European Tech survey. (Source: survey)

Extra Crunch: It is 5 years since Atomico published the first The State of European Tech report, which really attempted to capture a data-driven snapshot of the entire ecosystem. What are some of the biggest changes you’ve seen within European tech in the intertwining years or in this year in particular?

Tom Wehmeier: If I think back to when we did the first report, people who believe that Europe could actually be an interesting player in global technology, were largely limited to people who were in the tech industry in Europe itself. If you then fast forward to today, what has clearly happened — and I think 2019 was the year where this really materialized and became part of the narrative — was that belief translating from people on the inside to a bunch of people that were on the outside.

Most obviously has been the strength of interest from from the U.S. and the number of top-tier U.S. funds that are not just increasing their level of investment activity but committing to spending more and more time here on the ground, hiring people, building teams, building a network, and getting to know companies. I think it probably surprises people to know that 19% of all rounds this year will involve at least one U.S. investor in Europe, which is more than double since since the first year we did the report.

I think the other thing, where I come back to this idea that now we have finally convinced a certain group of people about the role that Europe can play, is mainstream institutional investors. I know it is not going to be lost on you, [but] this is going to be another record year for VC fund raising from Europe. And whilst the headline numbers might not be a surprise, I think what should catch people’s attention is that the composition of the LP base here in Europe is now shifting. And finally, there’s an unlocking of institutional investors, [by which] I mean pension funds, funds of funds, insurance companies, sovereign wealth funds, who are committing to European VC at levels that are significantly increased and elevated from where they had been in the past. So, if you just take pension funds, we’re going to see close to a billion dollars invested which is up nearly three fold.

It’s a validation of what’s happening around European tech to see that now coming through and I think is ultimately something that helps to build a foundation for the next five years of success. As much as this is a report that’s looking back, it’s also about trying to understand where things go from here.

With regards to the pension funds, do you think that is driven by the general bullishness towards European tech, or do you think it’s more the macro economic reality that maybe other places where they could put their money aren’t very attractive at the moment?

I think it’s really a reflection that there’s a strong level of belief that European venture as an asset class is an attractive investment opportunity. And that is reflected by the numbers. One of the charts that we’ve got in the report is from Cambridge Associates who do the benchmarking for the VC indices… And when you look back over a 1, 3, 5, or even a 10 year horizon, the performance from European VC is demonstrating that this is a place where for anyone building a diversified portfolio, they should have some allocation. I think it’s fundamentally the strength of the investment opportunity. That is the single biggest driver for why you’re seeing this happen.

I think the biggest thing that Europe has been able to prove is that it can take a great idea and turn it into a great company and that company can scale to not just a billion dollar outcome but to a multi-billion dollar outcome and go all the way through into an IPO or into a large scale acquisition. What you’ve seen happen in 2019 is in part A reflection of what happened last year where it was obviously this record year with Spotify, Adyen, Farfetch, Elastic and others that really showed you can go full cycle from start all the way to finish. And that the magnitude of those outcomes can be at a scale that makes them globally relevant.

Are the pension funds shifting their allocation of VC away from other geographies or are they just doing more VC as a whole?