Tag Archives: investment

European and Israeli startups raised $4.6 billion in Q2 2016 as investment pace slumps

europe european union flags

European and Israeli startups completed 782 funding rounds in the second quarter of 2016, worth a combined €4.1 billion (about $ 4.6 billion).

According to our own data and research, both figures represent a decrease compared to the previous quarter, when investment in local technology companies peaked at 808 deals worth €4.9 billion in total, in part as a consequence of Spotify’s $ 1 billion (or about €910 million) debt round.

Whilst the drop in quarterly investment volume can be attributed to Spotify’s effect in the previous quarter, what’s more interesting is the fact that the number of deals decreased -albeit slightly- quarter-on-quarter for the first time since the beginning of 2015.

Screen Shot 2016-06-30 at 23.23.31

As a consequence of the number of funding deals increasing at a much faster pace than total investment volume in recent times, the average size of European and Israeli investments decreased to €5.2 million in Q2, the lowest figure in the past six quarters.

Screen Shot 2016-06-30 at 23.23.43

Although the European and Israeli tech ecosystems continue to post significant year-on-year uplifts in investment volume and number of deals (+81% and +7%, respectively), it’s worth highlighting a couple of additional facts that could point to a period of slower growth ahead:

  • While the number rounds smaller than €1 million continue to grow massively (there were 285 in Q2 2016, vs. 132 a year ago in the same period), deals of between €1 and €5 million and €5 to €10 million decreased. In the case of the former, it was the first drop since the beginning of 2015.
  • Funding to UK-based startups reached its lowest point since the first quarter of 2015, at €737 million, despite the fact that the number of quarterly deals has remained stable.

The good news? Q2 2016 was still higher than any quarter last year, Israel continues to grow non-stop (leading the region with €1.1 billion in total funding in Q2 2016), while investment in German startups increased following various quarters of consecutive decline and, as aforementioned, there are many more entrepreneurs building companies, startups raising funding and investors backing companies than a year ago.

This post first appeared on Tech.eu.

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