European start-ups in the aftermath of COVID-19

Europe’s start-up fabric was taking shape at last: in 2019, Germany and France attracted $7b and $5.2b in venture capital respectively, according to Dealroom, far behind the UK though ($13.2b). This was before the massive disruption caused by the COVID-19 pandemic wiped revenues out of a number of start-ups while putting venture capital investors on edge.

To be fair, governments have dashed to the rescue of their tech start-ups:

• France launched a €4b liquidity plan, a mix of short-term refinancing, investment into already-planned funding rounds and early payment of some tax credits;

• Germany has earmarked €2b to this effect, to be followed by a longer-term fund of €10b for bigger start-ups;

• Though the British government has put an emergency loan into place to support smaller businesses, it may not apply to start-ups: seven industry lobby groups have therefore called for a “runway fund” that would allocate loans convertible into equity stakes at a company’s next financing round.

Incidentally, many start-ups are taking cues from the crisis and pivoting to healthcare: Hexigone (originally in chemical manufacturing), Archangel Imaging (originally in large-scale monitoring of remote areas), to name but a couple.

In light of the above considerations, we thought it was time to take stock of the impact of the pandemic on European start-up ecosystems.

The debate will be held under the Chatham House rule.

For more information on our Digital in Practice Programme (DiPP) click here.