EUVC | E415 | Atomico's Tom Wehmeier on the State of European Tech, regulations, and more
Feb 18, 2025
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Tom Wehmeier, Head of Intelligence at Atomico, dives into the evolving landscape of European tech. He discusses the current confidence crisis and how regulation influences growth. Key insights from the latest State of European Tech report shed light on capital gaps and market fragmentation. Tom emphasizes the importance of a unified approach in navigating public market challenges while recognizing AI's potential in Europe. He also advocates for stronger collaboration between the public and private sectors to drive deep tech innovation.
The European tech ecosystem has seen a tenfold increase in investments, marking significant growth in startups and established companies over the past decade.
Despite advancements, challenges such as bureaucratic hurdles, capital access, and market fragmentation demand urgent attention and collaboration from policymakers and the private sector.
Europe boasts a robust talent pool and strong research capabilities in AI, yet faces funding disparities compared to the U.S., emphasizing the need for strategic innovation partnerships.
Deep dives
Evolution of European Tech Funding
The European technology ecosystem has witnessed a remarkable transformation over the past decade, characterized by a significant increase in both the volume of investment and the growth of tech companies. Investments have surged from approximately $43 billion over the previous decade to nearly half a trillion in the last ten years, highlighting a tenfold increase. This growth is evident in the emergence of new startups and the expansion of existing ones, reflecting a thriving entrepreneurial environment. Key metrics indicate that the total value of private and public tech companies in Europe has skyrocketed, affirming the rising stature of European tech on the global stage.
Challenges Within the Ecosystem
Despite the progress, the European tech ecosystem faces several critical challenges that could impede its future growth. Founders have expressed frustrations with bureaucratic hurdles, access to capital, and the complexities of scaling across a fragmented market. In response, a report categorizes these hurdles into six key areas requiring attention, such as improving public market conditions and fostering better access to customers. Addressing these obstacles will necessitate bold actions from policymakers and active collaboration between private and public sectors.
The Importance of Policy Engagement
Engaging in policy discussions has become increasingly vital for European tech players who wish to shape the region's narrative in the global tech landscape. Historically, European founders have struggled to communicate their successes effectively, allowing external perceptions to dominate. The initiative to start the state of European tech aimed at rectifying this narrative gap by providing a platform to share positive developments and confront existing barriers realistically. This proactive engagement seeks not only to inspire confidence within the ecosystem but also to drive systemic change through collective action.
Talent Development and Workforce Growth
Talent is a significant driver of growth within the European tech ecosystem, with substantial increases in the number of skilled professionals entering the sector. Employment in technology has expanded from a few hundred thousand to over three and a half million in the last decade, reflecting an impressive compound annual growth rate. Moreover, the influx of fresh talent from universities is complemented by the recycling of experienced individuals moving between tech companies, fostering a rich environment of knowledge transfer. This trend underscores the importance of nurturing both new entrants and seasoned leaders to ensure continued innovation and progress.
Navigating the Future of AI in Europe
As discussions around artificial intelligence evolve, Europe's role in the AI landscape becomes particularly important, especially given the robust talent pool and leading research institutions present in the region. With the number of professionals in AI roles in Europe on par with the United States, Europe's potential for innovation is considerable. However, there exists a disparity in funding, with significantly more capital being directed towards AI ventures in the U.S. Despite these challenges, it is essential to focus on building successful AI companies that combine technological advancement with commercial viability, ensuring Europe remains competitive in the long run.
In today’s episode, Andreas talks with Tom Wehmeier, Head of Intelligence at Atomico, to discuss the State of European Tech and what’s shaping the ecosystem's future. For over a decade, Tom has been at the forefront of data-driven investment strategies, market education, and ecosystem analysis at Atomico. He leads the firm's intelligence efforts, sits on the investment committee, and shapes European venture capital policy discussions.
Operating across Europe, Atomico is a multi-stage venture capital firm with over 155 portfolio companies, 1 in 6 valued in excess of $1 billion. They’ve partnered with some of the continent’s biggest tech success stories, including Klarna, Stripe, and DeepL. Tom has been driving Atomico’s research efforts, particularly the annual State of European Tech report, which has become the most awaited yearly report in venture that helps us understand Europe’s investment landscape and future potential.
In this conversation, Tom shares insights into Europe’s confidence crisis, the impact of regulation, and the future of AI and deep tech. He unpacks key findings from the latest State of European Tech report, discussing capital gaps, liquidity challenges, and why Europe’s fragmented markets can be a strength. The discussion also covers public market dynamics, how Europe can compete in AI, and government collaboration's role in deep tech innovation.