Christoph Klink of Antler says European company formation is 50 to 60 percent above the 2020 peak, yet early-stage rounds fell 40% to 55% from 2021 into 2026.
Klink says Europe's rocket ships reached unicorn status in under three years on average, versus 7.2 years before 2020, with about seven investors on the cap table at seed.
Klink says Europe's juggernauts like Mistral AI need far more capital and attract a much higher share of European capital, while 43% of jets and juggernauts are headquartered in London.
Europe's startup boom meets a shrinking early-stage funding base
European tech is getting stronger at the top while the early stage thins out. Founders start companies at record rates, but fewer investors fund first rounds and capital concentrates in a few winners. That leaves room for new early-stage managers willing to back founders with less pedigree.
Takeaways
European tech is strengthening at the top. Europe now has 13 decacorns, a tier that did not exist before 2020, and top global funds back European companies very early. Klink says Europeans undersell this good news and that large European outcomes are possible.
Company formation is booming while early funding shrinks. Company starts in Europe run 50 to 60 percent above the 2020 peak, yet pre-seed, seed and Series A rounds fell 40% to 55% from 2021 into 2026. Klink says a company that never raises a Series A rarely reaches hockey stick growth.
Fewer investors are backing the early stage. Total early-stage investors are down 40% and new entrants down about 45%. Emerging managers have not replaced departing investors, and new fund formation has dropped over four years. Klink calls the pre-2020 baseline conservative.
Investors are converging on the same winners. The report's 33 rocket ships, companies founded since 2020 that became unicorns, got there in under three years against 7.2 before. They had about seven seed investors, nearly double the earlier figure, which Klink reads as growing consensus.
Jets and juggernauts are different kinds of company. Jets like Lovable and Legora are lean, AI-first and easy to imitate, raising roughly every eight months. Juggernauts like Mistral AI and Proxima Fusion ship slower, with median rounds of 16m USD at seed and 60m USD at Series A.
Juggernauts draw investor appetite and strategic weight. Klink expects investors to favour technology that makes Europe independent, citing Isar Aerospace's first commercial launch by a European company. Johnson argues the unicorn badge means less for compute-heavy companies, since they reach it by default.
Venture is spreading beyond London. London hosts 43% of jets and juggernauts, up from 28% before 2020. Even so, more than 400 cities have produced a unicorn, five to seven times more than ten years ago, and Munich now joins Berlin in deep tech.
What comes next for the funding gap
Some companies caught in the gap will bootstrap successfully.
Companies founded only because starting up got easier, such as those building toward 100k ARR, will not survive.
Some good companies will lack capital and attention.
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On this episode 2
Show 1
Keeping winners durable needs growth-stage investors, flatter regulation and capital markets that allow exits.
There are too many founders and too few investors, so investors must lean into deals with less pedigree. Klink sees a large opening for new managers at pre-seed, seed and Series A.