European startup funding faltered in Q3 2024, with startups raising a total of $11.3 billion – down 35% compared to the same time last year according to Dealroom. However, total investment in European tech so far in 2024 totals $40.9 billion and is on track to equal 2023’s total investment ($58.2 billion), fueled by a surge in AI-powered healthtech investments and the ongoing strength of Generative AI, demonstrating the underlying strengths of the European startup ecosystem.
In this context, the healthtech sector experienced an unexpected comeback, securing more VC than any other sector during the year to date. In Q3 alone, healthtech companies raised $2 billion, whilst oncology startups, in particular, saw a significant boost, attracting nearly $600 million in funding. Companies like Catalym and Myricx Bio, specializing in immunotherapies and precision cancer medicine, secured substantial funding rounds – $150 million and $117 million respectively.
AI technologies continue to be a driving force in the European startup landscape. Generative AI, in particular, has attracted significant investor interest, with $165 million raised in Q3. GenAI companies have raised a total of $3.3 billion so far this year, 8% of total European VC funding. Industrial technologies and hydrogen technologies also remain popular sectors for investment. Germany-based Black Forest Labs raised $31 million to develop generative deep learning models for images and video, whilst London-based Raycast raised $30 million for its productivity app in Q3.
The fintech sector demonstrated resilience, recovering from a downturn in 2023. Funding for fintech startups increased by 45% year-over-year in Q3 2024, reaching $1.6 billion. This growth is attributed to innovations in AI and embedded finance solutions.
Despite a decline in late-stage investments, early-stage and breakout-stage deals have remained steady throughout 2024. Over 2,000 rounds of $2 million or more have been raised by European startups, indicating a healthy pipeline of innovative companies.
The European startup ecosystem is well-positioned for continued growth, driven by AI-powered healthtech, Generative AI, and a strong pipeline of early-stage companies. With a projected $33 billion in dry powder by the end of the year, the ecosystem is primed for further momentum in 2025.
The UK took the most funding of any European country in Q3, taking in $2.9 billion in total thanks to large rounds from Flo Health ($200 million) and CloudPay ($120 million), bringing its total raised so far to $12.9 billion. However, this is still down 9% compared to 2023. Germany came second with $2.7 billion, with a total of $6.6 billion raised, up 6% compared to the same period last year and France was close behind with $1.6 billion raised, of a $6.0 billion total, down 13%.
The Netherlands, Italy, Belgium and Ireland have all seen an increase in VC investment this year. Dutch tech startups have raised $2.1 billion so far, up 31%, followed by Italy’s $933 million, (up 22%), Belgium’s $894.7 million ( up 25%) and Ireland’s $861.8 million (up 12%).
Imran Ghory, Partner at Blossom Capital, said: “There is a strong pipeline of innovative companies being forged across the continent and it’s not surprising that AI is playing a huge role in this. AI is enabling new startups to solve complex problems for customers across the spectrum from B2B SaaS to robotics and defence and investors across the world are taking note of this. We’re keeping a close eye on this new generation of AI companies across the continent and we’re excited to see how it will make European tech more efficient and impactful.”
Remus Brett, General Partner at LocalGlobe and Latitude, added: “Europe’s fintech sector is back in full force, as these funding figures confirm. Fintech startups, most now AI first, are further accelerating B2C and B2B innovation and opening up more opportunities in this $30 trillion sector. Moreover, the emergence of ‘thoroughbred’ fintech companies exceeding $100 million in annual revenue is driving growth, job creation, and reshaping the landscape.”
Read the orginal article: https://www.eu-startups.com/2024/10/despite-faltering-vc-funding-in-europe-healthtech-made-a-comeback-in-q3/
