Enterprise & Deep Tech VC in Europe & Israel 2021
Gil Dibner

After months of data crunching and analysis, we recently released the 2021 edition of our data-driven report on Enterprise and Deep Tech VC investment in Europe and Israel. Check out the full report here and TechCrunch’s analysis of our report here.

The scale of the increase in VC activity in Europe and Israel was truly mind-blowing. In 2021, VC investors pumped over $139B into European and Israeli technology companies, across 4,005 transactions. Compare this to $45B across 2,744 transactions in 2020.

When you dig deeper into the data, some interesting observations emerge:
(1) The biggest increases in VC volume happened at the later stages. Early-stage activity is growing but not as fast.
(2) Corporate VC activity has been steadily declining.
(3) Round sizes are up dramatically.
(4) Enterprise and Deep Tech continues to dominate investment activity, accounting for ~67% of investment rounds.
(5) Israel leads in terms of VC per capita, followed by Estonia, Sweden, and the UK.
(6) The German VC market has shown dramatic growth. In 4Q21, more VC dollars flowed into Germany than into Israel — the first time Israel was not in one of the top two slots. The UK, which trailed Israel slightly in the first part of 2021, jumped to first place in the second half.
(7) Investment across Europe is up massively. The fastest growing region is Eastern Europe, which saw investment volume quadruple and the number of transactions nearly double.
(8) US VC involvement continues to run at about 14–15% of transactions, with a bias towards later stage. US firms were only in 7% of early venture deals, but 33% of growth rounds. US VC activity is still mostly concentrated in Israel, the UK, and Germany.
(9) The most active US funds in Europe & Israel were Insight, Accel, Index, Bessemer, Lightspeed, and Sequoia. In the early stage, Accel and Index are the clear leaders.

EVENTS

Feb 23 / Compliance Tech: Building Pain-Killers
Eynat Guez, CEO of Papaya Global & Neta Meidav, CEO of Vault Platform

Mar 23 / The Importance of Culture and Values As You Scale a Business
Oren Kaniel, Co-Founder & CEO, AppsFlyer

Apr 11 / How to Employ Category Design as a VC
David Peterson, Partner at Angular & Al Ramadan, CEO of PlayBigger

Enterprise & Deep Tech VC in Europe & Israel 2021
A data-driven look at a record-setting year.

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The Problem with Engineering-led Growth for Early Stage Startups
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Childhood as a solution to the early stage entrepreneurship explore–exploit dilemma.

EUROPE & ISRAEL FUNDING NEWS

UK/Financial SaaS. Genesis raised $200M for its low code application platform targeted at the financial industry.
Israel/Logistics. Veho closed $125M for its next-day parcel delivery platform.
France/IT Infrastructure. InterCloud raised $113M for its platform guaranteeing enterprise clients optimised, automated and secure access to cloud-hosted applications and data.
Israel/Financial Services. Sharegain closed $64M for its cloud-based securities lending solutions for fund managers and custodians.
France/Video Design. PlayPlay raised $55M for its video creation platform.
Israel/Industrial. Exodigo raised $29M for its non-intrusive subsurface imaging platform providing a digital geolocated 3D map of buried assets.
Germany/HR. Sharpist raised $23M for its mobile-based mentorship platform provider.
Germany/Automation. Cognigy raised $15M for its low code conversational AI & automation platform.
Israel/Accounting. Trullion raised $15M for its AI-powered accounting software.
Israel/Security. Snyk acquired Fugue to enter the cloud security market.

WORTH READING

ENTERPRISE/TECH NEWS

The Israeli quantum computer. Israel has joined the quantum race and is now working on building a quantum computer. “The project by the Israel Innovation Authority and the weapons and technological infrastructure research body will result in a computer owned by the state and will be funded with a budget of about 200 million shekels ($61.9M). The goal is to establish a consortium of companies working together to build an Israeli quantum computer for research and development for the academic world, local high-tech industry and the security establishment.”

WFH to RTO. While it may feel like a déjà vu, many of the world’s largest tech companies are now planning their upcoming return to the office. Microsoft will be reopening February 28, Meta on March 28, Expedia on April 4, etc. Contrary, Amazon has stated they are not selecting a date and are instead letting teams decide for themselves. How will the big tech return to office affect the startup ecosystem? Will they follow the giants’ leads? Will there be an exodus of large tech talent vying for the still-remote startup jobs? Time will tell, but companies of all sizes will have to be very strategic about how they navigate returning to in-person work, given the current battle to attract and retain top talent.

Russia-Ukraine conflict. As the world watches with bated breath the escalating conflict surrounding Ukraine and Russia, the tech perspective is often overlooked. Ukraine is an established tech hub due to its wealth of education and research facilities and the low cost of living. Many international tech companies employ Ukrainian engineering talent and some of these companies have started to offer to help evacuate their employees. If the conflict continues to escalate, the effects may unfortunately reverberate through the tech ecosystem.

HOW TO STARTUP

PLG + enterprise sales. With more than a 150x increase in the cumulative market capitalization within the last seven years, PLG companies are eating the world. However, at a certain point, in order to hit the elusive $1B ARR, PLG companies often need to obtain enterprise adoption. Adding an enterprise sales motion to a PLG company is not obvious, and if done incorrectly, can have disastrous consequences. Bessemer has put together a wonderful deep dive on introducing enterprise sales to a PLG organization, examining the lessons learned from Auth0, HashiCorp, Imply, PagerDuty, and Twilio’s experience. The entire report is worth reading but a particular lesson worth calling out is lesson 2:
“Instead of only relying on “marketing-qualified leads (MQLs)”, where a prospect is nurtured through the sales funnel via marketing efforts, PLG companies should leverage their best assets — the product and user adoption — as a starting point for intent signals to convert end-user demand into enterprise momentum. Many of the best PLG companies do so by strategically mining for product-qualified leads (PQL) — users who have already tried out their product — to provide direction on where to push for enterprise sales.”

Tracking growth experiments. A few weeks ago, Darius Contractor led a terrific Angular Insights talk on his 20 years of growth learnings (to check out the session watch it here or listen to the podcast here). During his talk, he stressed the importance of growth teams carrying out substantial AB testing.

Now, how should founders go about actually managing those experiments, what software should they use? One free offering that helps founders run their growth team, built by Darius himself, is Evelyn, a central place to track experiments. According to Darius, “it’s really like a birth to death growth tracking system that really focuses on this kind of t-shirt and then numeric opportunity sizing that I think is really fundamental for growth team, because I think one of the ways you differentiate yourself as a product leader in general is you actually come up with at least double, if not quadruple the number of ideas that you could do, versus the ones you actually do. Like you want to make sure that you’re coming up with a big list, prioritizing them based on a sensical algorithm and then executing your absolute best ideas rather than you’re executing your first ideas.”

HOW TO VENTURE

Operator vs VC. After three years at Homebrew, Kate Stern, is heading back to being an operator and leaves with good advice on deciding if a career in venture capital is right for you. “For folks early in their careers considering their next step, I’ll pass along the best career advice I have ever received: don’t overthink your ten year plan — just go where you think you’ll learn and have fun. Early in my career, I might have thought this advice was silly. But looking back, the work I’m most proud of (and the work that’s advanced my career the most) has happened when I followed my interests and optimized for learning, not a long-term plan. We spend a huge percentage of our lives at work; spend your time doing something you like, and you’ll end up in a place you’re happy with.”

PORTFOLIO NEWS

Forter announced smart payments offering to help businesses increase digital commerce conversion rates and revenue.

Aquant announced the launch of Service Hero™ for Home Appliances. The mobile triaging app, which uses expert crowdsourcing to troubleshoot issues pertaining to all major home appliances and brands, turns every service technician into an expert.

JFrog unveiled new DevSecOps contextual analysis capabilities.

Snyk expands into cloud security with the acquisition of Fugue.