Emerging Technologies In Europe

During a volatile year for markets due to the COVID-19 pandemic, technology outperformed the broader market by up to 25% in 2020. Lockdown has increased reliance on the internet and technology, with some industries gaining market share. Longer term, technology will be the beneficiary of ongoing structural disruption, such as the shift to Artificial Intelligence (AI), innovation in e-commerce and payments, continued mobility evolution, and render farm blender.

The growth of the J.P. Morgan European TechStars Virtual Conference demonstrates that the technology industry is now more important than ever in Europe. In 2008, the average attendance was around 15 companies and 100 investors. Last year, 30 companies met with 200 investors over one day; this year, over 500 investors signed up to meet with 40+ companies over two full days. Ahead of this month’s now-virtual J.P. Morgan Euro Tech Stars Conference, we look closely at the industry’s rising trends in Europe, from next-gen payments and regtech to e-commerce and cybersecurity.

Here are some of the best-emerging technologies in Europe:

1. It’s Never Been a Better Time to Invest in European Technology

• Technology companies and investment opportunities are expanding at an impressive rate in Europe. European tech companies have historically faced scaling challenges compared to their American counterparts due to smaller local markets, multiple languages and payment methods, higher regulatory burdens, and a lack of capital. However, we are seeing a reversal, with some European companies now taking advantage of structural benefits unique to Europe, such as higher population density, which drives economics for e-commerce and local commerce, proximity to the luxury industry, and a deep technical talent pool with less competition.
• In addition to these benefits, Europe has seen a number of its tech companies go public and thrive in the aftermarket, including Delivery Hero, Zalando, Trainline, and Adyen. The success of these companies has attracted additional capital to the public and private markets, fueling the rapid growth of the conference’s next wave of tech stars.
• Many more funds are looking to invest in Europe at all stages of business development. We are now comfortably raising private capital rounds ranging from $200 to $500 million, and most major institutional investors are making significant private investments in Europe.
• As a result of this expansion, select banks, including J.P. Morgan, now have dedicated Private Capital Markets teams in Europe that advise on private capital raises for these early-stage technology companies. In addition, there has been a greater international focus on Europe, with many U.S.-based private equity firms opening offices across the continent.

2. Technology Transforms Other Industries

• Technology is no longer viewed as a standalone industry but as an enabler and partner to a wide range of other industries. There is no longer an industry unaffected by technology, whether it is retail, insurance, transportation, or healthcare.
• There have been some clear winners in the age of COVID-19. While the number of tech IPOs has decreased, many companies have continued to thrive, particularly in the healthcare, food delivery, streaming, and e-commerce sectors.
• One major effect of lockdown has been an overall shift of industries online. Because of the increased number of people at home, there has been an increase in the use of streaming platforms, a shift in fitness to digital and at home, and a significant increase in e-commerce. Telehealth also saw increased use as people could get the care they needed without worrying about spreading or contracting the disease. This relatively new method of receiving care has been a major disruptor in the healthcare industry. It allows companies to track patients’ health better, providing accurate diagnoses that lead to better outcomes – all without leaving the comfort of their homes.
• COVID-19 has also significantly impacted other industries, such as transportation and travel. On a micro level, technology has significantly impacted mobility, and due to Europe’s many densely populated urban cities, this landscape is ripe for innovation. The conference will feature presentations from companies that are innovating across the mobility spectrum, including buses/trains (FLixMobility), micro-mobility (Tier), vertical takeoff aircraft (Lilium), and electric delivery vehicles (Arrival).

3. Europe’s Capitals Are Working On Becoming The New Silicon Valley

• While the European technology market faces unique challenges, such as multiple languages, more payment methods, and varying regulations, this diversity also provides tremendous opportunities.
• London, along with Paris and Berlin, has been the focus of much venture capital (VC) investment. Still, in recent years, there has been an increase in VC funding being distributed across the continent. Showpad, a marketing and sales startup founded in Ghent, Belgium, and KRY, a Stockholm-based telehealth platform, is presenting at this year’s conference and has benefited from this expanding capital base.
• Most of the funding has come from London, and most of the digital fintech banking and payments names are based there, but the companies in the other sectors are very dispersed. With the exception of fintech, financial software, and payments, no single city dominates the formation of new technology companies.
• If a few had to be picked, they would be Berlin, Munich, Stockholm, Paris, and, increasingly, Barcelona. It is natural that, over time, capital bases will shift from the United States and London to a more local level.

4. Europe Is Taking The Lead in Payments

• Consumers and businesses want the process to be transparent and simple when it comes to payments. This is the driving force behind how next-generation payment companies structure their products. Companies are now focusing on developing payment platforms from the ground up to accept any form of payment and provide in-depth analytics to clients without the need for additional software.

European startups have made a name for themselves by removing the annoyances associated with traditional banking, such as foreign exchange fees. Given the region’s multiple currencies and high frequency of international travel, this has been a huge benefit to both consumers and industry. A single great product or platform had helped companies like Revolut and Monzo build a loyal following, implying that when they launched a more extensive product range, such as debit cards and full bank accounts, they had a ready-made customer base.