European Startups Pull In €15.8 Billion in September as Britain Takes Nearly Half

Set Trending Topics as a preferred source on Google.

After a sleepy summer, the money came back with a vengeance: European startup funding reached €15.8 billion in September, almost five times the total for August. That is according to the latest monthly report from the industry publication Tech.eu, released last Friday. In August, European tech companies had raised just €3.2 billion. Over the same period, the number of funding rounds rose from 165 to 300.

The rebound was highly concentrated, though. Two mega-deals account for more than a third of the total, and nearly half of the money went to Britain.

The Key Numbers

• Total funding: €15.8 billion, up almost 394 percent from August
• Deals: 300 funding rounds, about 82 percent more than the previous month
• Mega-rounds: 25 companies raised more than €100 million each, and three rounds topped €1 billion
• Largest deal: Mistral, with a €3 billion Series D at a valuation of more than €21 billion
• Top sector: cloud, with €5.5 billion, or 35 percent of the monthly total
• Top country: Britain, with €7.3 billion across 65 deals
• Exits: 39 transactions, including eight in Germany, six in France and three each in Britain and Sweden

Mistral and Nscale Make the Month

The biggest chunk came from the Paris-based A.I. start-up Mistral. Its €3 billion round is the largest equity raise ever completed by a European tech company. Samsung Electronics led the round, with PSG Equity and the Scaleup Europe Fund as co-leads. The fund, a multibillion-euro vehicle set up by the European Commission and managed by the Swedish investment group EQT, recently also backed the Swedish health tech company Tandem Health. Mistral plans to spend the money on computing capacity, infrastructure and international growth. On the technology side, the company still has work to do: its new flagship, Mistral Large 4, has yet to catch up with the leading open models from China.

The second billion-euro deal went to Nscale, a London-based A.I. cloud provider. Ahead of a planned listing on the New York Stock Exchange, it secured $3.36 billion (about €2.9 billion) in convertible notes. The hedge fund Third Point led the financing, and Nvidia also took part.

Together, the two companies account for nearly €5.9 billion, more than a third of the month’s total. That also explains why cloud was the strongest sector: data centers and GPU capacity for A.I. are currently where investors in Europe write the biggest checks, as the rise of neoclouds such as Finland’s Verda shows.

Britain Captures Nearly Half

With €7.3 billion, Britain remains by far Europe’s largest funding market, accounting for about 46 percent of the monthly total. The full-year picture looks similar: According to Euronews, European tech funding has reached almost €60 billion so far this year, and half of it went to British companies.

Germany stood out on exits, with eight transactions making it the most active market in September. Its funding year is also going well: According to the German Startup Monitor published by the German Startups Association, German start-ups had raised about €8 billion in venture capital by the end of September, already more than in all of last year. Ten new unicorns have emerged, bringing the country’s total to 39 start-ups valued at $1 billion or more.

What About Austria?

In Austria, the mood has turned as well. Austrian startups raised €472 million in the first half of the year, up 329 percent from a year earlier, according to EY’s Start-up Barometer. A record 97 funding rounds were completed, with the drinks maker Waterdrop and the proptech company Gropyus leading the way at €100 million each. By European standards, though, these are small sums: Mistral alone raised more than six times as much in a single round as the entire Austrian ecosystem did in six months.

The Limits of the Data

Monthly figures are a volatile indicator. One or two mega-deals can skew the picture dramatically, and that is exactly what happened in September. Excluding Mistral and Nscale, about €9.9 billion remains. That is still three times August’s total, but far less spectacular than the headline number.

There is also the question of what gets counted. Nscale’s financing consists of convertible notes that turn into shares only once the company goes public, and other data providers sometimes classify such instruments differently. The amounts of 34 of the 300 deals were not disclosed. And because Tech.eu, Dealroom, PitchBook and others use different methodologies, their figures are only partly comparable.