Today, Tech.eu and Stripe are releasing a new research report focused on analysing the increase of late-stage funding rounds (financing rounds of €100 million or more) for fast-growing Europe-born tech companies.

Titled “Blooming Late: The rise of late-stage funding for European tech scale-ups”, it's the third and last in a series of reports diving into the EU tech ecosystem, after “Seed the Future” (November 2018) and “Life is Growth” (May 2019), looking at early-stage investment and growth-stage investment in European tech businesses, respectively.

We will be presenting the results of our research at an exclusive event in Lisbon tonight (Monday) as the Web Summit is about to kick off.

The research report shows that late-stage investment in European tech scale-ups such as Deliveroo (UK), N26 (Germany), Glovo (Spain), Doctolib (France), Klarna (Sweden) and OutSystems (Portugal) has surged in 2019, with the number of €100 million+ rounds we recorded increasing fourfold compared to 2016.

With 52 rounds in the first quarter of 2019, the data also shows a fourfold increase in total late-stage investment volume in less than three years: from €3 billion worth of mega funding rounds in 2016 to €12 billion from Q1 to Q3 this year. If the current trend continues, we are likely to see around 70 mega funding rounds in 2019, which would be more late-stage financing deals in a year than in the previous three years combined.

The figures show that the UK and Germany are the unchallenged European champions in terms of tech scale-up financing, with just south of €15.3 billion invested in mega funding rounds from 2015 to Q3 2019, which is more than all other countries combined during that time period (€14.7 billion).

Also worth noting: the bulk of the total investment deployed through funding rounds of €100 million or more from 2015 to Q3 2019 was provided by non-European investors. In fact, close to 75% of the money invested in late-stage funding rounds for European tech scale-ups came from outside Europe; from a diverse mix of foreign PE & VC firms, big corporations such as Microsoft and Amazon, hedge funds, state funds, etc.

Of the top 10 investors in mega financing rounds for European tech scale-ups, more than half (6) are headquartered outside of Europe (US, Japan, South Africa, Hong Kong, Singapore and China).

Japan’s SoftBank is responsible for a massive influx of late-stage funding in Europe. Through its Vision Fund, it has pumped nearly €4 billion into European heavy-hitters from 2015 to Q3 2019, while the number two, Insight Venture Partners (US), deployed ‘only’ about €1.4 billion during that time period.

An increase of capital flowing to European fintech and software scale-ups was largely to thank for the overall surge in late-stage funding deals for European tech companies in the last twelve months.

In total, there were 34 late-stage deals for European fintech scale-ups from 2015 to Q3 2019, but the majority of those (22 rounds, or nearly 65%) were closed or at least announced in the first three quarters of 2019.

Even before the end of the year, there have been nearly five more late-stage funding rounds for European fintech companies recorded than in full year 2018, and that is without counting Sonovate’s £110 million in debt and equity funding, and rumoured upcoming mega funding rounds for other UK-based fintech scale-ups such as Monzo and Revolut.

The software sector is witnessing similar growth, with a jump from only two late-stage European SaaS funding deals in 2018 to a total of eleven in the first three quarters of 2019.

As more late-stage funding flows to European technology companies, more are opting to remain private and scale independently. Even though we’ve seen high-profile public listings from European tech scale-ups such as Spotify, Delivery Hero, Farfetch, Teamviewer and Adyen in recent times, the number of IPOs is dropping fast.

While there were 36 European tech IPOs at the peak in 2017, only 21 were recorded in 2018. With only 5 tech IPOs in 2019 recorded so far, the number continues to steadily decline.

The same is true for acquisitions, as an increasing number of European tech scale-ups carves its own path. The data shows that there were 629 acquisitions of European tech companies in 2015, but that number dropped nearly 12% to 555 deals by 2017, and in the first three quarters of 2019 to a mere 273 exits by acquisition.

You can download the full report free of charge here (for sharing, simply use tech.eu/bloominglate).