In a year that none of us will soon forget, European innovation stands out as a shining light. Coming off a record 2019, we were confident of strong 2020 growth for both the technology and healthcare sectors, until the pandemic took hold. While uncertainty still exists in global and European markets, we can report that the pace of innovation and investment in tech and healthcare remains robust and well placed to accelerate over time.
Despite the headwinds that still persist with respect to the pandemic, innovation in many areas is thriving and accelerating parts of the market faster than we’ve observed pre-pandemic. Digital adoption and movement online, remote collaboration and communication tools, technology to fight and cure COVID-19 along with enhanced healthcare delivery are a few such areas.
The report’s findings show that 2020 is on track to be the highest year on record for investment in the European innovation economy. We’ve seen 18 newly created unicorns thus far, with a stable of fast growth companies right behind them. That brings the aggregate enterprise value of Europe’s 200 total unicorns to an unprecedented level of $1.09 trillion based on findings from Atomico.
While the UK leads in activity, tech hubs are growing all over Europe at a rapid rate. In this environment, skilled talent is staying put and creating increased momentum in more newly energised tech clusters. We think this will lead to an acceleration of innovation across the continent and potentially a more collaborative ecosystem in the years to come. At SVB, we had already expanded to high-growth European hubs with SVB's presence in Germany, Denmark and Israel and SVB Financial Group UK Ltd's presence in Ireland supporting companies through our extensive global network.
As innovation takes the centre stage globally, we find increased domestic and international capital supporting European entrepreneurs and their ideas. We’ve gone from building great domestic companies to creating and scaling global category leaders that need increasingly sophisticated financing options. Access to seed and early stage venture capital continued to increase but a gap remains for capital at the growth stage and there is more work to do to elevate our public markets. Support through tools such as venture debt, working capital and acquisition financing are necessary to enable companies doing well domestically to grow and compete globally and complement the maturation of the equity markets.
Capital alone does not guarantee competitive success. It relies on building an ecosystem that brings a variety of voices and ideas to the table. The European tech community is making some progress to include entrepreneurs and investors with diverse backgrounds and experiences, but most of us agree, we must do more to put words into action if we are to make significant headway on diversity, equity and inclusion within our sector.
Looking ahead to 2021, we are optimistic that the fundamentals driving our growing innovation ecosystem will continue, and we will be here to do our part. In this time of uncertainty sustaining momentum is key, and it requires policies that reduce friction around access to talent and movement of commerce. Doing business virtually, including deal-making and fundraising, may improve velocity – but not in a vacuum. Policymakers must recognise that promoting a healthy innovation ecosystem requires a seamless bridge for talent across European countries and policies that level the playing field. We are encouraged because innovators are exceptionally skilled at finding solutions and adapting when the times call for it and we firmly believe the best is yet to come for the European innovation economy.
Head of EMEA and President of the UK Branch, Silicon Valley Bank