On the heels of Romanian-founded enterprise startup UiPath raising at a $7 billion valuation, the startup’s biggest investor is announcing a new fund to double down on making more investments in Europe. VC firm Accel has closed a $575 million fund — money that it plans to use to back startups in Europe and Israel, investing primarily at the Series A stage in a range of between $5 million and $15 million.
At $575 million, this makes the fund one of the largest in the region, and it brings the total managed by Accel in Europe to $3 billion.
Accel has been behind some of the biggest startups to have come of age in Europe in recent years, including Avito, BlaBlaCar, Celonis, Check24, Deliveroo, Doctolib, DocuSign, Funding Circle, Spotify and Supercell, alongside UiPath. Some — like Spotify — have become leaders in their respective segments (in Spotify’s case, music streaming), and so Accel has, by association, played a strong part in helping grow the wider tech ecosystem in Europe.
That ecosystem still lags behind the U.S. in terms of value. According to figures from KPMG, $136 billion was invested in startups in the U.S. and Americas in 2018, while Europe saw only $24.4 billion invested in the same period. However, even with dramatic drops in activity in the U.K. and France — thanks respectively to Brexit and domestic economic tensions — that was up by more than $2 billion on 2017, with median deal sizes also going up.
Philippe Botteri, a partner at Accel (who works alongside six other partners and principles based out of London), said that in addition to the average size of a Series A creeping up in value and proximity (essentially, the A round is raised sooner after seed than it used to be), another noticeable difference is the fact that the European opportunity has become more decentralised.
“Fifteen years back, a lot of the market was in the U.K. and Israel,” he said, “but in the last five years, we have invested across 22 different cities. Who would have thought that UiPath, one of the most successful startups currently in enterprise software, would come out of Bucharest? We are seeing ambitious founders and great companies emerging from everywhere now in the region.”
Indeed, the drop in investments being made in the U.K. and France also speaks to that trend, and also underscores that right now still seems to be a buyers’ market in terms of strong investors getting more of a look in, rather than startups turning backers away because of overdemand.
It will be interesting to see how that plays out in later stages, where firms like SoftBank have recently started stepping up their funding activity in the region, especially in late-stage deals. We have yet to see a strong run of IPOs come out of Europe (although some that made their debuts last year, like Farfetch and Adyen, have performed well), and having backers willing to invest in those late stages could push the biggest startups to stay private for a little longer.
Some of Accel’s biggest booms have been in consumer-facing services — just in the small list of wins I detailed here, more than half are services with consumer, not business user, endpoints. But Botteri said this is a consequence of the natural swing of the “pendulum.”
“You have a pendulum rocking between consumer and B2B,” he said. “Between 2009 and 2013/14 it was consumer-driven, with more than two-thirds of investments being made on these kinds of companies.”
But things slowly started to change in 2014 with a shift to more B2B investments. “Europe has become a hub for enterprise startups,” he noted.
Just as geographies have become more decentralised, so too have areas of interest, with automation (not just robotic process automation), fintech and health all figuring in Accel’s sights.