The State of European Tech

REPORT | In Partnership with Slush & Orrick

In Partnership with & The State of European Tech 2018

Contents 00 2018 Key Findings 3 01 The State of European Tech 2018 7 02 Tech & the European Economy 14 03 Diversity & Inclusion 26 04 Europe’s Got Talent 43 05 Tech Hubs 62 06 Research & Development 82 07 Regulation 90 08 Investors & Investment 102 09 Great European Companies 126 10 Challenges 138 11 Mythbusting 141 12 Predictions 145 13 About 151 14 Appendix 159 & 2 In Partnership with www.thestateofeuropeantech.com

2018 Key Findings What’s changed for It’s been another record year for investment in European tech and the sector is powering growth in Europe’s European tech in the stagnant economy. Yet not everyone is benefitting from the boom. The gains are not being democratized by investors. Companies need to address diversity and inclusion tools past 12 months? and unlock hidden talent pools. KEY FINDINGS 01 Another record year for investment into the European tech ecosystem 02 Europe urgently needs to fix its diversity & inclusion problem 03 Europe’s tech industry is the best hope for growth for a stalling European economy 04 The gains from Europe’s tech boom are not yet being democratised 05 Mobilising Europe’s hidden tech talent pool can unlock huge upside 06 Europe is producing $B+ companies at a level that is 15x+ higher than a decade ago 07 Top highlight statistics for Europe In Partnership with & www.thestateofeuropeantech.com

2018 Key Findings Another record year for investment into the European tech ecosystem CAPITAL INVESTED $ B 23 Record sums invested in Europe’s technology ecosystem- $23bn in 2018 up from just $5bn in 2013. TECH IPO COMPANIES X $ B 4 5 There were four tech IPOs or direct listings of European tech companies in 2018 that reached valuations of more than $5B on opening day, including Europe’s largest ever venture- backed publicly-listed tech company, Spotify. In total, Europe contributed three of the top 10 largest tech IPOs globally of 2018. Europe urgently needs to fix its diversity & inclusion problem CAPITAL INVESTED % 93 93% of all funds raised by European VC-backed companies went to all-male founding teams in 2018. GENDER DISCRIMINATION % 46 Almost half of women reported that they have experienced discrimination in the European tech sector. This is a point of clear tension with the 75% of respondents who think the culture at their European startup is inclusive. In European tech, discrimination appears to be someone else’s problem. & 4 In Partnership with www.thestateofeuropeantech.com

2018 Key Findings Europe’s tech industry is the best hope for growth for a stalling European economy TECH INDUSTRY GROWTH X 5 Europe’s tech (software) industry is growing 5x faster than the rest of the European economy in terms of Gross Value Added, a level that has accelerated in recent years. Eurostat EMERGING TECH HUBS % 4 The European tech workforce grew 4% in 2018 (source: LinkedIn), a significant difference to overall EU employment growth of 1.1%. European Commission The gains from Europe’s tech boom are not yet being democratised PENSION FUNDS INVESTMENT X 45 Pension funds are not yet democratising Europe’s tech sector boom - over the last five years, pension funds have invested just $1.7B in European VC, but have invested 45x more in European buyout funds, equivalent to more than $75B over that period. HNW INVESTMENT $ B 5 European tech growth and record success has not gone unnoticed by family offices and high net-worth individuals (HNWs). Over the last five years they have invested over $5bn in European venture capital funds. Only government agencies have invested more in European VC in that same period. & 5 In Partnership with www.thestateofeuropeantech.com

2018 Key Findings Mobilising Europe’s hidden tech talent pool can unlock huge upside PROFESSIONAL DEVELOPERS Europe’s ecosystem is more distributed and more interconnected than ever - there M are now 5.7m professional developers 5.7 in Europe, up by 200,000 on 2017. This compares to the 4.4m in the US, a number that stayed flat year on year. EMERGING TECH HUBS Still more European tech hubs will emerge. Cities such as Cologne, Warsaw 15 and Vienna all have larger developer populations than Stockholm and active local tech communities, but have yet to attract as much investment. In fact, there are 15 European cities with professional developer populations of 50,000+ that have seen less than $1B in total capital investment since 2013. Europe is producing $B+ companies at a level that is 15x+ higher than a decade ago $B+ COMPANIES 61 European $B+ companies founded in the past 15 years, including a record 17 new companies that first surpassed the milestone in 2018. Europe has also now produced 12 companies with a $5B+ valuation, of which 5 have grown to more than $10B. SUCCESS GROWTH X 15 Two companies founded in the 2000s had reached $B+ by 2008. Compare that to 31 founded in the 2010s that reached that milestone by 2018 - an increase of 15.5x. Where will the 2010s end up by 2028? & 6 In Partnership with www.thestateofeuropeantech.com

The State of European Tech 2018 Back once again like This is the fourth edition of the State of European Tech report, the single, most comprehensive data-driven story the renegade...er... of European technology today. We’ve gathered data from world-class data partners and a survey of 5,000 members of the tech ecosystem, from founders to students, data analysers! investors to researchers. We’ve tried to tell the most important stories. We cover diversity and inclusion, talent, regulation, investment, research and development, and the great, global disrupters out of Europe. ARTICLES 01.1 Welcome to the State of European Tech 2018 01.2 Executive Summary In Partnership with & www.thestateofeuropeantech.com

Welcome to the State of European Tech 2018 We’re proud to present the 2018 edition of the State of European Tech report, which is once again the single, most comprehensive data-driven story of European technology today. It’s been another incredible year We write this report to shine a light that this report is a lot longer than in for European tech - but there are on the issues that matter in the previous years. This was a deliberate some significant challenges too European ecosystem. We aim to enrich decision. Our data is open, and our conversations, highlight challenges, hope is as many people as possible will and support more informed decision use it to help tell the stories that matter making by closing the knowledge gap to them in Europe. between perception and reality. Each year we aim to produce a resource that is more comprehensive than the last. To this end, you’ll notice & 8 In Partnership with www.thestateofeuropeantech.com Photo: Anrietta Kuosku

Executive Summary For the past four years, we’ve produced an exhaustive deep dive into the European tech ecosystem by analysing the rich insights of our data partners. Every year the data busts another myth about our ecosystem: from pointing out that Europe actually has more developers than the US, to quantifying European advances in deep tech. Another record breaking This year we’re at risk of sounding like a $23 billion - up from $5 billion just five year for European tech broken record about breaking records years ago. European founders created - but we can’t dispute the data. In 17 billion-dollar companies. And in another extraordinary year, investment 2018, Europe produced three of the ten in European tech reached a record biggest venture backed public listings. Technology has become At a macro-level, Europe’s technology faster than the rest of the European a motor for growth in the sector is booming as the wider economy. This year’s report suggests European economy economy is stuck in the doldrums. that for a number of reasons, this As of Q3 2018, European growth was motor will only become more powerful. flatlining at 0.2%, the lowest rate for The importance of the tech to the four years. Europe’s software industry overall economy will only increase. is now growing at least five times European tech Last year we found that Europe was This all contributes to ‘density’ - achieving density experiencing a ‘Battle Royale’ for talent. which historically has been a crucial This year was the year Europe figured precondition for explosive growth. out how to effectively mobilise its Europe is certainly achieving density, deep pools of talent. The tech sector is but it’s doing it its own way. What is attracting more participants - whether interesting is that the developer pool is measured by the healthy increase in growing fastest outside those countries professional developers or the uptick that have historically attracted the most in talented executives moving into tech investment: Turkey, Spain and Russia’s from other sectors. The report shows pool of developers have been deepening dense areas of talent coalescing around the most rapidly. All this will lead to a universities, anchor tech companies, massive potential upside for the wider and innovation hubs, leading in turn European economy as capital eventually to increases in investment, and flows into these new communities. growth in anchor tech companies. Europe is a research This year’s report also shows science and tech converge further, powerhouse that we are only scratching the there is huge scope to strengthen surface of the potential of Europe’s the link between European STEM research community, and not fully and startups. Europe has a research harnessing our own cutting-edge community larger than U.S. and China science. An analysis by CERN, one - we need to make sure this becomes of this community’s most influential the hugely powerful differentiator it members, demonstrates that as should be. & 9 In Partnership with www.thestateofeuropeantech.com

Photo: Kai Kuusisto 01.2 Executive Summary Let Europe be Europe A word to the naysayers: irrespective horizon periods. We believe this is a of the huge strides European tech has bellwether for a changing landscape. taken in the last few years, our tech Let’s not forget that 95% of the value sector will continue to be compared to creation of today’s US tech sector the performance of Silicon Valley. is from companies founded 15 years ago or more, and that the early tech And as the ecosystem accelerates, successes of ARM, Amadeus and Ocado we are increasingly cool with that! For were not venture-backed. Given that a long time, US VC has outperformed 21 European companies have been European VC in terms of portfolio founded and scaled to billion-dollar- returns, but that is increasingly untrue. plus valuations with the support of The latest historical performance data venture capital since 2010 alone, we are shows that European venture has been confident that Europe has caught up on outperforming US venture in recent North America’s head start. A big diversity and This year’s report also unearths several way behind where it needs to be. This inclusion problem figures which are extraordinary for stark reminder of our shortcomings is all the wrong reasons. The State of timely, and it’s important that we draw European Tech has always highlighted the right conclusions. the challenges Europe faces, but this year, we’ve identified a particularly Reporting this data is a first step in the serious problem: 46% of women told us right direction. Only by measuring the they have experienced discrimination problem can you start to solve it. To in the European tech industry. As our take on this challenge, we’ve worked chapter on diversity and inclusion with Diversity VC to launch an industry- shows, this statistic is the tip of the first resource: a practical and hands-on iceberg. While most investment figures guide for technology entrepreneurs in this report spell good news, the fact that will help them build companies that all-male founding teams received that have diversity and inclusion at around 93% of the capital and 85% of their core. It’s not a complete solution, the deals speaks for itself. Women and but we hope it’s a contribution that minorities are underrepresented at founders will find useful nonetheless. every level of the ecosystem. Corporate You can find the toolkit at policy on diversity and inclusion is still www.inclusionintech.com & 10 In Partnership with www.thestateofeuropeantech.com

01.2 Executive Summary But we can still learn from As Europe catches up, it is vital that we Niklas Zennström founded a streaming the successes and failures make the most of our second mover company called Kazaa. Kazaa was a of others advantage - both in the companies we failure, but a group of Swedes led by build, and in our approach to building Daniel Ek were paying close attention, them. European tech has escaped most and learned important lessons. of the backlash which has engulfed Learning from the mistakes of the big US technology companies and previous generation led to the creation characterised media coverage this of Spotify. Spotify has unequivocally last year. For this to continue, we’ll proven that today, European founders need to learn from past failures, and can raise the right capital, hire the best act ethically from day one. European talent, go the full distance, stave off technologists have already shown we ferocious competition and win on a can learn from the lessons of the past global stage. Spotify will now become in terms of business strategy. Before the spur and inspiration for other he founded Skype, Atomico’s CEO European breakout successes. Another broken record: This report has consistently highlighted offices and high net worth individuals Bridge the funding gap, the need to close the institutional have spent the last five years investing democratise European investor funding gap. Over the last five $5 billion in venture capital. If pension years, pension funds have invested just funds can rebalance their allocations tech’s success $1.7 billion in European VC, but have away from legacy industries towards invested 45x more in European buyout gamechanging technology instead, they funds, equivalent to more than $75B can democratise access to the spoils of over that period. Meanwhile, family European tech. An ecosystem irreversibly The European ecosystem has levelled the seeds of success this year were changed up. Today, as Spotify has shown us, planted a decade ago. That is why we European founders have access to should expect even greater success sophisticated investors, can hire the in the years to come. As long as we all best talent, go the full distance, stave continue to learn from both success off ferocious competition, go public and failure, will European tech reach and win on the global stage. Europe is the heights we know it to be absolutely now reaping the early rewards from the capable of. transformation of its tech ecosystem- Thank you to all our partners I’d like to dedicate my final words to them this report would not have been thank all of our data partners and most possible. importantly, Slush and Orrick. Without Tom Wehmeier Partner, Atomico & 11 In Partnership with www.thestateofeuropeantech.com

01.2 Executive Summary A Word from Slush Scrolling through the figures of The problem of diversity that Europe, the State of European Tech 2018 like the rest of the world, is having can report, it is easy to feel a nice sense be turned into an opportunity. By lifting of confirmation to what we’ve been up a more diverse set of role models will seeing and hearing throughout the affect the decisions of to-be founders. year in countless conversations with Emphasizing the role that humanities entrepreneurs: European tech is and arts, in addition to STEM, will graduating. Record numbers of both play in the future development of raised funding and exits speak louder technological solutions should be done than words, and they have interesting upfront if we want to gain an edge from consequences. the magnificent creative industry in Europe. As the amount of successful scale-up companies continues to rise on the One more additional thing that continent, so does the need for ever Europe really stands to benefit from greater amounts of top tier talent. is our strong academia. Nailing the combination of bleeding-edge, As the access to venture capital is hardcore research and practical, world- no longer the biggest bottleneck for class company building should be one European tech, our eyes are turning of our main targets for the upcoming towards cultivating the next generation years. of world-class talent for the current and future tech companies that are set out Almost all businesses that want to to solve some of the biggest challenges make it big in Europe have to think on the planet. international or global from the beginning. This is a mindset that For this we need a diverse talent pool to we should utilise also in the next be part of building the European tech generation of education for future companies. entrepreneurs. Stay tuned! Andreas Saari CEO, Slush & 12 In Partnership with www.thestateofeuropeantech.com

01.2 Executive Summary A Word from Orrick There has been a nearly five-fold innovation – as companies in every growth in European venture capital sector recognize the need to adapt to investment in the last five years. the tech transformation. There are five times the number of unicorns – with at least 17 new billion Altogether these trends point to a dollar plus companies added in the robust future for European tech. past year alone. The European tech sector has produced nearly four times However, the Report’s purpose is the job growth rate of the general to shine a light on all of “the issues economy, resulting in a talent pool of that matter” in the European tech programmers and STEM researchers ecosystem. We applaud Atomico for surpassing that of the United States. highlighting some deeply troubling ones: 46% of women in tech report Tech and innovation is no longer on the experiencing discrimination and only sidelines in Europe – it is driving the 7% of capital went to female founded economy. That’s the clear take-away companies or mixed gender founding from this year’s State of European Tech teams. That’s not right – and it’s not Report. sustainable if Europe truly wants to innovate. We also applaud Atomico’s At Orrick, we see it in our practice collaboration with Diversity VC to every day as we have helped founders, provide guidance to founder teams on investors and corporate venture clients how to build a diverse and inclusive raise or deploy more than $3.7 billion culture. Awareness and education across Europe over the past year. are a key first step. Investors have an essential role to play. The good news As a global tech law firm, we’re not is that there’s an incredible amount surprised to see investors from around of unfunded talent out there. Let’s all the world chasing strong returns from participate in the conversation about their European investments. While U.S. how to dramatically improve next year’s investment returned to 2016 levels after results. another record-breaking performance last year, investment from Asia We’re grateful to Atomico for the continued to grow. opportunity once again to help provide this data to the tech community in We’re encouraged by corporate venture Europe and globally. We hope you investment growth, particularly from find it as useful as we do in seeing the outside traditional tech industries. patterns and opportunities in this rich This affirms the strong demand for and promising ecosystem. Chris Grew Partner, Technology Companies Group Orrick 13 In Partnership with & www.thestateofeuropeantech.com

Tech & the European Economy Continuing to drive While Europe’s overall economy and traditional industries are stuck in the doldrums, booming tech represents the best hope for growth. Tech firms are powering job significant growth creation and ambitious founders are tackling some of the world’s biggest problems. All of that has members of the ecosystem optimistic - except in the U.K. where sentiment is not at the same levels as elsewhere. ARTICLES 02.1 Powering Workforce Growth 02.2 Tech: The Motor for GDP Growth 02.3 Heritage as opportunity 02.4 Smiles (almost) all round in European techv 02.5 Tech for Good: A European Opportunity? In Partnership with & www.thestateofeuropeantech.com

Powering Workforce Growth The European tech industry continues to power remarkable workforce growth, leading to a signiïcant acceleration Employment growth in European economy as a whole is stalling. The European in the rate of change in 2018. Europe's tech workforce grew 4% in 2018, up materially from 2.6% in 2017. More Commission’s latest forecast for 2018 employment growth implies a drop to just importantly, Europe's tech workforce is now growing at 3.6x the rate of employment growth in the European 1.1% year-on-year growth, a material decline from the level seen in 2017. economy as a whole EU employment growth, 2016-2018 1.5 1.5% LEGEND 1.3% EU employment YoY growth 1.1% ) % ( 1.0 h wt o r g Y o Y 0.5 0.0 2016 2017 2018 Note: Source: European Commission. European Commission It is worth comparing EU employment growth rate TECH WORKER POPULATION GROWTH to the remarkable worker population growth that powers the European tech industry. Europe’s tech worker population grew % 4% in 2018. 4 The French tech worker population is growing The French tech worker population is growing signiïcantly significantly faster than in Germany and the UK. faster than in Germany and the UK Tech worker population growth in France, Germany and the UK in 2018 France 7.3% LEGEND YoY tech worker population growth (%) in 2018 Germany 4.0% United Kingdom 3.3% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 YoY growth (%) Note: Based on an analysis of sample pool of LinkedIn members and the difference between those in 2018 working in the Tech Source: Sector in each country from this sample pool. 15 In Partnership with & www.thestateofeuropeantech.com

02.1 Powering Workforce Growth France’s tech worker population grew at the fastest WORKFORCE GROWTH rate of any European country in 2018 French tech workforce growth in 2018, % based on a comparison of the size of 7.3 the workforce in October 2018 versus October 2017. The rate of tech workforce growth across Europe The rate of tech workforce growth across Europe is not equally distributed with workforces in some countries is not equally distributed, with workforces in some growing much faster than others. France, for example, hit 7.3% growth in 2018, making it comfortably the fastest- countries growing much faster than others. growing tech workforce in Europe YoY growth in the worker population of the Finland 3.9% Top 20 largest tech workforces by country in Italy 3.5% 2018 Sweden 3.4% DATASET: 11-20 United Kingdom 3.3% LEGEND Denmark 3.3% 2018 Romania 3.1% Netherlands 3.0% Bulgaria 2.8% Czech Republic 1.9% Hungary 1.1% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 YoY growth (%) Note: Based on an analysis of sample pool of LinkedIn members and the difference between those in 2018 working in the Tech Source: Sector in each country from this sample pool and those in 2017. & 16 In Partnership with www.thestateofeuropeantech.com Photo:Jussi Ratilainen

Tech: The Motor for GDP Growth There is an ever-widening gap in the indexed growth rates of the tech (software) and non- The implication of this sustained difference in growth rates is starkly visible when looking at indexed growth of the tech parts of the European economy. Over the past 15 years, tech (software) has grown to tech (software) and non-tech parts of the European economy. Over the past 15 years, tech (software) has grown to hit 194% of its relative value in 2002. hit 194% of its relative value in Chain linked volumes of tech and non-tech 200 194 GVA (indexed 2002-2016) 188 ) 6 1 173 0 2 175 LEGEND - 2 163 0 0 Tech 2 155 d e x 146 Non-tech e d 150 141 141 n i ( 136 136 s 133 130 129 133 me 126 128 u 125 l 124 123 o 121 v 125 118 d e 112 k n i 107 l n i 100 100 a h C 100 75 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: 2016 is the most recent year for which full NACE breakdowns of Source: Eurostat European GVA are available. Tech refers to the European Eurostat software industry, or NACE J62-63. Non-tech is everything else. Europe’s software industry growth dramatically ECONOMIC GROWTH outpaces the rest of the European economy Latest figures show Europe’s software industry Gross Value Added 5x is growing 5x faster than the rest of the European economy Eurostat While the long-term historical trend in relative growth rates has been impressive, more While the long-term historical trend in relative growth rates has been impressive, more recently the speed of recently the speed of growth between tech and non-tech has diverged even further. Today, growth between tech and non-tech has diverged even further. Today, the European tech (software) industry is now the European tech (software) industry is now growing 5x faster than the rest of the economy growing 5x faster than the rest of the economy % Growth YoY of tech and non-tech contribution to European economy by GVA 3.1% (2016 versus 2015) 3.0 LEGEND YoY growth (%) ) % ( 2.0 h wt o r g Y o Y 1.0 0.6% 0.0 Tech* Non-tech Note: *Tech refers to the European software industry, or NACE J62- Source: Eurostat 63 Eurostat & 17 In Partnership with www.thestateofeuropeantech.com

02.2 Tech: The Motor for GDP Growth Over the last 10 years, many of these traditional industries upon which the European economy is so dependent have either stagnated or declined, undermining the overall Over the last 10 years, many of these traditional industries upon which the European economy is so dependent rate of growth in European Gross Value Added have either stagnated or declined, undermining the overall rate of growth in European Gross Value Added Chain linked volumes of tech and selected 146 142 traditional industries GVA (indexed 2007- 140 ) 2016) 6 131 1 0 2 - 7 123 0 LEGEND 0 2 118 118 117 d 120 e Tech x 112 111 e 110 109 110 d 107 n i ( Real estate activities 103 103 103 103 103 s 100 102 100 Wholesale and retail trade, transport, accommodation me 98 u l 100 94 95 94 95 and food service activities o v 90 90 d 88 89 89 e 87 Industry k 85 85 n i 83 l n Financial and insurance activities i a h 80 Construction C Telecommunications 60 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: 2016 is the most recent year for which full NACE breakdowns of Source: Eurostat European GVA are available. Tech refers to the European Eurostat software industry, or NACE J62-63. Yet the European economy today remains heavily dependent on traditional Yet the European economy today remains heavily dependent on traditional industries, such as industrial industries, such as industrial manufacturing, construction, retail and transportation manufacturing, construction, retail and transportation Share of total gross value added in Europe Industry (except construction) 21% 19% Wholesale and retail trade, transport, 19% LEGEND accomodation and food service activities % of total GVA (2002) Public administration, defence, educa… 19% % of total GVA (2016) Real estate activities 11% Professional, scientific and technical … 11% Construction 6% Financial and insurance activities 5% Arts, entertainment and recreation; ot… 4% Tech 3% Agriculture, forestry and fishing 2% Telecommunications 2% Publishing, motion picture, video, tele… 1% Publishing activities 1% Motion picture, video, television progr… 1% 0 5 10 15 20 % of total gross value added Note: Europe is based on EU-28. 2016 is the most recent year for Source: Eurostat which full NACE breakdowns of European GVA are available. Eurostat Tech refers to the European software industry, or NACE J62-63 & 18 In Partnership with www.thestateofeuropeantech.com

Photo: Kai Kuusisto 02.2 Tech: The Motor for GDP Growth The European tech (software) industry contributes around $400 billion to the European economy today, though it remains just a fraction of total European The European tech (software) industry contributes around $400 billion to the European economy today, though it Gross Value Added, accounting for just 2.5% of total European GVA remains just a fraction of total European Gross Value Added, accounting for just 2.5% of total European GVA Tech industry contribution to the European 400.0 economy by total Gross Value Added ($B) and $376.0B % of total (2002-2016) 2.4 $335.0B 300.0 $300.0B ) T LEGEND B $2.1B e $ $264.0B $263.0B c ( 2.2 h Tech d a e $2.0B s d $234.0B d % A Tech as % of total GVA $208.0B o e f u $194.0B t l 200.0 $1.9B o a t V a 2.0 l s s $1.9B G o V r A G $1.8B $1.8B $1.8B 100.0 1.8 0.0 1.6 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: 2016 is the most recent year for which full NACE breakdowns of Source: Eurostat European GVA are available. Tech refers to the European Eurostat software industry, or NACE J62-63 At ~$400 bllion, Europe’s software industry ECONOMIC GROWTH is still just a fraction of overall European Gross Value Added Latest data shows Europe’s software %industry accounts for 2.5% of total 2.5 Gross Value Added in Europe, up from 1.9% 10 years ago Eurostat & 19 In Partnership with www.thestateofeuropeantech.com

Heritage as Opportunity There is huge equity value locked up in TRADITIONAL INDUSTRY traditional industry in Europe Total value by market cap of European $8.8T companies from traditional industries in the S&P Global 1,200 S&P Global Market Intelligence As technology becomes an increasingly more transformative force across all parts of the economy, there is a huge opportunity to digitise and reignite Europe’s traditional As technology becomes an increasingly more transformative force across all parts of the economy, there is a huge industries with trillions of dollars of value in play. The combined market capitalisation opportunity to digitise and reignite Europe's traditional industries with trillions of dollars of value in play. The of European constituents of the S&P Global 1,200 equates to $8.8 trillion in just the top combined market capitalisation of European constituents of the S&P Global 1,200 equates to $8.8 trillion in just 10 most valuable traditional industries. the top 10 most valuable traditional industries. Total market cap of European public Energy $1,270B companies in S&P Global 1,200 by industry Financial Services $1,231B group ($B) Bio & pharma $1,150B LEGEND Materials $924B Total Market Cap ($B) Food & Drink $893B CPG $777B Retail $734B Industry $648B Insurance $608B Mobility $523B 0 200 400 600 800 1,000 1,200 1,400 Total market cap ($B) Note: Based on an analysis of the industry breakdown by market cap, Source: S&P Global Market revenue, market cap/revenue multiple and age of the 328 Intelligence constituents of the S&P Global 1,200 Index from Europe. Data as of October 2018. S&P Global Market Intelligence Those same 300 or so European companies control more than $6.9 trillion in annual Those same 300 or so European companies control more than $6.9 trillion in annual revenue and represent a giant revenue and represent a giant potential opportunity for any European tech companies potential opportunity for any European tech companies that seek to take on those incumbent giants in their that seek to take on those incumbent giants in their traditional industries traditional industries. Total revenue of European public companies Energy $1,642B in S&P Global 1,200 by industry group ($B) Mobility $1,012B Materials $906B LEGEND Total revenue ($B) Insurance $843B CPG $589B Financial Services $537B Food & Drink $422B Industry $375B Bio & Pharma $344B Retail $269B 0 250 500 750 1,000 1,250 1,500 1,750 Aggregate LTM revenue ($B) Note: Based on an analysis of the industry breakdown by market cap, Source: S&P Global Market S&P Global Market Intelligence revenue, market cap/revenue multiple and age of the 328 Intelligence constituents of the S&P Global 1,200 Index from Europe. Data as of October 2018. 20 In Partnership with & www.thestateofeuropeantech.com

02.3 Heritage as Opportunity Europe’s most valuable public companies - 95% TRADITIONAL INDUSTRY of which come from traditional industries - have demonstrated remarkable endurance until now Median age in years of the 348 European companies that are constituents of the 102 S&P Global 1,200 index. This compares to 64 for North American companies. Do the old have the speed it takes to respond to tech-enabled change? S&P Global Market Intelligence Interestingly, the median age of the incumbent companies in these industries is well over 100 years. In the battle of incumbent versus startup, Interestingly, the median age of the incumbent companies in these industries is well over 100 years in most cases. it is not the young who beats the old or the large who beats the small. It is In the battle of incumbent versus startup, it is not the young that beats the old or the large that beats the small. It those who are fast that are more likely to succeed against the slow. is those that are fast that are more likely to succeed against the slow. Median age in years of European public Insurance 155 companies in S&P Global 1,200 by industry Financial Services 154 group Industry 4.0 135 LEGEND Food & Drink 130 Median Age of Companies (years) CPG 125 Materials 113 Mobility 102 Biology 2.0 92 Retail 66 Energy 62 0 25 50 75 100 125 150 175 Median age (years) Note: Based on an analysis of the industry breakdown by market cap, Source: S&P Global Market S&P Global Market Intelligence revenue, market cap/revenue multiple and age of the 328 Intelligence constituents of the S&P Global 1,200 Index from Europe. Data as of October 2018. & 21 In Partnership with www.thestateofeuropeantech.com Photo: Joonas Linkola

Smiles (almost) all round in European tech Europe’s tech ecosystem remains characterised by a strong level of growing optimism Europe's tech ecosystem remains characterised by a strong level of growing optimism about the future. This about the future. This increase in optimism is most evident in Eastern and Southern Europe increase in optimism is most evident in Eastern and Southern Europe, where real momentum in building the local where there is real momentum. The UK, perhaps unsurprisingly, registered the largest tech ecosystems is evident. The UK, perhaps unsurprisingly, registered the largest downturn in optimism by a wide downturn in optimism by a wide margin. margin. Are you more or less optimistic about the Central Europe & Baltics future of European technology today than you were 12 months ago? DACH LEGEND Eastern Europe More About the same France & Benelux Less Nordics Southern Europe UK & Ireland 0 20 40 60 80 100 % of respondents Source: There continues to be a very strong sense of EUROPEAN TECH OPTIMISM optimism across the European tech ecosystem of the European tech community is either more optimistic about the future of European tech, or 90 maintain the same levels of optimism compared to 12 months ago. This remains the same as 2017, when 91% of respondents were more optimistic or the same. S&P Global Market Intelligence 22 In Partnership with & www.thestateofeuropeantech.com

02.4 Smiles (almost) all round in European tech 2018 has seen some strong wins for the European tech ecosystem and we are resoundingly optimistic and excited by the opportunity set we see emerging. “ 2018 has seen some strong wins for the European tech ecosystem and we are resoundingly optimistic and excited by the opportunity set we see emerging. There were several large IPOs in the region signalling that the sector is maturing while still generating opportunities to partner with emerging, disruptive companies that combine market leadership, multiplying network effects and data-driven approaches to create transformative businesses. Enhanced access to early growth capital is also a hugely positive market driver, enabling more Munish Varma companies to scale rapidly while still prioritising innovation.” SoftBank Vision Fund The factors that are driving optimism around the future of European tech are many and The factors that are driving optimism around the future of European tech are many and varied. But when asked to varied. But when asked to state the most important grounds to be optimistic, respondents state the most important grounds to be optimistic, respondents gave a clear number one reason: the people that gave a clear number one reason: the people that make up the tech ecosystem make up the tech ecosystem What, if anything, makes you feel optimistic People 27% about the state of the European tech ecosystem? Growth & Momentum 25% Startup Ecosystem 11% LEGEND % of respondents European Collaboration & Diversity 11% Capital Availability 9% Tech Innovation 7% Regulation & Political Climate 6% Values & Ethics 5% 0 5 10 15 20 25 30 % of respondents Note: Source: Based on respondents that gave explicit responses only. I’m definitely more optimistic than 12 months ago. I think we’re seeing a marked shift in ambition in Europe, and crucially, that’s being matched at an investor level. “ I’m definitely more optimistic than 12 months ago. I think we’re seeing a marked shift in ambition in Europe, and crucially, that’s being matched at an investor level. What’s more, the increased cost of living and hiring competition seem to have taken the blinkers off a lot of Valley-bound entrepreneurs. This can only benefit Europe.” Rosie Dallas Fat Llama 23 In Partnership with & www.thestateofeuropeantech.com

Tech for Good: A European Opportunity? There is strong agreement across all survey respondents, including within the public There is strong agreement across all stakeholders, including within the public sector, that European tech sector, that European tech entrepreneurs will have a bigger impact than European entrepreneurs are changemakers for a better world and that they will have a bigger impact on helping to important governments when it comes to solving important global challenges. global problems than Europe's governments. European technology entrepreneurs will do more to address societal challenges Founder or startup/scale-up employee LEGEND Agree Investor Neither agree nor disagree Disagree Policymaker or public sector employee Other 0 20 40 60 80 100 % of respondents Source: Area of Focus City Country Round Selected Investors Selected early-stage European tech Date companies with a strong focus on solving a Cambridge Glycoscience Biology 2.0 Cambridge UK 3Q18 Y Combinator major global or societal challenge that have Cytera CellWorks Biology 2.0 London UK 3Q18 Y Combinator raised in the past year from top investors Lifebit Biology 2.0 London UK 3Q18 Connect Ventures, Pentech Ventures, Tiny VC GTN Limited Biology 2.0 London UK 2Q18 Octopus Ventures, Pentech Ventures Quit Genius Digital Health & London UK 2Q18 Force Over Mass Capital, Village Global, Y Combinator Wellness TPH.co Future of Retail Stockholm Sweden 2Q18 Propel Capital, STING, Seedcamp, The Nordic Web Ventures, Wave Ventures Veratrak Biology 2.0 Oxford UK 2Q18 Seedcamp Carbo Culture Future of Energy Helsinki Finland 1Q18 Wave Ventures, Lifeline Ventures, Starlight Ventures Disior Digital Health & Helsinki Finland 1Q18 Maki.vc Wellness KisanHub Future of Food & Cambridge UK 1Q18 IQ Capital Partners, Notion Capital Drink Sixfold Bioscience Biology 2.0 London UK 1Q18 Y Combinator, LombardStreet.io Ventures ThinkSono Digital Health & London UK 1Q18 AI Seed, WestTech Ventures Wellness WeFarm Future of Food & London UK 1Q18 Localglobe, True Ventures, ADV, Norrsken Foundation Drink Fat Lama Future of Retail London UK 4Q17 Blossom Capital, Greylock Partners, Atomico, Y Combinator Hygglo Future of Retail Stockholm Sweden 4Q17 Norrsken Foundation, Schibsted Growth (SWE) LabGenius Biology 2.0 London UK 4Q17 Acequia Capital, Kindred Capital, System.One Source: 24 In Partnership with & www.thestateofeuropeantech.com

02.5 Tech for Good:A European Opportunity? There is a strong level of conviction in the power of ENTREPRENEURS AS CHANGEMAKERS European tech entrepreneurs to be changemakers for a better world % of public sector and policymaker % respondents who agree that European 64 technology entrepreneurs will do more to address major societal challenges than European governments There is clear evidence that those working in European technology pay close attention to the social and ethical impact of the companies for There is clear evidence that those working in European technology pay close attention to the social and ethical whom they work - this is reflective of a global trend. impact of the companies for whom they work - this is reðective of a global trend. 100 The potential social and ethical impact of a company plays a signiïcant role in my decision to invest in or work for that 75 company s t n e LEGEND d n po50 Female, Agree s e r f Male, Agree o Female, Neither agree nor disagree % Male, Neither agree nor disagree 25 Female, Disagree Male, Disagree 0 Female Male Female Male Female Male Venture capitalist Angel investor Other investor Source: Compared to US, we seem to be a bit further ahead when it comes to sustainability. Especially when it comes to food waste and climate consciousness, both among consumers and within the food industry... “ Compared to US, we seem to be a bit further ahead when it comes to sustainability. Especially when it comes to food waste and climate consciousness, both among consumers and within the food industry...Compare this with President Trump’s decision to withdraw from the Paris agreement a year ago...One thing that has influenced us at Karma is that we’ve had mission driven, competent and successful entrepreneurs, such as Niklas Adalberth founding Norrsken Foundation, drive the agenda of using entrepreneurship to Elsa Bernadotte build technologies that can solve social challenges on a global scale.” Karma The social impact of a company plays an important SOCIAL & ETHICAL IMPACT OF INVESTMENT role in how VCs invest, especially female VCs % of European female VCs who agree that % the potential social and ethical impact 83 of a company plays a significant role in their decision to invest in a company. This compares to only 61% of male VCs. & 25 In Partnership with www.thestateofeuropeantech.com

Diversity & Inclusion Perception and Reality While the vast majority in Europe’s tech ecosystem agrees diversity is a good thing, the community has a major diversity problem. Women and minorities are underrepresented at every level of the ecosystem. Corporate policy on diversity and inclusion still lags. ARTICLES 03.1 We’ve Got a Problem 03.2 We’re All Part of the Problem 03.3 Accelerating Change In Partnership with & www.thestateofeuropeantech.com

We’ve Got a Problem No single question in the survey received a stronger level of agreement than this one. When asked if having a diverse team is a benefit to company performance, almost 90% of No single question in the survey received a stronger level of agreement than this one. When asked if having a respondents agree. If the European tech ecosystem wants to achieve its full potential, then diverse team is a bene t to company performance, almost 90% of respondents agree. If the European tech diversity and inclusion has to be at its core. ecosystem wants to achieve its full potential, then diversity and inclusion has to be at its core. Having a diverse team is a bene t to company performance Female LEGEND Agree Neither agree nor disagree Disagree Male 0 10 20 30 40 50 60 70 80 90 100 % of respondents Source: The European tech community is dominated by men. Women account for just 22% of The European tech community is dominated by men. Women account for just 22% of participants in tech-related participants in tech-related Meetup events in the region. Notably, the industry is failing to Meetup events in the region. Notably, the industry is failing to make any meaningful progress, having seen an make any meaningful progress, having seen an increase of just a single percentage point in increase of just a single percentage point in the level of female participation at European tech community events the level of female participation at European tech community events in the past two years. in the past two years. 25 Share of female attendees in tech-related Meetup events in Europe 22% 21% 21% 20 LEGEND Total in Europe (%) s e e d15 n e t t a e l ma e f f10 o % 5 0 2016 2017 2018 Note: Source: % of the reported gender of attendees only. Diversity is one of our core values. It’s vital to our business and has been embedded from the beginning. Diverse teams are better for business, and better for creativity. Pip Jamieson The Dots & 27 In Partnership with www.thestateofeuropeantech.com

03.1 We’ve Got a Problem The gender imbalance of the tech communities within different countries follows the European-wide picture, though there are leaders and laggards. The top 10 countries for female participation at tech-related Meetup events across the region is dominated by countries from Eastern Europe, though it should be noted that female participation in the Women are not equally present in tech communities in any number one country, Albania, only reaches 33%. European country Share of female attendees in tech-related Albania 33% Meetup events by country Lithuania 28% DATASET: TOP 10 COUNTRIES Romania 28% LEGEND Bulgaria 26% 2018 Latvia 26% Serbia 26% Bosnia and Herzegovina 25% Ukraine 25% Portugal 25% Sweden 25% 0 5 10 15 20 25 30 35 % of female attendees Note: % of the reported gender of attendees only. Only countries with 100+ reported female attendees included. Source: We found only 1 female CTO out of 175 CTOs that work at VC-backed We found only 1 female CTO out of 175 CTOs that work at VC-backed European tech companies that raised a Series A or Series B in the past year. European tech companies that raised a Series A or Series B in the past year Gender composition by job title for Chief Executive Officer 6% 94% Executive-level positions of selected European Series A and B venture-backed Chief Technology Officer 1% 99% companies Chief Operating Officer 11% 89% LEGEND Chief Financial Officer 20% 80% Female Male Chief Marketing Officer 21% 79% Chief Revenue Officer (or similar) 9% 91% Chief Product Officer 9% 91% CxO Other 19% 81% 0 20 40 60 80 100 % of Executives Note: Based on a sample of executives in CxO positions at 270 European VC-backed tech companies that raised a Series A or Source: B round between 1 October 2017 and 30 September 2018. The 'class of 2018' of VC-backed European tech companies The ‘class of 2018’ of VC-backed European tech companies shows no shows no improvement compared to similar analysis from improvement compared to similar analysis from 2017 2017. Share of women by position of senior leaders and founders of selected European Series A 9% 9% and B venture-backed companies (2018 versus 2017) LEGEND 6% 6% 6% 2017 5% 2018 2% 1% % of CEOs % of CTOs % of Founders % of all CxO leaders Note: Based on a sample of Founders and executives in CxO positions at 270 European VC-backed tech companies that Source: raised a Series A or B round between 1 October 2017 and 30 September 2018. 2017 data is based on a similar sample. & 28 In Partnership with www.thestateofeuropeantech.com

03.1 We’ve Got a Problem Europe is not necessarily tangibly better or worse than other tech hubs – however, given that Europe is such a diverse range of geographies and people this should be a key strength. “ Lack of diversity is driven by a combination of factors that affect the pipeline of talent in STEM subjects, the availability of diverse role models, access to expertise and capital, social mobility and a range of other issues. Europe is not necessarily tangibly better or worse than other tech hubs – however, given that Europe is such a diverse range of geographies and people this should be a key strength. I am encouraged to see the subject of diversity and inclusion appear Check Warner on the agenda of more tech companies and more VCs over the last Diversity VC 12 months and to see so many funds participating in initiatives led by Diversity VC and others. I hope that this translates to sustained and impactful change – the first step though is understanding the situation as it is today, which is why Atomico’s commitment to this subject is so encouraging.” The European tech industry's lack of diversity could not be more stark when it comes to how funding is allocated in The European tech industry’s lack of diversity could not be more stark when it The European tech industry's lack of diversity could not be more stark when it comes to how funding is allocated in the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and comes to how funding is allocated in the region. It is arresting to see that all-male the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last year account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last year founding teams receive 93% of the capital invested and account for 85% of deals. It is even more stark to see that these shares have not changed in the last years. Capital Raised Capital Raised Capital raised and # of deals by founding DATASET: CAPITAL RAISED Capital raised and # of deals by founding 100 95% 94% team gender (%) 100 92% 93% 93% 93% team gender (%) ) 92% 95% 94% 93% 93% 93% % ( ) s LEGEND l % 75 a ( e s l LEGEND d 75 a Male f e o d # Male f / o Female ) # % 50 / ( Female Mixed ) d % e 50 ( s Mixed i d a e r s l i a a t r l pi 25 a a t The European tech industry's lack of diversity could not be more stark when it comes to how funding is allocated in C pi 25 a C 6% the region. It is arresting to see that male founders and founding teams receive 95% of the capital invested and 2% 4% 2% 4% 3% 4% 2% 5% 2% 5% 6% 1% 4% 4% 4% 5% 5% 0 3% account for 90% of deals,. It is even more stark to see that the these shares have not changed in the last years. 2% 1% 2% 2% 2% 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Source: Source: DATASET: # OF DEALS # of deals 85% 86% 86% 85% 85% 85% ) 75 % ( s l a e d f o 50 # / ) % ( d e s i a 25 r l a t 10% 10% pi 9% 9% 9% 9% a 6% C 5% 5% 5% 5% 5% 0 2013 2014 2015 2016 2017 2018 Source: & 29 In Partnership with www.thestateofeuropeantech.com

03.1 We’ve Got a Problem There is shocking imbalance in the flow of capital FUNDING DIVERSITY to male versus female founders of all funds raised by European VC-backed % companies in 2018 went to all-male 93 founding teams. The importance of diversity and inclusion has unquestionably gained an elevated prominence in the news narrative around the tech industry in Europe. But the The importance of diversity and inclusion has unquestionably gained an elevated prominence in the news narrative level of discussion around this topic pales into insignificance relative to other around the tech industry in Europe. But the level of discussion around this topic pales into insigniïcance relative core tech topics. In fact, in the past year, there have been more articles devoted to other core tech topics. In fact, in the past year, there have been more articles devoted to discussion of crypto to discussion of crypto than to diversity and inclusion in Europe. We have an than to diversity and inclusion in Europe. We have an opportunity to shine a much brighter spotlight on the opportunity to shine a much brighter spotlight on the problem. problem. Share of total tech news narrative by topic 43.6% area and region Fundraising 34.0% LEGEND 11.8% European news sources Exits (IPOs & M&A) 11.5% US news sources 11.9% Blockchain 8.1% 19.9% Artificial Intelligence 16.7% 10.6% Diversity & Inclusion 7.4% Note: Based on ~3,000 stories across 843 European news sources (primarily UK focused) and ~2,700 stories across 1,103 US news Source: sources from Septemeber 2017 to September 2018. & 30 In Partnership with www.thestateofeuropeantech.com Photo: Petri Anttila

03.1 We’ve Got a Problem Each node represents an article. Links connect articles sharing similar language. Clusters form when many articles share strong similarity, revealing topics. Blockchain: 11.91% Fundraising: 43.58% Diversity, Discrimination, Harassment, Pay Equity, Women: 10.62% Diversity: 3.8% Discrimination: 1.2% Harassment: 1.3% Pay Equity: 0.3% Women: 7.4%% & 31 In Partnership with www.thestateofeuropeantech.com

03.1 We’ve Got a Problem The narrative around diversity and inclusion is driven by US tech companies, leaving a huge vacuum in terms of Interestingly, the reporting we do see on diversity and inclusion in tech in European news European voices stepping up into the discussion. In the absence of European voices taking part in the discussion, sources is driven by US tech companies. There’s a huge vacuum of European voices does this leave an opportunity for leadership from European tech companies to help drive the discussion in a stepping into the discussion. We all have a responsibility to do and say much more. positive way? Top 10 most discussed companies in Google 157 European news stories focused on diversity Facebook 88 and inclusion in the tech industry Twitter 45 LEGEND Microsoft 37 # of mentions Apple 35 Salesforce 30 PwC 24 IBM 23 McKinsey 21 Amazon 20 0 25 50 75 100 125 150 175 # of unique articles primarily talking about the company Note: Based on ~3,000 stories across 843 European news sources, primarily UK focused, from September 2017 to September Source: 2018. Compared to other tech-related topics that gain large amounts of coverage in European news sources, it is notable that articles related to diversity and inclusion are more likely to Compared to other tech-related topics that gain large amounts of coverage in European news sources, it is notable be led by a negative sentiment. that articles related to diversity and inclusion are more likely to be led by a negative sentiment. Share of total stories per topic by sentiment Fundraising summary LEGEND Exits (IPOs & M&A) Positive Neutral Negative Blockchain Artificial Intelligence Diversity & Inclusion 0 20 40 60 80 100 % of total stories Note: Based on ~3,000 stories across 843 European news sources (primarily UK focused) from Septemeber 2017 to September Source: 2018. & 32 In Partnership with www.thestateofeuropeantech.com

03.1 We’ve Got a Problem Photo: Samuli Pentti / Sami Valikangas Many stories on diversity and inclusion have a negative sentiment and they are more likely to drive more engagement on social media. In fact, news articles related to diversity and inclusion that are classified with a negative sentiment drive 42% of all social engagement Many stories on diversity and inclusion have a negative sentiment and they are more likely to drive more engagement on social media. In fact, news articles related to diversity and inclusion that are classiïed with a around the topic as a whole, despite those same stories accounting for just 11% of everything negative sentiment drive 42% of all social engagement around the topic as a whole, despite those same stories written on the topic. Are we sending enough positive messages to underrepresented accounting for just 11% of everything written on the topic. Are we sending enough positive messages to communities to join the tech industry, or are we in danger of further reinforcing the deeply underrepresented communities to join the tech industry, or are we in danger of further reinforcing the deeply entrenched stereotypes that have made tech so unwelcoming to these groups? entrenched stereotypes that have made tech so unwelcoming to these groups? Share of total social engagement per topic by Fundraising sentiment summary LEGEND Exits (IPOs & M&A) Positive Neutral Negative Blockchain Artificial Intelligence Diversity & Inclusion 0 20 40 60 80 100 % of total sentiment Note: Based on ~3,000 stories across 843 European news sources (primarily UK focused) from Septemeber 2017 to September Source: 2018. The entire ecosystem as a whole needs to challenge itself to make concrete commitments and change. “ Europe’s VC industry is missing out on returns because we are lacking in diversity. Startups are missing out on performance because they lack diversity. That means both diversity in our teams and the founders that we back. This means diversity not just of gender, but in terms of background, race, ethnicity, physical and cognitive differences. The entire ecosystem as a whole needs to challenge itself to make concrete commitments and change.” Niklas Zennström Atomico 33 In Partnership with & www.thestateofeuropeantech.com

We’re All Part of the Problem Despite many voices in the industry taking a negative view on the level of inclusion in Despite many voices in the industry taking a negative view on the level of inclusion in Europe's tech industry, Europe’s tech industry, people are much more likely to believe that the culture in their own people are much more likely to believe that the culture in their own companies is inclusive. In fact, more than three companies is inclusive. In fact, more than three-quarters of founders or employees at quarters of founders or employees at Europe's private tech companies perceive their company's culture to be Europe’s private tech companies perceive their company’s culture to be inclusive. inclusive. DATASET: OCCUPATION The culture at my tech company is inclusive Occupation Founder or startup/scale-up employee LEGEND Agree Investor Neither agree nor disagree Disagree Policymaker or public sector employee Other 0 20 40 60 80 100 % of respondents Source: DATASET: GENDER Gender Female Male 0 20 40 60 80 100 d % of respon ents Source: & 34 In Partnership with www.thestateofeuropeantech.com Photo: Petri Anttila

03.2 We’re All Part of the Problem People in the European tech ecosystem are split in their views on whether it is inclusive. While a majority of men think it is inclusive, only 38% of women agree. Female investors People in the European tech ecosystem are split in their views on whether it is inclusive. While a majority of men on the other hand, who are arguably able to take a broader view given the number of think it is inclusive, only 38% of women agree. Female investors on the other hand, who are arguably able to take a companies they meet, are much less positive, with 45% disagreeing that the industry is broader view given the number of companies they meet, are much less positive with 45% disgreeing that the inclusive versus 36% that agree. industry is inclusive versus 36% that agree. The European tech industry is inclusive DATASET: GENDER LEGEND Female Agree Neither agree nor disagree Male Disagree People in the European tech ecosystem are split in their views on whether it is inclusive. While a majority of men 0 20 40 60 80 100 think it is inclusive, only 38% of women agree. Female investors on the other hand, who are arguably able to take a % of respondents broader view given the number of companies they meet, are much less positive with 45% disgreeing that the industry is inclusive versus 36% that agree. DATASET: FOUNDER/INVESTOR Source: The European tech industry is inclusive Female founder or startup/scale-up DATASET: FOUNDERS/INVESTORS employee LEGEND Agree People in the European tech ecosystem are split in their views on whether it is inclusive. While a majority of men Female investor Neither agree nor disagree think it is inclusive, only 38% of women agree. Female investors on the other hand, who are arguably able to take a Disagree broader view given the number of companies they meet, are much less positive with 45% disgreeing that the Male founder or startup/scale-up industry is inclusive versus 36% that agree. employee The European tech industry is inclusive DATASET: EXPERIENCED DISCRIMINATION Male investor LEGEND Agree 0 20 40 60 80 100 % of respondents Neither agree nor disagree Disagree DATASET: EXPERIENCED DISCRIMINATION Source: Experienced discrimination Not experienced discrimination 0 20 40 60 80 100 % of respondents Source: The industry’s perception of its own inclusiveness is undermined by what survey The industry's perception of its own inclusiveness stands is undermined by what survey respondents shared about respondents shared about their individual experiences of discrimination while working their experiences with discrimination while working in European tech. 46% of women state that they have in European tech. 46% of women state that they have experienced discrimination. experienced discrimination. Have you ever experienced discrimination Central Europe & Baltics 32% while working in the European tech industry? 10% DACH 62% 22% LEGEND Eastern Europe 35% Female 26% Male 49% France & Benelux 12% Nordics 39% 18% Southern Europe 42% 14% UK & Ireland 50% 15% 0 10 20 30 40 50 60 70 % of respondents Source: & 35 In Partnership with www.thestateofeuropeantech.com

03.2 We’re All Part of the Problem Women are experiencing an alarming level of DISCRIMINATION IN THE EUROPEAN TECH INDUSTRY discrimination in the European tech industry of female respondents have % experienced some form of 46 discrimination while working in the European tech industry “ Diversity is a key challenge facing the tech ecosystem here in Europe, and it is ironic that more companies are not looking to address that Companies are not looking challenge when talent is also such a key issue for them. Companies widely and deeply enough for are not looking widely and deeply enough for diverse talent. Founders diverse talent. Founders need need to take ownership of this as they scale.” to take ownership of this as Baroness Martha Lane Fox they scale. Doteveryone Discrimination based on gender might be the most visible and quantifiable, but it is not the only form of discrimination that exists at worrying levels in the European tech ecosystem. Discrimination based on gender might be the most visible and quanti able, but it is from the only form of A meaningful number of respondents have experienced discrimination based on age and discrimination that exists at worrying levels in the European tech ecosystem. Meaningful numbers of respondents ethnicity too. The survey can’t accurately quantify the level of discrimination based on have experienced discrimination based on age and ethnicity too. The survey can't accurately quantify the level of disability or sexual orientation, but the data points to these being very prevalent here too. discrimination based on disability of sexual orientation, but the data points to these being very prevalent here too. Types of discrimination experienced by 40% Age people who have experienced any form of it 39% when working in European tech 90% Gender 32% LEGEND 6% Female Sexual orientation 12% Male 11% Ethnicity 32% 1% Disability 5% 3% Religion 11% 0 20 40 60 80 10 0 Source: % of respondents that have experienced each form of discrimination Note: The respondents' mix in self-identi ed ethnicity: 84% White, 5% Asian, 1% Black/African/Caribbean, 3% Mixed/Multiple, 2% Other, 4% Prefer not to say. The underrepresentation of people from less privileged socio-economic backgrounds or persons with disabilities seems to be missing from the conversation entirely. “ In Europe we have blindly imported Silicon Valley’s conversation on diversity and inclusion, which is often too narrow in scope, and further marginalises other underrepresented groups or leaves itself vulnerable to accusations of identity politics. For example, the underrepresentation of people from less privileged socio-economic backgrounds or persons with disabilities seems to be missing from the conversation entirely.” Steve O’Hear TechCrunch & 36 In Partnership with www.thestateofeuropeantech.com

03.2 We’re All Part of the Problem This is exemplified by the fact that people of Black, African or Caribbean ethnicity that are working in the European tech ecosystem are more This is exempliïed by the fact that people of Black, African or Caribbean ethnicity that are working in the European likely to have experienced discrimination than not. tech ecosystem are more likely to have experienced discrimination than not. Share of respondents who have experienced Asian 35% discrimination by self-deïned ethnicity LEGEND Black/African/Caribbean 55% % of respondents who have experienced discrimination Mixed/Multiple 33% Other 39% White 22% 0 10 20 30 40 50 60 % of respondents who have experienced discrimination Note: The sample size for all ethnicities is not large, but this fact Source: itself tells a story of its own. & 37 In Partnership with www.thestateofeuropeantech.com Photo: Kai Kuusisto / Petri Anttila

Accelerating Change In the wake of high profile stories of discrimination in the tech industry, the issue of diversity and inclusion has seen an increased focus. According to many respondents, In the wake of high pro le stories of discrimination in the tech industry, the issue of diversity and inclusion has this changed how many now behave. 45% of women and 36% of men agree that seen an increased focus. This has, according to respondents, changed how many now behave. 45% of women and they’ve made changes to their behaviour in the last 12 months. 36% of men agree that they've made changes to their behaviour in the last 12 months. I have changed my behaviour as a result of increased focus on diversity and inclusion LEGEND Female Agree Neither agree nor disagree Disagree Male 0 10 20 30 40 50 60 70 80 90 100 % of respondents Source: “ At Klarna, we now have over 80 nationalities, with over 55 in our Stockholm HQ alone. I am amazed that we have somehow managed Diversity of thinking and to attract such talented people from across the globe to this small experience fuels innovation city in the north with dark winters. Most of our employees have moved for their job and if the culture is not open or enabling people and drives market growth. to speak their voice and feel like they can make an impact, diversity To put it simply, diverse does not matter alone, if it’s simply not inclusive and people will not teams create better stay or thrive. To scale and stay competitive in the tech industry, we benefit massively from experiences of people from many different products and solutions types of backgrounds in building solutions. Diversity of thinking and experience fuels innovation and drives market growth. To put it simply, diverse teams create better products and solutions.” Sebastian Siemiatkowski Klarna “ By investing outside of the homogeneous networks of traditional venture capital we believe we can make great return and also drive change in society. The key to diversity is giving more entrepreneurs The key to diversity is giving the right keys to grow their companies because it will create new more entrepreneurs the employers, role models and owners.” right keys to grow their Sara Wimmercranz / Susanne Najafi companies because it will Backingminds create new employers, role models and owners. & 38 In Partnership with www.thestateofeuropeantech.com

03.3 Accelerating Change Photo: Anrietta Kuosku One way to explore the extent to which the European tech industry is tackling diversity and One way to explore the extent to which the European tech industry is tackling diversity and inclusion is by inclusion is by examining the level of adoption of different policies that can help to enable a One way to explore the extent to which the European tech industry is tackling diversity and inclusion is by examining the level of adoption of different policies that can help to enable a more diverse and inclusive company more diverse and inclusive company culture. Flexible working, for example, has a high level examining the level of adoption of different policies that can help to enable a more diverse and inclusive company culture. Flexible working, for example, has a high level of adoption among European tech companies. of adoption among European tech companies. culture. Flexible working, for example, has a high level of adoption among European tech companies. My company has a exible working policy DATASET: ALL RESPONDENTS My company has a exible working policy DATASET: ALL RESPONDENTS DATASET: ALL RESPONDENTS LEGEND All respondents 91% 9% LEGEND All respondents 91% 9% Yes Yes 0 10 20 30 40 50 60 70 80 90 100 No One way to explore the extent to which the European tech industry is tackling diversity and inclusion is by % of respondents No 0 10 20 30 40 50 60 70 80 90 100 % of respondents examining the level of adoption of different policies that can help to enable a more diverse and inclusive company culture. Flexible working, for example, has a high level of adoption among European tech companies. Source: Note: DATASET: INDUSTRY Source: Company size only includes founder and startup/scale-up Note: employees. My company has a exible working policy Company size only includes founder and startup/scale-up employees. Tech 92% 8% DATASET: INDUSTRY LEGEND Yes Non-tech No 90% 10% One way to explore the extent to which the European tech industry is tackling diversity and inclusion is by examining the level of adoption of different policies that can help to enable a more diverse and inclusive company 0 10 20 30 40 50 60 70 80 90 100 culture. Flexible working, for example, has a high level of adoption among European tech companies. % of respondents My company has a exible working policy DATASET: COMPANY SIZE BY # OF EMPLOYEES Source: DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND Yes <=10 94% 6% No Note: Company size only includes founder and startup/scale-up 11-100 92% 8% employees. 100+ 88% 12% 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Note: Company size only includes founder and startup/scale-up Source: Company size only includes founder and startup/scale-up employees. employees. & 39 In Partnership with www.thestateofeuropeantech.com

03.3 Accelerating Change Similarly, founders and employees of Europe’s private tech startups and scale-ups report high levels of adoption of dedicated parental leave policies, though there is a marked Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of difference based on company size. In fact, nearly 40% of companies that are still fewer dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% than 10 employees have yet to put in place a parental leave policy of companies that are still fewer than 10 employees have yet to put in place a parental leave policy My company has a parental leave policy DATASET: ALL RESPONDENTS LEGEND All respondents 78% 22% Yes Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of No 0 10 20 30 40 50 60 70 80 90 100 dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents DATASET: INDUSTRY My company has a parental leave policy DATASET: INDUSTRY Tech 74% 26% LEGEND Yes No Non-tech 87% 13% Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of Note: Company size only includes founder and startup/scale-up dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% employees. 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: COMPANY SIZE BY # OF EMPLOYEES DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND <=10 62% 38% Yes No 11-100 75% 25% Note: Company size only includes founder and startup/scale-up 100+ 88% 12% employees. Note: 0 10 20 30 40 50 60 70 80 90 100 Company size only includes founder and startup/scale-up % of respondents employees. Flexible working and parental leave policies are important steps towards enabling a more diverse workforce, but may not be sufficient on their own. Interestingly, a large Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of percentage of companies, especially smaller ones, have not yet implemented an overall dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% of companies that are still fewer than 10 employees have yet to put in place a parental leave policy diversity and inclusion policy. My company has a diversity & inclusion policy DATASET: ALL RESPONDENTS LEGEND All respondents 53% 47% Yes Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of No 0 10 20 30 40 50 60 70 80 90 100 dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents DATASET: INDUSTRY My company has a parental leave policy DATASET: INDUSTRY Tech 48% 52% LEGEND Yes No Non-tech 62% 38% Note: Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of Company size only includes founder and startup/scale-up dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% employees. 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: COMPANY SIZE BY # OF EMPLOYEES DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND <=10 41% 59% Yes No 11-100 42% 58% Note: Company size only includes founder and startup/scale-up 100+ 58% 42% employees. Note: Company size only includes founder and startup/scale-up 0 10 20 30 40 50 60 70 80 90 100 employees. % of respondents & 40 In Partnership with www.thestateofeuropeantech.com

03.3 Accelerating Change Even more targeted initiatives, such as specific diversity & inclusion hiring policies, are still Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of uncommon among European tech companies. It is clear here too that many companies appear dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% of companies that are still fewer than 10 employees have yet to put in place a parental leave policy to delay putting in place specific D&I policies until they scale to a large number of employees. My company has specific diversity DATASET: ALL RESPONDENTS & inclusion hiring policies LEGEND All respondents 45% 55% Yes Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of No dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: INDUSTRY DATASET: INDUSTRY Tech 43% 57% LEGEND Yes No Non-tech 51% 49% Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of Note: Company size only includes founder and startup/scale-up dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% employees. 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: COMPANY SIZE BY # OF EMPLOYEES DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND <=10 36% 64% Yes No 11-100 38% 62% Note: Company size only includes founder and startup/scale-up 100+ 52% 48% employees. Note: 0 10 20 30 40 50 60 70 80 90 100 Company size only includes founder and startup/scale-up employees. % of respondents Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of The fact that such policies remain far from widespread in the European tech industries may be dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% of companies that are still fewer than 10 employees have yet to put in place a parental leave policy compounded by the fact that few companies have appointed dedicated D&I representatives. My company has a diversity & DATASET: ALL RESPONDENTS inclusion representative LEGEND All respondents 35% 65% Yes Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of No dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: INDUSTRY DATASET: INDUSTRY Tech 32% 68% LEGEND Yes No Non-tech 44% 56% Similarly, founders and employees of Europe's private tech startups and scaleups report high levels of adoption of Note: Company size only includes founder and startup/scale-up dedicated parental leave policies, though there is a marked difference based on company size. In fact, nearly 40% employees. 0 10 20 30 40 50 60 70 80 90 100 of companies that are still fewer than 10 employees have yet to put in place a parental leave policy % of respondents My company has a parental leave policy DATASET: COMPANY SIZE BY # OF EMPLOYEES DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND <=10 26% 74% Yes No 11-100 24% 76% Note: Company size only includes founder and startup/scale-up 100+ 36% 64% employees. Note: Company size only includes founder and startup/scale-up 0 10 20 30 40 50 60 70 80 90 100 employees. % of respondents & 41 In Partnership with www.thestateofeuropeantech.com

03.3 Accelerating Change There are, of course, reasons to be optimistic about the possibility of achieving positive change in the European tech ecosystem. In the last 12 months, for example, there has been strong momentum around initiatives There are, of course, reasons to be optimistic about the possibility of achieving positive change in the European focused on improving Diversity & Inclusion in the European tech ecosystem. tech ecosystem. In the last 12 months, for example, there has been strong momentum around initiatives focused In the UK alone, Diversity VC has identified 28 separate initiatives that are all on improving Diversity & Inclusion in the European tech ecosystem. In the UK alone, Diversity VC has identiïed 28 tackling diversity and inclusion in various different ways. separate initiatives that are all tackling diversity and inclusion in various different ways. Type of Short description URL Selected Diversity & Inclusion Initiatives in Initiative the UK AllBright Angel group Angel group and co-working club focussed on female founders https://www.allbrightcollective.com/ Angel Academe Angel group Angel group focused on female founders & angels http://www.angelacademe.com/ Astia Angels Angel group Angel group focused on female founders & angels http://astia.org/astia-angels/ Rare Seed Capital Angel group Angel group focused on BAME invetsors https://www.rareseedcapital.com/ 23 Code Street Coding school Teaching women in the UK and India http://www.23codestreet.com/ One Tech Collective / Focussing on promoting entreprenrship to BAME / female http://capitalenterprise.org/one- network entrepreneurs tech/ Hustle Crew Community Community for entrepreneurial women of colour http://www.hustlecrew.co/ People of Color in Tech Community Community for entrepreneurial people of colour https://peopleofcolorintech.com/ Techish Community Podcast / community showcasing diverse tech rolemodels http://www.techishpod.com/ YSYS Community Community group of diverse entrepreneurs https://www.thisisysys.com/ Accelerate Her Company Born out of Founders Forum, consulting fast growth tech https://accelerateher.co/#/ companies Inclusive Boards Company Helping recruit more ethnically diverse boards http://www.inclusiveboards.co.uk/ Success Talks Event series Platform and event series showcasing diverse speakers http://www.success-talks.co.uk/ Jane VC Fund Fund focused on female founders https://www.janevc.com/ Merian Ventures Fund Fund focused on female founders https://www.merianventures.com/ Voulez Capital Fund Fund focused on female founders https://www.voulez-capital.com/ Backstage Capital Fund / Accelerator in the UK focussed on LGBT, people of colour and https://backstagecapital.com/ Accelerator female founders Divinc Incubator Young Enterprise focused on inner city schools http://wearedivinc.com/ Muslamic Makers Meet-up group Meet-up group for Muslims in Tech https://muslamicmakers.com/ 50/50 Pledge Network A pledge for events and conferences to be 50:50 represented http://www.5050pledge.com/ FemStreet Newsletter Start-ups / VC https://www.femstreet.com/ 30% Club Non-proït Dedicated to increasing women on boards https://30percentclub.org/ Code First: Girls Non-proït Non-proït teaching women how to code and helping them get work https://www.codeïrstgirls.org.uk/ in tech companies Color in Tech Non-proït Non-proït promoting a fairer tech industry https://www.colorintech.org/ DevelopHer Non-proït Non-proït social enterprise promoting women in technology https://developher.org/ Dot Everyone Non-proït Focused on tech companies https://doteveryone.org.uk/ Level 20 Non-proït Focused mainly on women in the Private Equity and LP community https://www.level20.org/ Fearless Futures Training group Training focussed on Social Justice http://www.fearlessfutures.org/ Note: This list is illustrative and not exhaustive. If you would like to Source: add your initiatives to this list, please contact us at [email protected] and we will update the list. Our users are at the core of everything we do, and we’ve hired a diverse team to reflect our growing customer base. Sharmadean Reid Beautystack & 42 In Partnership with www.thestateofeuropeantech.com

Europe’s Got Talent People, Competition One of European tech’s greatest strengths is its deep talent pool. A growing number of tech hubs are distributed across all corners of the region. They are connected by flows of and Movement Europeans and non-Europeans alike. Finally, a bright, new generation is emerging; European founders are returning from the Valley, and students are seizing the opportunity to found their own startups. ARTICLES 04.1 People Power 04.2 People Flows 04.3 An Ecosystem Powered by Migratory Talent 04.4 Competing for & Compensating Talent 04.5 The Next Generation In Partnership with & www.thestateofeuropeantech.com

People Power The next generation of European tech companies from hubs across the region are being The next generation of European tech companies from hubs across the built by experienced tech talent from previous generations region are being built by experienced tech talent from previous generations AMSTERDAM BARCELONA COPENHAGEN HELSINKI Adeline Lee C. Bartek Kunowski Christian Holm Jussi Mäkinen Director of Growth VP Product & Technology CTO CMO Clue Tuenti, Amazon Citrix Rovio Koen Bok Kritarth Chhabra Patrick Cournoyer Klaus Melakari CEO Global Head of Business Dev. COO CTO Facebook OnePlus, Uber FlightCar Microsoft, Nokia Tom Watson Peter Van Kersen Phillip Chambers Tiina Nieminen Director of Product VP People CEO Program Director Pinterest, Facebook Foodora, Catawiki Citrix, Qype Microsoft, Nokia LONDON MUNICH PARIS STOCKHOLM Marina Theodosiou Frank Stephenson Odile Szabo Anna Fredrixon Head of Credit Decision Science Head of Product Design VP Ecommerce & Marketing VP People Aire, Funding Circle McLaren, Ferrari Vestiaire Collective, PriceMinister Truecaller, Capgemini Meri Williams Remo Gerber Marty Ostermiller Peder Stahle CTO CCO CFO Chief Product Officer Moo, Marks & Spencer Gett, Groupon HireVue, Oracle (RightNow) iZettle, Vodafone Tom Foster-Carter Meggy Sailer Pascal Gauthier Victoria Kopylov Chief Operating Officer Global Head of Recruitment President General Counsel Curve, Oscar Tesla Criteo Spotify, Mannheimer Swartling Note: Note: This is intended as a representative selection of experienced talent that is This is intended as a representative selection of experienced talent that is gained experience in gained experience in previous European tech companies and is now helping to previous European tech companies and is now helping to build a new generation of companies. It Europe's professional developer talent pool is distributed The State of European Tech 2018 build a new generation of companies. It should not be considered complete. across all corners of the region should not be considered complete. Europe’s professional developer talent pool is Europe's professional developer talent pool is distributed Map of professional developer distribution across all corners of the region distributed across all corners of the region across Europe by country Map of professional developer distribution across Europe by country LEGEND upto 1,000,000 LEGEND 800,000 to 900,000 upto 850,400 700,000 to 800,000 680,320 to 765,360 595,280 to 680,320 600,000 to 700,000 510,240 to 595,280 500,000 to 600,000 425,200 to 510,240 400,000 to 500,000 340,160 to 425,200 255,120 to 340,160 300,000 to 400,000 170,080 to 255,120 200,000 to 300,000 85,040 to 170,080 100,000 to 200,000 upto 85,040 upto 100,000 Source: & 44 In Partnership with www.thestateofeuropeantech.com Source:

04.1 People Power Europe’s professional developer workforce PROFESSIONAL DEVELOPER TALENT POOL continues to grow strongly professional developers in Europe, which represents growth of 200,000 compared 5.7mto 5.5 million in 2017. This also compares to 4.4 million in the US, a number that stayed flat year on year. Germany, Europe’s largest country by population, is also home to the region’s largest Germany, Europe's largest country by population, is also home to the region's largest single market for professional single market for professional developer talent, followed very closely by the UK and Germany, Europe's largest country by population, is also home to the region's largest single market for professional developer talent, followed very closely by the UK and then France in a more distant third place then France in a more distant third place developer talent, followed very closely by the UK and then France in a more distant third place # of professional developers Germany 851,000 # of professional developers Germany 851,000 by country (2018 and 2017) United Kingdom 830,500 by country (2018 and 2017) United Kingdom 830,500 TOP 10 France 491,800 TOP 10 France 491,800 LEGEND Russia 407,100 LEGEND 2018 Russia 407,100 Italy 308,900 2018 2017 Italy 308,900 Spain 308,500 2017 308,500 Spain Netherlands 310,000 Note: Netherlands Poland 310,000 Where data for 2017 was not available, 254,500 Note: this is shown as blank Poland Ukraine 254,500 Where data for 2017 was not available, 172,000 this is shown as blank Ukraine Sweden 172,000 176,000 Sweden 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 176,000 Note: # of professional developers Where data for 2017 was not available, this is 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 shown as blank # of professional developers Source: Source: Europe is home to at least 30 different hubs with 50,000 or more professional Europe is home to at least 30 different hubs with 50,000 or more professional developers. It's three largest hubs developers. Its three largest hubs for developers are London, Paris and Amsterdam, Europe is home to at least 30 different hubs with 50,000 or more professional developers. It's three largest hubs for developers are London, Paris and Amsterdam, which together are home to about 15% of the region's total which together are home to about 15% of the region’s total developers. for developers are London, Paris and Amsterdam, which together are home to about 15% of the region's total developers developers Top 30 European cities by # of London 357,900 Top 30 European cities by # of London 357,900 professional developers in 2018 Paris 268,600 professional developers in 2018 Paris 268,600 TOP 10 Amsterdam 216,800 TOP 10 Amsterdam 216,800 LEGEND Cologne 165,900 LEGEND Professional developers Cologne 165,900 Professional developers Moscow 160,900 Moscow 160,900 Frankfurt am Main 120,700 Frankfurt am Main 120,700 Madrid 111,800 Madrid 111,800 Manchester 110,600 Manchester 110,600 Berlin 99,400 Berlin 99,400 Zurich 99,100 Zurich 99,100 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 # of professional developers # of professional developers Source: Source: Germany’s largest hubs for professional developers PROFESSIONAL DEVELOPER TALENT POOL might surprise you 165,900 professional developers in Cologne, Germany’s largest hub for engineering talent & 45 In Partnership with www.thestateofeuropeantech.com

People Flows The UK is the number one destination for all international movers into the European The UK is the number one destination for all international movers into the European tech ecosystem, but it is tech ecosystem, but it is closely followed now by Germany and then France. closely followed now by Germany and then France Top 10 European destinations for all United Kingdom 20.9% international movers into European tech in Germany 15.2% 2018 France 11.1% LEGEND Netherlands 7.8% Top 10 Destinations - 2018 Spain 6.7% Ireland 4.4% Switzerland 4.0% Sweden 3.9% Poland 3.0% Belgium 2.6% 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 22.5 % of all international movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. For additional context, it is worth analysing a similar dataset covering tech talent For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by movement in 2017 provided by LinkedIn for last year’s State of European Tech. LinkedIn for last year’s State of European Tech Top 10 European destinations for all United Kingdom 21.5% international movers into European tech in Germany 13.8% 2017 France 9.1% LEGEND Netherlands 7.4% Comparison to Similar Data from SOET 2017 Spain 7.3% Ireland 6.1% Switzerland 4.1% Sweden 3.3% Poland 3.9% 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 22.5 % of all international movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A ‘mover’ is deïned by LinkedIn as someone now Source: working in the tech industry that has moved country for their primary employment between 2017 & 2016. Belgium not provided in 2017. Germany and UK are now the joint top destinations MIGRANT TALENT IN EUROPEAN TECH for migratory tech talent moving within the European tech industry The same % of all-intra European %movers within the European tech 14.6 industry end in either Germany or the UK as their destination country. & 46 In Partnership with www.thestateofeuropeantech.com

04.2 People Flows Looking more closely at just migratory tech talent moving Looking more closely at just intra-European migratory tech talent moving within within Europe, Germany is now the joint #1 destination the region, Germany is now the joint #1 destination together with the UK together with the UK Top 10 European destinations for intra- United Kingdom 14.6% European movers within European tech Germany 14.6% industry in 2018 Spain 8.5% LEGEND France 8.1% Top 10 destinations in 2018 Netherlands 7.7% Switzerland 5.9% Poland 4.2% Ireland 4.0% Sweden 3.4% Italy 3.2% 0.0 2.5 5.0 7.5 10.0 12.5 15.0 % of intra-European movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. For additional context, it is worth analysing a similar dataset covering tech talent For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by movement in 2017 provided by LinkedIn for last year’s State of European Tech. LinkedIn for last year’s State of European Tech Top 10 European destinations for intra- United Kingdom 14.9% European movers within European tech Germany 13.8% industry in 2017 Spain 8.9% LEGEND France 7.0% Comparison to Similar Data from SOET 2017 Netherlands 7.0% Switzerland 5.7% Poland 5.3% Ireland 6.9% Sweden 2.9% 0.0 2.5 5.0 7.5 10.0 12.5 15.0 % of all intra-European movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A ‘mover’ is deïned by LinkedIn as someone now Source: working in the tech industry that has moved country for their primary employment between 2017 & 2016. Italy not provided in 2017. The US is the largest destination of European tech talent moving outside of the The US is the largest destination of European tech talent moving outside of the region, but other destinations are region, but other destinations are now important too, such as Canada and Australia. now important too, such as Canada and Australia. Top 10 non-European destinations for United States 31.9% European movers out of European tech in India 20.3% 2018 Canada 9.5% LEGEND Australia 8.6% Top 10 Destinations - 2018 China 3.5% United Arab Emirates 2.5% Brazil 2.2% Singapore 2.0% New Zealand 1.8% Japan 1.5% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 % of tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. & 47 In Partnership with www.thestateofeuropeantech.com

04.2 People Flows For additional context, it is worth analysing a similar dataset covering tech talent For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by movement in 2017 provided by LinkedIn for last year’s State of European Tech. LinkedIn for last year’s State of European Tech Top 10 non-European destinations for United States 36.4% European movers out of European tech in India 19.7% 2017 Canada 8.2% LEGEND Australia 7.1% Comparison to Similar Data from SOET 2017 China 3.1% United Arab Emirates 3.1% Brazil 1.8% Singapore 3.1% New Zealand 1.7% Japan 1.4% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 % of tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A ‘mover’ is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country for their primary employment between 2017 and 2016. India and the US account for more than 50% of the non-European India and the US account for more than 50% of the non- European talent moving into the European tech industry talent moving into the European tech industry. Top 10 non-European source countries for India 39.4% movers into the European tech industry United States 16.9% Brazil 7.5% Tunisia 3.7% Australia 3.3% Morocco 3.2% Canada 2.6% China 2.0% South Africa 1.5% Other 1.5% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45. 0 % of non-European tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. India and the US are more important sources of migratory talent moving into and India and the US are more important sources of migratory talent moving into and within the European tech within the European tech industry than any single European source country. industry than any single European source country Top 10 source countries for all movers into India 21% and within the European tech industry United States 9% United Kingdom 7% Germany 5% France 4% Brazil 4% Spain 3% Italy 3% Netherlands 2% Russia 2% 0 3 5 8 10 13 15 18 20 23 % of tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. & 48 In Partnership with www.thestateofeuropeantech.com

04.2 People Flows The UK has seen a huge increase in the % of COMPETITION FOR TALENT software engineer job postings that are defined as ‘hard to fill’ increase year-on-year in the % of software % engineer job postings in the UK that are 42 hard to fill, i.e. are posted for longer than 60 days in Indeed’s UK job site As every company becomes a software company and the need for software engineers and other tech roles continues to grow, it will be even more crucial for companies of all sizes look to solutions that will help them hire quality candidates and to close the talent gap in tech. “ People want to work at a company that has a mission they believe in. No longer is talent just driven by compensation. Though we still see that salary is a key factor candidates consider when evaluating an offer, we also see candidates caring more about job location, work flexibility, a good work environment, and meaningful work. As every company becomes a software company and the need for software engineers and other tech roles continues to grow, it will be even more Raj Mukherjee crucial for companies of all sizes look to solutions that will help them Indeed hire quality candidates and to close the talent gap in tech.” World-class talent is moving to and returning to Europe from the US to help build a new generation of European tech companies Note: This is intended as a representative selection of talent that has moved to Europe from the US and should not be considered complete. & 49 In Partnership with www.thestateofeuropeantech.com

04.2 People Flows Europe is growing as a destination of choice for US software engineers searching for software engineer roles overseas, and now accounts for more than 20% of all cross-border Europe is growing as a destination of choice for US software engineers searching for software engineer roles searches, up 20% compared with 2017. overseas, and now accounts for more than 20% of all cross-border searches, up 20% compared with 2017. European share (%) of US-originated cross- border searches containing 'software' and 20.8% s20.0 e 'engineer' h c r a e s d 16.2% e LEGEND t a n 15.0 i g Share of US-originated cross-border searches (%) i r o - S U f o ) % 10.0 ( e r a h s n a pe o 5.0 r u E 0.0 2018 2017 Source: The UK is the clear destination country of choice for US software engineers searching for The UK is the clear destination country of choice for US software engineers searching for potential job postings in The UK is the clear destination country of choice for US software engineers searching for potential job postings in potential job postings in the European tech ecosystem. the European tech ecosystem. the European tech ecosystem. 13.96% % share by destination country of US.- 13.96% % share by destination country of US.- UK UK 10.56% originated cross-border searches containing 10.56% originated cross-border searches containing 2.74% 'software' and 'engineer' 2.74% 'software' and 'engineer' Ireland Ireland 1.73% 1.73% LEGEND 1.46% LEGEND Germany 1.46% Germany 1.60% 2018 1.60% 2018 2017 0.84% 2017 Netherlands 0.84% Netherlands 0.88% 0.88% 0.42% France 0.42% France 0.36% 0.36% 0.35% Spain 0.35% Spain 0.24% 0.24% 0.30% Italy 0.30% Italy 0.41% 0.41% 0.29% Sweden 0.29% Sweden 0.18% 0.18% Belgium 0.15% Belgium 0.15% 0.06% 0.06% Denmark 0.10% 0.10% Denmark 0.09% 0.09% Portugal 0.10% 0.10% Portugal 0.03% 0.03% Austria 0.08% 0.08% Austria 0.07% 0.07% 0.00 2.50 5.00 7.50 10.00 12.50 15.00 0.00 2.50 5.00 7.50 10.00 12.50 15.00 Share (%) by destination country of US-originated searches Share (%) by destination country of US-originated searches Source: Source: & 50 In Partnership with www.thestateofeuropeantech.com

An Ecosystem Powered by Migratory Talent By comparing the nationality of survey respondents with their country of residence, it’s By comparing the nationality of survey respondents with their country of residence, it's possible to get a proxy for possible to get a proxy for the relative share of migrant talent in different regions in Europe. the relative share of migrant talent in different regions in Europe. The UK and Germany, led by London and Berlin, The UK and Germany, led by London and Berlin, are the two most dependent on migrant talent. are the two most dependent on migrant talent. Founders' and startup/scale-up employees' UK & Ireland 44% 56% backgrounds by subregion of residence DACH 44% 56% LEGEND Immigrant France & Benelux 25% 75% National Southern Europe 22% 78% Nordics 19% 81% Central Europe & Baltics 16% 84% Eastern Europe 6% 94% 0 20 40 60 80 100 % of respondents Note: Founder and private tech startup and scaleup employee Source: respondents only. The UK tech ecosystem is the most heavily MIGRANT TALENT IN EUROPEAN TECH dependent on migrant talent of any in Europe of founders and employees of private tech % start-ups in the UK are migrants, more than 44 any other region European tech startups are highly dependent on MIGRANT TALENT IN EUROPEAN TECH talent that has migrated to work for companies outside their home countries of founders and employees of private % European tech startups who are working 28 outside of their home countries Roughly half of the tech workforce has come Roughly half of the tech workforce has come from abroad in from abroad in four European hubs. four European hubs Selected European hubs by share of Berlin 46% immigrants in tech workforce LEGEND London 45% Share of immigrants in the tech workforce (%) Stockholm 24% Paris 23% Helsinki 14% 0 5 10 15 20 25 30 35 40 45 50 % of immigrants in tech workforce Note: Only respondents working in the tech industry. Cities with less Source: than 100 respondents ïltered out. & 51 In Partnership with www.thestateofeuropeantech.com

04.3 An Ecosystem Powered by Migratory Talent The UK is the #1 source of outbound talent leaving to move to out of Europe, accounting for nearly 2.8x as much outbound The UK is the #1 source of outbound talent leaving to move to another country within Europe, accounting for nearly talent as the next largest source country in Europe. 2.8x as much outbound talent as the next largest source country in Europe Top 10 European source countries for non- United Kingdom 34.9% European destinations in 2018 France 12.3% Germany 8.8% LEGEND Top 10 Sources - 2018 Netherlands 4.6% Spain 4.3% Russia 3.8% Ireland 3.7% Sweden 2.6% Switzerland 2.6% Ukraine 2.5% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 % of tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by LinkedIn For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by for last year’s State of European Tech. LinkedIn for last year’s State of European Tech Top 10 European source countries for non- United Kingdom 38.0% European destinations in 2017 France 12.4% LEGEND Germany 7.5% Comparison to Similar Data from SOET 2017 Netherlands 4.2% Spain 3.7% Ireland 5.1% Sweden 2.7% Switzerland 2.4% Ukraine 3.2% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 % of tech movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A ‘mover’ is deïned by LinkedIn as someone now Source: working in the tech industry that has moved country for their primary employment between 2017 % 2016. Russia not provided in 2017. Skilled immigration difficulties are taking a toll on Europe’s scaleups, and we are in bad need of more openness in terms of talent acquisition. “ I see two major threats, the first one being education and talent. Europe is among the top in terms of talent & research, but it shouldn’t be taken for granted. The challenge is that if we don’t see forward- thinking, long-term and brave investments in the field of education, we might lose this edge that’s keeping Europe on the surface. Skilled immigration difficulties are taking a toll on Europe’s scaleups, and we are in bad need of more openness in terms of talent acquisition – Rasmus Ekholm startup visas being great initiatives towards solving this problem.” Slush & 52 In Partnership with www.thestateofeuropeantech.com

04.3 An Ecosystem Powered by Migratory Talent The UK is the #1 source country for tech talent that is moving within and out of Europe, but it has The UK is the #1 source country for tech talent that is moving within and out of Europe, but it has a much larger a much larger share of those moving outside of the European tech ecosystem than within it. share of those moving outside of the European tech ecosystem than within it United Kingdom 15.1% Top 10 European source countries of 34.9% European movers in 2018 Germany 9.6% France 8.9% LEGEND 12.3% Spain 7.0% Moving Inside Europe Moving Outside Europe Italy 5.8% n/a% Netherlands 4.8% Russia 4.4% Poland 4.3% n/a% Ireland 3.9% Turkey 3.1% n/a% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 % of tech movers Note: All interpretations of LinkedIn data made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as someone now Source: working in tech industry who has moved country or industry sector for primary employment between 2018 & 2017. PL & TR outside not provided. The UK is today the #1 destination for non-European talent, but faces strong challenges as The UK is today the #1 destination for non-European talent, but faces strong challenges as the destination of the destination of choice as the range of viable alternative hubs across Europe expands, choice as the range of viable alternative hubs across Europe expands, especially in Germany, France and the especially in Germany, France and the Netherlands. Netherlands Top 10 European destinations for non- United Kingdom 26.6% European movers into European tech Germany 15.7% industry in 2018 France 13.9% LEGEND Netherlands 7.9% Top 10 destinations in 2018 Spain 5.1% Ireland 4.7% Sweden 4.3% Portugal 2.9% Belgium 2.5% Switzerland 2.1% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 % of non-European movers Note: All interpretations of the LinkedIn data are made by Atomico, not LinkedIn. A 'mover' is deïned by LinkedIn as somebody now Source: working in the tech industry that has moved country or industry sector for their primary employment between 2018 and 2017. For London to retain its “ I remain optimistic about the future of European tech - never before have we come as close to creating the next global tech giant. Of title as Europe’s fintech course the uncertainty surrounding Brexit is a challenge. Lots of capital we must continue fintechs like TransferWise will be opening additional offices across the continent to mitigate Brexit risk, and there will certainly be to attract talent, and hubs like Berlin, Paris and Amsterdam that benefit from start-up jobs coming to their cities. For London to retain its title as Europe’s make it easy for that fintech capital we must continue to attract talent, and make it easy for that talent to come here. We hire to our headquarters from all talent to come here. over the world, roughly 50% of our London office were not born in the UK. Engineers and product managers are vital, but we recruit from overseas across all our teams. Regulation must be flexible enough to encompass rapidly evolving technical and marketing specialist roles.“ Taavet Hinrikus TransferWise & 53 In Partnership with www.thestateofeuropeantech.com

04.3 An Ecosystem Powered by Migratory Talent For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by LinkedIn for last year’s State of European Tech For additional context, it is worth analysing a similar dataset covering tech talent For additional context, it is worth analysing a similar dataset covering tech talent movement in 2017 provided by movement in 2017 provided by LinkedIn for last year’s State of European Tech. LinkedIn for last year’s State of European Tech Top 10 European destinations for non- United Kingdom 32.6% European movers into European tech United Kingdom 32.6% Top 10 European destinations for non- Germany 11.7% industry in 2017 European movers into European tech Germany 11.7% industry in 2017 France 10.7% LEGEND Comparison to Similar Data from SOET 2017 France 6.2% 10.7% LEGEND Netherlands Comparison to Similar Data from SOET 2017 Netherlands 6.2% Spain 5.5% Spain 5.5% Ireland 5.0% Ireland 5.0% Sweden 3.5% Sweden 3.5% Switzerland 2.3% Switzerland 2.3% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 % of non-European movers 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 Note: % of non-European movers All interpretations of LinkedIn data made by Atomico, not LinkedIn. A ‘mover’ is deïned by LinkedIn as someone now Source: Note: working in tech industry who has moved country for primary All interpretations of LinkedIn data made by Atomico, not employment between 2017 & 2016. Portugal and Belgium not LinkedIn. A ‘mover’ is deïned by LinkedIn as someone now Source: provided by LinkedIn. working in tech industry who has moved country for primary employment between 2017 & 2016. Portugal and Belgium not provided by LinkedIn. Though the largest share of founders in each region have seen no change in the trend of candidates relocating internationally to join their business, they are significantly more Thought the largest share of founders in each region have seen no change in the trend of candidates relocating likely to have experienced an increase in this trend in the past 12 months, rather than a internationally to join their business, they are signiïcantly more likely to have experienced an increase in this trend decline. A larger share of founders in France & Benelux and DACH have seen an increase in in the past 12 months, rather than a decline. A larger share of founders in France & Benelux and DACH have seen an this trend, while UK fincoreuansed ienr ts ahis trre menod,r we lhiilkee Uly tK fohuann adernsy r aree mgioorn te lio hkelya tve shan aeneyn a d regioenc troe haasvee. seen a decrease. % change in founders' view on change in Central Europe & Baltics candidates relocating internationally to join their company, by subregion (past 12m) DACH LEGEND Eastern Europe Increase No change France & Benelux Decrease Nordics Southern Europe UK & Ireland 0 20 40 60 80 100 % of respondents Note: Respondents stating 'Not able to comment' ïltered out. Source: Founder respondents only. Taking the trend from the opposite perspective and looking at trends of founders reporting Taking the trend from the opposite perspective and looking at trends of founders reporting changes in employee changes in employee interest to leave the country by relocating overseas, founders in the UK interest to leave the country by relocating overseas, founders in the UK & Ireland and in Eastern Europe are seeing the largest increase compared to other regions. & Ireland and in Eastern Europe are seeing the largest increase compared to other regions. % change in founders' view on change in Central Europe & Baltics employees leaving their country to relocate to another country, by subregion (past 12m) DACH LEGEND Eastern Europe Increase No change France & Benelux Decrease Nordics Southern Europe UK & Ireland 0 20 40 60 80 100 % of respondents Note: Respondents stating 'Not able to comment' ïltered out. Source: Founder respondents only. & 54 In Partnership with www.thestateofeuropeantech.com

Competing For & Compensating Talent There is a wide variance in the level of average founder compensation at every funding round There is a wide variance in the level of average founder compensation at every funding round stage between stage between Europe and the US, both in terms of base salary and incentive pay. Europe and the US, both in terms of base salary and incentive pay 400,000 Founder base salary and incentives by Funding Round stage in 50th percentile by region 300,000 LEGEND Base Salary D S 200,000 Incentive Pay U Note: Incentive pay is cash bonus or incentive, which is not related to equity or equity value. 100,000 0 Europe US Europe US Europe US Europe US Seed Series A Series B Series C Source: While there are differences in average pay between European and US founders, the average While there are differences in average pay between European and US founders, the average level of founder equity level of founder equity by funding round stage is closely aligned from Series A onwards. by funding round stage is closely aligned from Series A onwards Founder equity by funding round stage in 50th percentile by region 34% 30 29% LEGEND Europe y t i US qu e r e 20 19% 19% d n u o f f o 13% % 12% 13% 10% 10 0 Seed Funding Only Post Series A Post Series B Post Series C Note: Advanced-HR’s compensation report details founder’s cash and equity pay as reported by participating private, venture- Source: backed companies. Equity data is displayed as a percentage of European tech companies have historically either chosen not to use or have not been fully diluted shares. Equity not related to salary nor incentives. able to use stock options as an incentive tool for employees in the same way as has been standard in the US Advanced-HR’s latest data suggests that there is positive change afoot in Europe. Based on their latest employee ownership report, the average level of employee The average level of employee ownership by funding round ownership by funding round stage in Europe is broadly in line with levels in the US. stage is broadly similar in Europe compared to the US Employee ownership by funding round stage 20.0 in 50th percentile by region LEGEND 15.0 Executives p i h s Staff + Other r e wn10.0 Unissued o f o % Note: This details equity held by executive-level employees, staff- level employees and remaining unissued options. It excludes 5.0 Founder’s Shares and equity allocations displayed as a percentage of fully diluted shares. Equity not related to salary nor incentives 0.0 Europe US Europe US Europe US Europe US Seed Series A Series B Series C Source: & 55 In Partnership with www.thestateofeuropeantech.com

04.4 Competing For & Compensating Talent A positive effect of awareness-building campaigns, led in part by strong arguments from Europe’s leading VCs, is evident in a reported increase in employee awareness of stock A positive effect of awareness-building campaigns, led in part by strong arguments from Europe's leading VCs, is options as a form of compensation. This increased awareness is most prevalent in larger evident in a reported increase in employee awareness of stock options as a form of compensation. This increased companies of 100 employees or more. awareness is most prevalent in larger companies of 100 employees or more. Founders' view on change in employees awareness of stock options as form of <=10 compensation by company size LEGEND Increase No change 11-100 Decrease 100+ 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Respondents stating 'Not able to comment' ïltered out. Source: Founder respondents only. A majority of European founders of larger companies STOCK OPTION AWARENESS of 100+ employees report an increase in employee awareness of stock options of founders of European private tech % start-up or scale-ups with more than 100 56 employees report an increase in employee awareness of stock options as a form of compensation As Europe’s tech ecosystem continues to evolve and mature, it is helping to drive greater As Europe's tech ecosystem continues to evolve and mature, it is helping to drive greater access to talent that has access to talent that has built significant and relevant prior experience at other startups or built signiïcant and relevant prior experience at other startups or scaleups. This is especially true for the region's scaleups. This is especially true for the region’s more scaled startups with 55% of founders more scaled startups with 55% of founders of companies with more than 100 employees reporting an increase in of companies with more than 100 employees reporting an increase in this talent trend. this talent trend. % change in founders' view on change in candidates with signiïcant prior <=10 startup/scaleup experience joining the industry by company size (past 12m) LEGEND Increase 11-100 No change Decrease 100+ 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Respondents stating 'Not able to comment' ïltered out. Source: Founder respondents only. & 56 In Partnership with www.thestateofeuropeantech.com

04.4 Competing For & Compensating Talent The impetus for founders to ensure they have designed competitive incentives mechanisms to attract talent is underpinned by the growing level of competition for talent The impetus for founders to ensure they have designed competitive incentives mechanisms to attract talent is in the European tech ecosystem. Founders from all regions, though at varying levels, underpinned by the growing level of competition for talent in the European tech ecosystem. Founders from all report increased levels of competition from both global tech giants, as well as homegrown regions, though at varying levels, report increased levels of competition from both global tech giants, as well as local startups that are playing in the same talent pool. homegrown local startups that are playing in the same talent pool. 100 Founders' view on change in competition for talent from global tech giants and local startups, by subregion 75 s LEGEND t n e d Tech giants, Increase n po 50 s e Local startups, Increase r f o Tech giants, No change % Local startups, No change 25 Tech giants, Decrease Local startups, Decrease 0 Global tech giants Global tech giants Global tech giants Global tech giants Global tech giants Global tech giants Global tech giants Central Europe DACH Eastern France & Nordics Southern UK & Ireland & Baltics Europe Benelux Europe Note: Respondents stating 'Not able to comment' ïltered out. Source: Founder respondents only More than half of European founders are COMPETITION FOR TALENT seeing increased competition for talent from global tech companies of European founders have experienced % an increase or significant increase in 54 competition for talent from global tech companies in the past 12 months The effect of increased competition for talent plays out in different ways, including salary The effect of increased competition for talent plays out in different ways, including salary in�ation, greater inflation, greater employee churn and more difficulty in filling roles. On the last point, for employee churn and more di�culty in �lling roles. On the last point, for example, the number of job postings for example, the number of job postings for ‘software engineer’ roles that prove hard to fill has 'software engineer' roles that prove hard to �ll has increased in every European country for which data is available, increased in every European country for which data is available, except Denmark. except Denmark Share of software engineer job postings that Netherlands 46% are hard to ïll 42% Spain 42% LEGEND 34% 2018 Belgium 42% 2017 34% Ireland 41% 35% Germany 36% 32% Italy 35% 27% France 33% 25% Austria 32% 25% Denmark 32% 35% UK 29% 20% Sweden 28% 26% Portugal 27% 20% 0 10 20 30 40 50 % hard to �ll 'software engineer' job postings Note: Hard to �ll is de�ned as % of 'software engineer' job postings Source: on the Indeed site(s) for more than 60 days. & 57 In Partnership with www.thestateofeuropeantech.com

04.4 Competing For & Compensating Talent There is talent in Europe but it’s in demand, especially when it comes to people who have been there and done it already. “ The biggest challenge is finding high-quality talent. There is talent in Europe but it’s in demand, especially when it comes to people who have been there and done it already. This is a younger ecosystem than Silicon Valley and it’s not easy to hire people who have been able to implement, say, groundbreaking new AI techniques that scale a B2C solution so it can conquer the world - they are in short supply! So you have to always look not only for people who will help you now, but also Tugce Bulut for those who will be what you need in several months’ time.” Streetbees The extent to which it has become harder to fill software engineer job postings in Europe The extent to which it has become harder to ïll software engineer job postings in Europe varies at the country varies at the country level. The UK has, by some margin, experienced the largest overall level. The UK has, by some margin, experienced the largest overall increase in the share of jobs that have become increase in the share of jobs that have become hard to fill. hard to ïll. Change in % of software engineer job UK 42.1% postings that are hard to ïll, 2018 versus 2017 Portugal 31.7% LEGEND YoY change (%) France 31.1% Austria 28.3% Italy 28.1% Spain 23.7% Belgium 22.7% Ireland 16.6% Germany 11.2% Netherlands 9.4% Sweden 6.8% Denmark -9.6% -20.0 -10.0 0.0 10.0 20.0 30.0 40.0 % change from 2017 to 2018 in % of software engineer job postings that are hard to ïll Note: % change in % of software engineer jobs that are hard to ïll in 2018 versus 2017 by country. Hard to ïll is deïned as % of Source: 'software engineer' job postings on the Indeed site(s) for more than 60 days. & 58 In Partnership with www.thestateofeuropeantech.com

The Next Generation The list of companies that have the largest number of alumni that have gone on to become founders of European tech companies is dominated by established tech companies, such as Google and Microsoft, as well as large consulting ïrms, such as Boston Consulting Group and Accenture. The list of companies that have the largest number Top 10 companies by number of alumni who have founded companies of alumni who have gone on to become founders Company of European tech companies is dominated by Top 10 companies by number of alumni who 1 The Boston Consulting Group have founded companies established tech companies, such as Google and Microsoft, as well as large consulting firms, such 2 Microsoft as The Boston Consulting Group and Accenture. 3 Nokia 4 Accenture 5 Siemens 6 IBM 7 Google 8 Hewlett Packard 9 Yahoo! 10 McKinsey & Company Source: European universities are important sources of founder talent, especially the leading technical and business universities. Notably, Harvard and Stanford also features amongst the top 20 academic institutions that have the large number of alumni that have founded European tech companies European universities are important sources of Top 10 institutions by number of alumni who have founded companies founder talent, especially the leading technical University City Country and business universities. Notably, Harvard and Top 10 institutions by number of alumni who 1 University of Cambridge Cambridge United Kingdom Stanford also feature amongst the top 20 academic have founded companies institutions with the largest number of alumni who 2 HEC Paris Paris France have founded European tech companies. 3 University of Oxford Oxford United Kingdom 4 INSEAD Fontainebleau France 5 Imperial College London London United Kingdom 6 ESCP Europe Berlin (HQ) Germany 7 London Business School London United Kingdom 8 Stanford University Stanford United States 9 KTH Royal Institute of Technology Stockholm Sweden 10 Lund University Lund Sweden Source: Europe’s leading universities are important SOURCE OF TALENT sources of entrepreneurial talent The University of Cambridge is the top source of founders of European venture- #1 backed startups & 59 In Partnership with www.thestateofeuropeantech.com

04.5 The Next Generation The biggest reservations that hold back students when considering entrepreneurship are the overall perceived risk, lack of funding, lack of ideas and an inability to find a co-founder to join them on the journey. These concerns are generally felt equally across students of both genders, except for access to funding, which is cited significantly more frequently by female students. Selecting any that apply, what are the main Too risky 51% reservations you have when considering Lack of funding 63% whether to become an entrepreneur? 40% Lack of ideas 47% LEGEND Inability to find a co-founder 29% Female Male Lack of support from universities 18% Unattractive lifestyle 13% Lack of support from family/friends 7% Lack of successful role models in Europe 9% 5% Lack of support from 7% incubators/accelerators 0 10 20 30 40 50 60 70 % of respondents Note: Student respondents only Source: Creator Fund is...building a community where potential founders or people interested in starting a business meet other people like them. They realise that entrepreneurship is viable, and that there will be people to support them. “ Entrepreneurship might feel riskier to students because they think they can’t find the funding. Second, students see their friends taking a job at a large corporation or going into a law firm and therefore by comparison it feels risky to break out and start their own thing. I think Creator Fund is changing that by building a community where potential founders or people interested in starting a business meet other people like them. They realise that entrepreneurship is viable, Jamie Macfarlane and that there will be people to support them.” Creator Fund The structural imbalance in access to funds BARRIERS TO ENTREPRENEURSHIP FOR STUDENTS for female entrepreneurs is evident in the reservations that female students have when Female students cite access to funding as considering entrepreneurship % their main reservation when considering 63 whether to become an entrepreneur, versus just 40% of male students & 60 In Partnership with www.thestateofeuropeantech.com

04.5 The Next Generation If Europe’s tech ecosystem is to benefit from an increased number of its next generations of students entering into entrepreneurship, it should explore If Europe's tech ecosystem is to bene t from an increased number of its next generations of students entering into ways to better educate students about tech entrepreneurship and expose entrepreneurship, it should explore ways to better educate students about tech entrepreneurship and expose them to relevant, practical experiences from which they can learn. them to relevant, practical experiences from which they can learn. Stated brie y, what could be done to better Bridging the knowledge gap 29% support students to move straight into entrepreneurship? Gaining practical experience in tech 16% LEGEND Access to funding 12% % of respondents University-linked accelerators 12% Access to mentors 11% Connecting universities to the tech 10% ecosystem Other 9% 0 5 10 15 20 25 30 % of respondents Note: Student respondents only. Based on respondents that gave Source: explicit responses only. Each student should think about and use their Edge, what is their competitive advantage against other founders? Particularly if you’re technical, this is a must. “ It’s never been easier for students to start companies both while at university and upon graduating. That said, we still see students focus on small markets and small problems when this needn’t be the case. Each student should think about and use their Edge, what is their competitive advantage against other founders? Particularly if you’re technical, this is a must.” Alice Bentinck EF A new generation of VCs is emerging in Europe to pioneer a model of running a fund by students that is investing in students Campus Capital First Momentum Oxford Seed Fund The Creator Fund UCL Entrepreneurs Wave Ventures United Kingdom Ventures United Kingdom Pan-European VC Fund Finland Germany United Kingdom & 61 In Partnership with www.thestateofeuropeantech.com

Tech Hubs Concentrated & Let’s look beyond London, Paris, and Berlin. European tech is no longer driven by just a handful of cities. Upcoming hubs span from Cardiff, in the U.K. to Novosibirsk, Russia, Connected Communities 5,300 kilometers away. These new communities - linked by knowledge, talent, and capital flows - are already producing global, category winners. ARTICLES 05.1 Growing Communities 05.2 Every City is a Tech City 05.3 Density, through Interconnected Tech Hubs 05.4 Building and internationalising away from home 05.5 New Hubs - Where Next? In Partnership with & www.thestateofeuropeantech.com

Growing Communities Europe has huge upside potential is it succeeds in building active tech communities in all cities where there are large tech talent clusters. This is because there is, perhaps unsurprisingly, a very high correlation (r-squared of 0.914) between the strength of tech community There is a, perhaps unsurprisingly, very high correlation (r-squared of 0.914) between the strength of tech engagement within cities, as defined by the number of tech-related community engagement within cities, as deïned by the number of tech-related Meetups, and the rate of Meetups, and the rate of companies formation. companies forming and raising funds Number of funded companies (2013 to 9M 2,500 2018) versus number of tech-related Meetups London (2013 to 9M 2018) per city, selected European 2,000 cities s e i n mpa1,500 o c Paris d e d n u 1,000 F Berlin # Stockholm 500 Amsterdam Helsinki Dublin Prague Warsaw 0 0 5,000 10,000 15,000 20,000 25,000 30,000 # Meetups Source: But not all cities with large engineering talent pools have been able to build vibrant communities where people meet up frequently to But not all cities that have large engineering talent pools have been able to build vibrant communities where people are meeting up with high frequency to exchange ideas and knowledge. exchange ideas and knowledge. Number of tech-related Meetups per London professional developer (2013 to 9M 2018) versus number of professional developers per city, selected European cities s300,000.00 r Paris pe o l e v e Amsterdam d l a200,000.00 n o i s Cologne s e f o r P Frankfurt am Main # Munich Berlin 100,000.00 Brussels Prague Hamburg Dublin 0.00 0.00 0.02 0.05 0.07 0.10 0.12 0.15 # Meetups per developer Source: & 63 In Partnership with www.thestateofeuropeantech.com

05.1 Growing Communities When cities succeed in building active communities around their engineering talent, as measured by the number of tech-related Meetup events hosted per local developer, the data suggests that capital investment follows in larger When cities succeed in building active communities around their engineering talent, as measured by the number volumes. The strength of tech community development is a critical leading of tech-related Meetup events hosted per local developer, the data suggests that capital investment follows in indicator signposting the future potential of the European tech ecosystem. larger volumes. Number of tech-related Meetups per London developer versus total capital invested (2013 to 9M 2018) per city, selected European cities 20,000.00 ) M $ ( d e t Berlin s 10,000.00 Paris e v n i l a Stockholm t pi a Amsterdam Dublin C Hamburg 0.00 Cologne Kiev Prague -10,000.00 0.00 0.02 0.05 0.07 0.10 0.12 0.15 # Meetups per developer Source: There is huge geographic diversity amongst the Top 20 fastest-growing tech There is huge geographic diversity amongst the Top 20 fastest-growing tech hubs in Europe, as measured by the hubs in Europe, as measured by the annual growth in attendees to tech-related annual growth in attendees to tech-related Meetup events in those cities. Zug in Switzerland, home to a growing There is huge geographic diversity amongst the Top 20 fastest-growing tech hubs in Europe, as measured by the Meetup events in those cities. Zug in Switzerland, home to a growing crypto crypto community, ranked number one as the fastest-growing community overall. annual growth in attendees to tech-related Meetup events in those cities. Zug in Switzerland, home to a growing community, ranked number one as the fastest-growing community overall. crypto community, ranked number one as the fastest-growing community overall. Top 20 fastest-growing tech hubs in Europe Zug, Switzerland 177% by year-on-year growth of attendees to tech- Novosibirsk, Russia 173% Top 20 fastest-growing tech hubs in Europe Zug, Switzerland 177% related Meetup events per city by year-on-year growth of attendees to tech- Novosibirsk, Russia 173% Ghent, Belgium 165% DATASET: TOP 10 HUBS related Meetup events per city Ghent, Belgium 165% The Hague, Netherlands 121% DATASET: TOP 10 HUBS LEGEND Katowice, Poland 101% The Hague, Netherlands 121% YoY growth 2017-2018 (%) LEGEND Katowice, Poland 101% YoY growth 2017-2018 (%) Dortmund, Germany 100% Newcastle, United Kingdom 88% Dortmund, Germany 100% Newcastle, United Kingdom 88% Sofia, Bulgaria 77% Sofia, Bulgaria 77% Essen, Germany 75% Cardiff, United Kingdom 74% Essen, Germany 75% Cardiff, United Kingdom 74% 0 25 50 75 100 125 150 175 200 YoY growth (%) 0 25 50 75 100 125 150 175 200 Note: YoY growth (%) 2018 annualised based on RSVPs to end of September 2018. Only hubs with at least 1,000 RSVPs in 2017 are included in the Source: Note: analysis. 2018 annualised based on RSVPs to end of September 2018. Only hubs with at least 1,000 RSVPs in 2017 are included in the Source: analysis. The number of tech-related Meetup events in Europe continues to hit new highs, although the rate of year-on-year The number of tech-related Meetup events in Europe continues to hit new highs, growth is decelerating. In 2018, the level of activity on Meetup alone equates to around 200 events hosted every The number of tech-related Meetup events in Europe continues to hit new highs, although the rate of year-on-year although the rate of year-on-year growth is decelerating. In 2018, the level of activity on single day through the year. growth is decelerating. In 2018, the level of activity on Meetup alone equates to around 200 events hosted every Meetup alone equates to around 200 events hosted every single day through the year. single day through the year. # of tech-related Meetups hosted in Europe 80,000 68 per annum 80,000 72,233 # of tech-related Meetups hosted in Europe 68 per annum 65,101 72,233 60 LEGEND 60,000 51 65,101 Events hosted 60 LEGEND 60,000 51 51,135 Y o YoY growth (%) Y Events hosted ps 51,135 g u Yr t 40 oo e Ywt YoY growth (%) e 40,000 h psM 36,226 g r u ( t# 40 o% e 27 wt) e 40,000 h M 36,226 ( # 27 % 23,924 20 ) 20,000 23,924 11 20,000 20 11 0 0 2014 2015 2016 2017 2018 0 0 2014 2015 2016 2017 2018 Note: Source: 2018 annualised based on data to end of September 2018 Note: Source: 2018 annualised based on data to end of September 2018 & 64 In Partnership with www.thestateofeuropeantech.com

05.1 Growing Communities “ We’ve recently done deals with amazing companies in cities as diverse as Marbella to Bristol. Gone are the days where growth Today, if you build a capital is limited to the Valley, a fact that Silicon Valley itself now acknowledges: with the majority of VCs based there now planning to business that’s obsessed invest internationally. Today, if you build a business that’s obsessed with the customer, the with the customer, the capital will come to you.” capital will come to you. Simon Cook Draper Esprit The density of these tech-related Meetup communities relative to the The density of these tech-related Meetup communities relative to the overall population of individual countries overall population of individual countries varies significantly across The density of these tech-related Meetup communities relative to the overall population of individual countries varies signiïcantly across Europe, led by Ireland, Luxembourg, the Netherlands and Switzerland. Europe, led by Ireland, Luxembourg, the Netherlands and Switzerland. varies signiïcantly across Europe, led by Ireland, Luxembourg, the Netherlands and Switzerland. # of active members of tech-related Meetup # of active members of tech-related Meetup groups per 1,000 inhabitants by country groups per 1,000 inhabitants by country LEGEND LEGEND upto 7.0 upto 7.0 5.0 to 6.0 5.0 to 6.0 4.0 to 5.0 3.0 to 4.0 4.0 to 5.0 2.0 to 3.0 3.0 to 4.0 1.0 to 2.0 2.0 to 3.0 upto 1.0 1.0 to 2.0 upto 1.0 Source: Source: & 65 In Partnership with www.thestateofeuropeantech.com

05.1 Growing Communities In Europe’s largest and most mature tech communities, there are signs of a slowdown in In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation the level of participation around tech-related Meetup events, but outside those leading In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation hubs there continues to be rapid growth in engagement, including in cities such as around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in Hamburg, Zurich, Manchester or Wroclaw. engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. Top 20 hubs by level of tech Meetup activity in 2018, ranked by number of Meetup DATASET: TOP 5 HUBS 315,839 315,497 Top 20 hubs by level of tech Meetup activity 292,792 Top 20 hubs by level of tech Meetup activity 315,839 315,497 attendees 300,000 in 2018, ranked by number of Meetup 315,839 315,497 in 2018, ranked by number of Meetup 292,792 attendees 300,000 292,792 attendees 300,000 s 209,386 LEGEND e e sd en 209,386 LEGEND e200,000 London s et t 209,386 LEGEND de a ne 160,608 d London ep 200,000 153,528 Berlin tn 150,866 tu t London ae200,000 t e 136,537 t 160,608 p e Berlin a 150,866 153,528 Paris uM 160,608 t Berlin ep 150,866 153,528 u # 136,537 et 105,118 Paris e 136,537 Amsterdam M Paris e 84,647 #M 83,239 81,746 100,000 105,118 Amsterdam # Munich 105,118 Amsterdam 61,313 63,857 84,647 100,000 83,239 81,746 84,647 Munich 100,000 83,239 41,471 81,746 35,714 37,333 63,857 Munich 61,313 63,857 11,492 61,313 41,471 35,714 37,333 41,471 In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation 35,714 37,333 11,492 In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation 0 around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in 11,492 2014 2015 2016 2017 2018 0 around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. Note: Source: LEGEND DATASET: HUBS 6-10 2018 annualised based on RSVPs to end of September 2018 80,000 74,792 Note: Source: LEGEND Source: Note: 80,000 Madrid 74,792 2018 annualised based on RSVPs to end of September 2018 2018 annualised based on RSVPs to end of September 2018 Madrid 65,332 Warsaw Warsaw 65,332 59,895 Barcelona 58,559 Barcelona 60,000 58,559 59,895 Istanbul s 60,000 50,929 52,017 e e 52,017 Istanbul sd 50,929 46,445 Dublin en ee dt 46,445 Dublin nt ea 37,206 tp tu40,000 at p e 37,206 ue40,000 tM e e# 25,852 M 22,174 # 25,852 16,605 18,516 22,174 20,000 18,516 20,000 16,605 8,880 7,604 e tech communities, there are signs of a slowdown in the level of participation 8,880 7,604 2,207 , but outside those leading hubs there continues to be rapid growth in 0 2,207 2014 2015 2016 2017 2018 h as Hamburg, Zurich, Manchester or Wroclaw. e tech communities, there are signs of a slowdown in the level of participation 0 2014 2015 2016 2017 2018 , but outside those leading hubs there continues to be rapid growth in 50,000 h as Hamburg, Zurich, Manchester or Wroclaw. Note: Source: 43,959 LEGEND DATASET: HUBS 11-15 2018 annualised based on RSVPs to end of September 2018 Source: Note: 40,962 Hamburg 50,000 2018 annualised based on RSVPs to end of September 2018 40,000 36,068 36,224 36,749 Zurich 43,959 LEGEND Stockholm 40,962 32,064 Hamburg s 31,746 40,000 e 28,523 36,749 Oslo e 36,068 36,224 Zurich d30,000 27,539 n e Manchester t 24,424 32,064 Stockholm t 31,746 s a 22,217 e p u 28,523 Oslo e t 19,705 20,575 d30,000 27,539 n e 18,805 e e20,000 t M 24,424 Manchester t 15,922 a # 22,217 13,875 p u 12,580 20,575 t 11,249 19,705 e 18,805 e20,000 M 8,094 15,922 # 10,000 6,774 13,875 12,580 11,249 3,174 8,094 In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation 10,000 6,774 0 around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in 2014 2015 2016 2017 2018 3,174 In Europe's largest and most mature tech communities, there are signs of a slowdown in the level of participation engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. around tech-related Meetup events, but outside those leading hubs there continues to be rapid growth in 0 Source: 2014 2015 2016 2017 2018 engagement, including in cities such as Hamburg, Zurich, Manchester or Wroclaw. Note: 2018 annualised based on RSVPs to end of September 2018 40,000 38,018 LEGEND HUBS 16-20 Note: Source: 33,680 Budapest 40,000 38,018 2018 annualised based on RSVPs to end of September 2018 LEGEND Wroclaw 28,869 Budapest 30,000 33,680 Vienna s e e Wroclaw d 23,408 28,869 Copenhagen n 22,676 23,112 e 30,000 t Vienna st Frankfurt ea 19,062 ep 18,607 du20,000 23,408 Copenhagen nt 16,829 22,676 23,112 ee te tM Frankfurt a 19,062 14,308 p # 18,607 u 20,000 t 11,302 e 16,829 e 9,131 M 10,000 7,889 14,308 # 4,216 11,302 3,746 9,131 7,889 10,000 1,445 0 4,216 3,746 2014 2015 2016 2017 2018 1,445 0 2014 2015 2016 2017 2018 Note: Source: 2018 annualised based on RSVPs to end of September 2018 Note: Source: 2018 annualised based on RSVPs to end of September 2018 & 66 In Partnership with www.thestateofeuropeantech.com

05.2 Every City is a Tech City Talent is necessary, but talent alone is not TECH COMMUNITIES AND COMPANY FORMATION enough. Cities need to engage that talent in active communities to drive greater levels of company The correlation between the strength of formation tech community engagement within cities 0.914and the rate of company formation and funding has an r-squared of 0.914. & 67 In Partnership with www.thestateofeuropeantech.com Photo: Sami Heiskanen/ Juuso Hmlinen

Every City is a Tech City Data on the size of tech-related Meetup communities per city is useful in helping to identify a new generation of hubs that are emerging across the region and are achieving a meaningful scale in terms of the number of active participants in local tech-related Meetup events Data on the size of tech-related Meetup Top 10 most popular tech-related Meetup event topics in Europe in 2018 communities per city is useful in helping to identify Country 2016 2017 2018 YoY 2017-2018 (%) European cities surpassing 1,000 members of a new generation of hubs that are emerging across Antalya Turkey 97 209 1,715 721 tech-related Meetup groups for the ïrst time the region and are achieving a meaningful scale in Cologne Germany 83 407 1,061 161 in 2018 terms of the number of active participants in local Minsk Belarus 580 895 1,259 41 tech-related Meetup events Ghent Belgium 329 883 1,212 37 Zug Switzerland 431 852 1,159 36 Mannheim Germany 586 881 1,190 35 Essen Germany 516 869 1,075 24 Rzeszów Poland 858 946 1,145 21 Münster Germany 440 991 1,184 19 Freiburg Germany 569 958 1,031 8 The signs that every city is becoming - or will eventually become - a tech city in Europe continue to strengthen. There are now more 180+ hubs across Europe that host tech-related Meetup events with high levels of regularity Arnhem Netherlands 691 989 1,027 4 throughout the year. Source: # European cities with >50 tech-related 200 The signs that every city in Europe is becoming - or will eventually become - a tech city 182 Meetup events per year The signs that every city is becoming - or will eventually become - a tech city in Europe continue to strengthen. continue to strengthen. There are now 180+ hubs across Europe that host tech-related 172 There are now more 180+ hubs across Europe that host tech-related Meetup events with high levels of regularity LEGEND Meetup events with high levels of regularity throughout the year. throughout the year. 150 141 # European cities s e i t i c 113 n 200 # European cities with >50 tech-related a pe100 o 182 Meetup events per year r u 172 E 74 # LEGEND 150 50 48 141 # European cities s e i t i 25 c 113 n a pe100 o r u 0 E 2012 2013 2014 2015 2016 2017 2018 # 74 50 48 Note: Source: 2018 annualised based on data to end of September 2018 25 The extent to which the growth of the European tech ecosystem to now has been driven by just a handful of cities 0 2012 2013 2014 2015 2016 2017 2018 is evident by comparing the share of capital invested over a �ve-year period in those leading cities versus their relative share of professional developer talent. For example, 76% of all capital invested into Europe since 2013 has Source: �owed to just 10 hubs representing just 30% of the talent pool. Note: 2018 annualised based on data to end of September 2018 It’s clear that Europe’s tech ecosystem to date has been driven by just a handful of cities. Share of capital invested (2013 to 9M 2018) 80 The extent to which the growth of the European tech ecosystem to now has been driven by just a handful of cities The share of capital invested over a five-year period in leading cities versus their relative 76% versus share of professional developer talent is evident by comparing the share of capital invested over a �ve-year period in those leading cities versus their pool for Top 3, 5 & 10 hubs share of professional developer talent is telling. For example, 76% of all capital invested relative share of professional developer talent. For example, 76% of all capital invested into Europe since 2013 has 62% into Europe since 2013 has flowed to just 10 hubs representing just 30% of the talent pool. 60 �owed to just 10 hubs representing just 30% of the talent pool. LEGEND l a t 52% o % capital invested t n % professional developers a pe o Share of capital invested (2013 to 9M 2018) r 80 u 40 76% E versus share of professional developer talent f o 30% pool for Top 3, 5 & 10 hubs % 62% 20% 60 LEGEND l 20 a 15% t 52% o % capital invested t n % professional developers a pe o r u 40 E 0 f Top 3 hubs Top 5 hubs Top 10 hubs o 30% Note: % Top 3 hubs based on total capital invested 2013-3Q2018 are Source: 20% London, Berlin, and Paris. Top 5 adds Stockholm and 20 Barcelona. Top 10 adds Cambridge, Dublin, Amsterdam, Madrid, 15% and Moscow. 0 Top 3 hubs Top 5 hubs Top 10 hubs Note: Top 3 hubs based on total capital invested 2013-3Q2018 are Source: London, Berlin, and Paris. Top 5 adds Stockholm and Barcelona. Top 10 adds Cambridge, Dublin, Amsterdam, Madrid, and Moscow. & 68 In Partnership with www.thestateofeuropeantech.com

05.2 Every City is a Tech City It’s interesting to compare the ‘bang for buck’ different cities have achieved by measuring across them the level of capital investment per local professional developer. Such It's interesting to compare the 'bang for buck' that different cities have achieved by measuring the level of capital comparison shows Berlin stands apart as a real outlier, having attracted a disproportionate investment per local professional developer in those cities. In doing this, Berlin stands apart as a real outlier having level of investment relative to its local developer pool. attracted a disproportionate level of investment relative to its local developer pool. Top 10 European cities for capital invested ($) 100,000 $97,404 per professional developer LEGEND ) 75,000 $ ( $66,337 Capital invested per developer ($) d $63,019 e t s European average ($) e v n i l 50,000 a $45,000 t pi a $36,138 C $31,255 25,000 $24,432 $13,906 $13,906 $13,906 $13,906 $13,906 $13,906 $19,106 $19,096 $12,224 0 n n n a s g d i n i m i i r i k l o l l n r r n e r d o b o a u d i g e n h u l P b a s a B o k D e l h c c m M e n L o r a H e t a H p S B o C Note: Investment amounts are based on capital invested in the city in Source: aggregate between 2012 and September 2018 divided by the total number of professional developers (2018) in the city. The emergence of global hits like UIPath from Bucharest, Supercell from Helsinki, Farfetch from Lisbon -- all from far beyond the unicorn-factories of London, Stockholm and Berlin - marks a new era for Europe. “ The big change is that there are now plenty of examples of how it’s possible to create world-changing companies from all over Europe. The emergence of global hits like UIPath from Bucharest, Supercell from Helsinki, Farfetch from Lisbon -- all from far beyond the unicorn-factories of London, Stockholm and Berlin - marks a new era for Europe. However, so far founders from non-hub cities have been inadequately served by investors who tend to focus on Ophelia Brown the traditional geographies and are not equipped to offer the same Blossom Capital support when a startup originates from a small town in, for example, Germany or Estonia.” Europe’s tech community outside its Top TECH HUBS EVERYWHERE 20 hubs continues to flourish of all tech-related Meetups in Europe that % now happen outside of the Top 20 hubs in 53 the region, up from 42% in 2014. Berlin’s relatively small professional developer CAPITAL BANG PER DEVELOPER BUCK community has attracted a disproportionate amount of capital investment compared to any other European city, including London $97,404 capital invested since 2013 per developer in Berlin, the highest concentration of capital invested per developer of any European city & 69 In Partnership with www.thestateofeuropeantech.com

Density, through Interconnected Tech Hubs The European ecosystem benefits from interconnectivity in a number of ways The European ecosystem bene ts from interconnectivity in a number of ways that help drive the ow of that help drive the flow of knowledge, talent, and capital. Exchanges amongst The European ecosystem bene ts from interconnectivity in a number of ways that help drive the ow of knowledge, talent and capital. The ow of useful ideas and knowledge throughout the European tech ecosystem is counterparts, whether founders or investors, enables the flow of useful ideas knowledge, talent and capital. The ow of useful ideas and knowledge throughout the European tech ecosystem is enabled by exchanges between counterparts, whether founders or investors. and knowledge throughout the European tech ecosystem. enabled by exchanges between counterparts, whether founders or investors. The European ecosystem bene ts from interconnectivity in a number of ways that help drive the ow of knowledge, talent and capital. The ow of useful ideas and knowledge throughout the European tech ecosystem is I have exchanged useful ideas and knowledge enabled by exchanges between counterparts, whether founders or investors. I have exchanged useful ideas and knowledge with my counterparts from other hubs Founder or startup/ DATASET: OCCUPATION 67% 33% with my counterparts from other hubs scale-up employee DATASET: OCCUPATION Founder or startup/ 67% 33% scale-up employee DATASET: OCCUPATION I have exchanged useful ideas and knowledge LEGEND with my counterparts from other hubs Founder or startup/ LEGEND scale-up employee 67% 33% Yes DATASET: OCCUPATION Yes No Investor 91% 9% No Investor 91% 9% LEGEND Yes No Investor 91% 9% Other 69% 31% Other 69% 31% Other 0 20 69% 40 60 80 31% 100 0 20 40 60 80 100 % of respondents % of respondents Note: In subregions, only founders' and startup/scale-up employees' 0 20 40 60 80 100 Note: Source: responses included. In company sizes, only founders' In subregions, only founders' and startup/scale-up employees' The European ecosystem bene�ts from interconnectivity in a number of ways that help drive the �ow of Source: % of respondents responses. responses included. In company sizes, only founders' knowledge, talent and capital. The �ow of useful ideas and knowledge throughout the European tech ecosystem is responses. Note: In subregions, only founders' and startup/scale-up employees' enabled by exchanges between counterparts, whether founders or investors. Source: responses included. In company sizes, only founders' DATASET: COMPANY SIZE BY # OF EMPLOYEES responses. I have exchanged useful ideas and knowledge with my counterparts from other hubs <=10 74% 26% DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND Yes No 11-100 67% 33% 100+ 77% 23% 0 10 20 30 40 50 60 70 80 90 100 The European ecosystem bene ts from interconnectivity in a number of ways that help drive the ow of The European ecosystem bene�ts from interconnectivity in a number of ways that help drive the �ow of % of respondents knowledge, talent and capital. The ow of useful ideas and knowledge throughout the European tech ecosystem is knowledge, talent and capital. The �ow of useful ideas and knowledge throughout the European tech ecosystem is Note: enabled by exchanges between counterparts, whether founders or investors. enabled by exchanges between counterparts, whether founders or investors. In subregions, only founders' and startup/scale-up employees' Source: responses included. In company sizes, only founders' DATASET: SUBREGION responses. I have exchanged useful ideas and knowledge Central Europe & Baltics 22% I have exchanged useful ideas and knowledge 78% with my counterparts from other hubs Founder or startup/ with my counterparts from other hubs scale-up employee 67% 33% DATASET: OCCUPATION DACH 73% 27% DATASET: SUBREGION LEGEND LEGEND Eastern Europe 79% 21% Yes Yes No Investor 91% 9% No France & Benelux 67% 33% Nordics 64% 36% Southern Europe 68% 32% Other 69% 31% UK & Ireland 65% 35% 0 20 40 60 80 100 0 20 40 60 80 100 % of respondents % of respondents Note: Note: In subregions, only founders' and startup/scale-up employees' In subregions, only founders' and startup/scale-up employees' Source: responses included. In company sizes, only founders' Source: responses included. In company sizes, only founders' responses. responses. & 70 In Partnership with www.thestateofeuropeantech.com

05.3 Density, through Interconnected Tech Hubs The combination of an increase in competition for talent in established European tech hubs together with the increased attractiveness of a new generation of tech hubs across the region is helping to drive an increase in The combination of an increase in competition for talent in established European tech hubs together with the founders’ interest in opening satellite offices to tap new talent pools. 80% increased attactiveness of a new generation of tech hubs across the region is helping to drive an increase in of founders of companies with more than 100 employees state an increased founders' interest in opening satellite o�ces to tap new talent pools. 80% of founders of companies with more interest in pursuing this ‘distributed office’ strategy. than 100 employees state an increased interest in pursuing this distributed o�ce strategy Distribution of change in founder interest in opening satellite oíces to tap new talent <=10 pools by company size (past 12m) LEGEND Increase No change 11-100 Decrease 100+ 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Respondents stating 'Not able to comment' �ltered out. Source: Founder respondents only. The principle of scaling a European tech company by building in a distributed way across multiple offices in different cities is firmly embedded. By the time The trend of scaling European tech companies by building in a distributed way across multiple o�ces in different European startups have hit 100 employees or more, more than half of them cities is �rmly embedded. By the time European startups have hit 100 employees or more, more than half of them have established a satellite office or team in another hub. have established a satellite o�ce/team in another hub. My company has established satellite oíces/teams in other hubs <=10 21% 79% LEGEND Yes No 11-100 33% 67% 100+ 58% 42% 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Source: Founder respondents only. & 71 In Partnership with www.thestateofeuropeantech.com

05.3 Density, through Interconnected Tech Hubs In addition to opening offices in new hubs to tap alternative talent pools, a large number of European founders recruit high-performing In addition to opening o�ces in new hubs to tap alternative talent pools, a large number of European founders talent from other hubs, though the likelihood of doing so increases recruit high-performing talent from other hubs, though the likelihood of doing so increases signi�cantly as the size significantly as the size of the company increases. of the company increases. I have recruited high-performing talent from other hubs, by company size by # of <=10 19% 81% employees LEGEND Yes No 11-100 35% 65% 100+ 63% 37% 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Source: Founder respondents only. Europe’s tech ecosystem also benefits from an interconnected flow of capital, driven by connections between investors and founders across borders. Europe’s VCs, in particular, are highly connected and Europe's tech ecosystem also bene ts from an interconnected ow of capital, driven by connections between EEuuroroppee's t's teecchh e eccoossyysstetemm a alsolso b beennee tsts f froromm a ann i inntetercrcoonnnneecctetedd ooww o of cf caappitiatal,l d, drirviveenn b byy c coonnnneecctitoionnss b beetwtweeeenn investors and founders across borders. Europe's VCs, in particular, are highly connected and have almost have almost unanimously built relationships and benefit from positive ininvveesstotors ars anndd f foouunnddeers ars accrorosss bs boordrdeersrs. E. Euuroroppee's's V VCCss, i, inn p paartritcicuulalar,r a, arere h higighhlyly c coonnnneecctetedd a anndd h haavvee a almlmoosstt unanimously built relationships and bene t from positive interactions with fellow investors from other hubs across interactions with fellow investors from other hubs across the region – a uunnaannimimoouuslysly b buuilitl rt reelalatitoionnshishippss a anndd b beennee t ft froromm p poossitiitvivee i innteteraracctitoionnss w witihth f feellloloww i innvveesstotorsrs f froromm o oththeer hr huubbss a accrorossss the region. unique advantage given the diversity of the European market as a whole. ththee r reeggioionn. . I have interacted positively with investors OCCUPATION from other hubs Founder or I hI havaev ien itnetrearcatcetd ped poosistiitvievleyl wy witiht ihn ivnevsetsotorsrs frforomm o othtehre hr hubsubs startup/scale-up 56% 44% employee DATASET: OCCUPATION FoFuonudnedre orr or stsatraturtpu/ps/csacleal-eu-pup 565%6% 444%4% employee DADTAATASSEET:T :O OCCCCUUPAPTAITOIONN employee LEGEND Yes Investor 95% 5% LELEGGEENNDD InIvnevsetsotror 959%5% 5% No 5% YeYses 0 20 40 60 80 100 Europe's tech ecosystem also bene ts from an interconnected ow of capital, driven by connections between NoNo % of respondents 00 2020 4040 6060 8080 101000 investors and founders across borders. Europe's VCs, in particular, are highly connected and have almost %% of o rfe rsepospondnednetnsts unanimously built relationships and bene t from positive interactions with fellow investors from other hubs across the region. Source: Europe's tech ecosystem also bene ts from an interconnected ow of capital, driven by connections between Europe's tech ecosystem also bene ts from an interconnected ow of capital, driven by connections between COMPANY SIZE BY # OF EMPLOYEES SoSuorucrec:e: investors and founders across borders. Europe's VCs, in particular, are highly connected and have almost investors and founders across borders. Europe's VCs, in particular, are highly connected and have almost unanimously built relationships and bene t from positive interactions with fellow investors from other hubs across unanimously built relationships and bene t from positive interactions with fellow investors from other hubs across the region. <=10 59% 41% the region. Note: In subregions, only founders' and startup/scale-up employees' I have interacted positively with investors NoNotet:e: responses included. In company sizes, only founders' 11-100 InI snu sburbergeigoinosn, so,n olny lfyo fuonudnedresr' sa'n adn sdt satraturtp/up/scsacleal-eu-p uep mpemplolyoeyeese' s' 72% 28% responses. from other hubs Founder or rerseposponsnesse isn icnlculduedde.d In. I cno cmpaompanyn syi zseizse, so,n olny lfyo fuonudnedresr' s' startup/scale-up <=10 59% 41% rerseposponsnesse.s. employee 56% 44% DATASET: OCCUPATION LEGEND 100+ 79% 21% Yes Investor 95% 5% Note: 11-100 72% 28% In subregions, only founders' and startup/scale-up employees' No 0 10 20 30 40 50 60 70 80 90 100 responses included. In company sizes, only founders' 0 20 40 60 80 100 responses. % of respondents % of respondents 100+ 79% 21% Note: In subregions, only founders' and startup/scale-up employees' Source: responses included. In company sizes, only founders' Source: 0 10 20 30 40 50 60 70 80 90 100 responses. % of respondents Source: Note: In subregions, only founders' and startup/scale-up employees' responses included. In company sizes, only founders' responses. & 72 In Partnership with www.thestateofeuropeantech.com

05.3 Density, through Interconnected Tech Hubs Photo: Sami Valikangas Europe’s tech ecosystem also benefits from a valuable series of international events that help to interconnect hubs via network flow. The overwhelming Europe's tech ecosystem also bene�ts from a valuable series of international events that help to interconnect majority of investors and a clear majority of founders and startup employees hubs via network �ow. The overwhelming majority of investors, and a clear majority of founders and startup have attended events in other hubs that they have found useful. employees, have attended events in other hubs that have been useful to them. I have attended useful events in other hubs Founder or startup/scale-up employee 67% 34% LEGEND Yes No Investor 85% 15% Other 67% 33% 0 20 40 60 80 100 % of respondents Note: In subregions, only founders' and startup/scale-up employees' Source: responses included. In company sizes, only founders'. The continued development and growth of the numerous tech-hubs across Europe will be a critical factor in incubating the next big tech successes. “ The continued development and growth of the numerous tech-hubs across Europe will be a critical factor in incubating the next big tech successes. Europe boasts some of the world’s most progressive universities and research institutions, contributing directly to the growing and diverse pool of ideas and talent across London, Paris, Berlin, Stockholm, as well as other European hubs. Governments and policy makers across the region are also increasingly responsive to Munish Varma the technology-led agenda through forward-thinking regulation and SoftBank Vision Fund investment in next-generation digital infrastructure. These factors combine to provide the foundation for partnerships between bold entrepreneurs and bold investors in building the businesses that fundamentally disrupt the status quo.” & 73 In Partnership with www.thestateofeuropeantech.com

Building and internationalising away from home The overwhelming majority of European founders are happy in Europe. It's often said that European founders 'all want to move to the Valley'. This is not what the data shows. Only 6% of Just 6% would choose to found and build their company in Silicon Valley European founders would choose to found and build their company in Silicon Valley if given the chance to start if given the chance to start over again. over again. If you were to start over, where would you I would stay where we are now 63.9% choose to found and build your company? A different European city 19.3% LEGEND % of founders Silicon Valley/Bay Area 6.2% Somewhere else (e.g. Asia) 3.7% Other (please specify) 3.6% A different US city (not Silicon Valley/Bay 3.0% Area) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 % of respondents Note: Source: Founder respondents only Given that 28% of European founders are building their companies outside of their home countries, it’s clear that founders will move if Given that 28% of European founders are building their companies outside of their home country, it's clear that necessary to find the right location to build their company. But this is founders will move if necessary to ïnd the right location from which to build their company. But this is not not necessarily their first choice. The majority of founders choose to necessarily their ïrst choice. The majority of founders choose to build from exactly where they are or where they build exactly where they are or where they have an established network. have an established network. What was the most important consideration I was already living here 46.1% for you when choosing where to locate your company when you founded it? Strength of my personal network here 14.2% LEGEND Access to relevant talent 7.2% % of counders Strength of the local tech community 5.6% Access to customers 5.0% Friendly business environment 4.9% Access to investors (angels, VCs, etc) 4.5% Cost of talent 3.6% Other 2.7% Access to knowledge 2.3% Friendly regulatory environment 2.2% Cost of office space 1.1% 0.0 10.0 20.0 30.0 40.0 50.0 % of respondents Note: Source: Founder respondents only & 74 In Partnership with www.thestateofeuropeantech.com

05.4 Building and internationalising away from home European teams entering Y Combinator are voting with their feet on where to build their business; YC graduates who have returned to Europe have raised 5x more in the past two European teams entering Y Combinator are voting with their feet on where to build their business; YC graduates years than those who moved their startups to the US (the difference in absolute amounts that have returned to Europe have raised 5x more in the past two years than those that moved their startup to the across years is simply a function of the relative age of the different cohorts). US ) M $ ( r $170.6M Funds raised by Y Combinator cohorts, a e y Europe vs US-based ($M) t r o h o c 150.0 C LEGEND Y r pe HQ in Europe s $102.3M e i HQ in US n 100.0 mpa o $71.6M c $66.9M y b d e 50.0 s i $36.6M a $32.3M r $25.6M s d n $8.8M u $5.9M f $5.0M l a t 0.0 o T 2014 2015 2016 2017 2018 Source: Blossom Blossom Capital Capital European founders going through Y Combinator are FOUNDER RELOCATION TRENDS voting with their feet and choosing to return to Europe European founders that have graduated from Y Combinator and returned to Europe 5x have raised 5x more than those that moved their startup to the U.S. Blossom Capital European graduates of YC that elect to build from Europe are attracting investment from the region's leading investors, as well as from top US-based funds. European graduates of YC that elect to build Selected examples of YC graduates that are building from Europe from Europe are attracting investment from the YC Cohort HQ Location Selected Investors Selected examples of YC graduates that are Duffel Summer 2018 London Blossom, Index region’s leading investors, as well as from top U.S.-based funds. building from Europe Let's do This Winter 2018 London Shasta Quit Genius Winter 2018 London Village Global Siite Winter 2018 Paris eFounders, Index Station Winter 2018 Paris Accel, eFounders Veriff Winter 2018 Tallinn Mosaic, ACE & Company Fat Lama Summer 2017 London Atomico, Blossom, Greylock MessageBird Summer 2016 Amsterdam Accel, Atomico Blossom Capital Source: Blossom Capital Around two-thirds of Europe's scale-ups have established an Around two-thirds of Europe’s scale-ups have established an international office international oíce. Share of leading VC-backed European tech companies with an international oíce 61% 60 footprint LEGEND s e International oíce location i 39% n 40 No international oíce location mpa o c f o % 20 0 Companies Note: Based on a sample 120 European tech companies that have reached $B+ milestone and/or raised more than $50M in Source: venture capital. 75 In Partnership with & www.thestateofeuropeantech.com

05.4 Building and internationalising away from home The US is the #1 destination for European tech scale- The US is the #1 destination for European tech scale-ups ups that set up an international office that set up an international oíce. Top 10 most popular countries for US 59% international oíce locations of European UK 53% tech scale-ups that have internationalised their oíce footprint Germany 31% Australia 20% LEGEND % of internationalised companies with oíce in Netherlands 18% country Spain 18% France 16% Italy 14% Poland 14% 0 10 20 30 40 50 60 % of internationalised companies with oíce in country Note: Based on a sample 120 European tech companies that have reached $B+ milestone and/or raised more than $50M in Source: venture capital. Although London ranked as the most cited destination city amongst all respondents, there are clear differences in the top city preferences when analysing the results based on the sub-region of origin of survey participants. On that basis, it’s apparent that London is only Although London ranked as the most cited destination city amongst all respondents, there are clear differences in Although London ranked as the most cited destination city amongst all respondents, there are clear differences in the number one city for respondents from UK & Ireland and from the Mediterranean region. the top city preferences when analysing the results based on the sub-region of origin of survey participants. On the top city preferences when analysing the results based on the sub-region of origin of survey participants. On that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the Mediterranean region. DATASET: BENELUX Mediterranean region. DATASET: WESTERN EUROPE Top 5 hubs where founders would Top 5 hubs where founders would start a Amsterdam Top 5 hubs where founders would start a 48 Berlin 42 company tomorrow, by region company tomorrow, by region start a company DATASET: BENELUX DATASET: WESTERN EUROPE tomorrow, by London 33 Paris 37 LEGEND region LEGEND Share of founders (%) Share of founders (%) Berlin 30 London 23 Eindhoven 18 Cologne 14 Paris 18 Barcelona 13 0 10 20 30 40 50 0 5 10 15 20 25 30 35 40 45 Although London ranked as the most cited destination city amongst all respondents, there are clear differences in Although London ranked as the most cited destination city amongst all respondents, there are clear differences in Share of founders (%) Share of founders (%) the top city preferences when analysing the results based on the sub-region of origin of survey participants. On the top city preferences when analysing the results based on the sub-region of origin of survey participants. On that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the Note: that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the Note: Founders could allocate 3 votes. Percentages indicate how Source: Founders could allocate 3 votes. Percentages indicate how Source: Mediterranean region. Mediterranean region. many founders would like to startup in each respective city. DATASET: NORDICS & BALTICS many founders would like to startup in each respective city. DATASET: CENTRAL & EASTERN EUROPE Top 5 hubs where founders would start a Stockholm Top 5 hubs where founders would start a 42 Berlin 54 company tomorrow, by region company tomorrow, by region DATASET: NORDICS & BALTICS DATASET: CENTRAL EASTERN EUROPE Berlin 40 London 42 LEGEND LEGEND Share of founders (%) Share of founders (%) London 32 Amsterdam 14 Copenhagen 26 Lisbon 13 Amsterdam 15 Warsaw 12 0 5 10 15 20 25 30 35 40 45 0 10 20 30 40 50 60 Although London ranked as the most cited destination city amongst all respondents, there are clear differences in Although London ranked as the most cited destination city amongst all respondents, there are clear differences in Share of founders (%) Share of founders (%) the top city preferences when analysing the results based on the sub-region of origin of survey participants. On the top city preferences when analysing the results based on the sub-region of origin of survey participants. On that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the Note: that basis, it's apparent that London is only the number city for respondents from UK & Ireland and from the Note: Founders could allocate 3 votes. Percentages indicate how Source: Founders could allocate 3 votes. Percentages indicate how Source: Mediterranean region. DATASET: MEDITERRANEAN Mediterranean region. DATASET: UK & IRELAND many founders would like to startup in each respective city. many founders would like to startup in each respective city. Top 5 hubs where founders would start a London Top 5 hubs where founders would start a 47 London 71 company tomorrow, by region company tomorrow, by region DATASET: MEDITERRANEAN DATASET: UK & IRELAND Barcelona 44 Berlin 34 LEGEND LEGEND Share of founders (%) Share of founders (%) Berlin 28 Paris 28 Milan 20 Barcelona 21 Lisbon 15 Dublin 16 0 10 20 30 40 50 0 10 20 30 40 50 60 70 80 Share of founders (%) Share of founders (%) Note: Note: Founders could allocate 3 votes. Percentages indicate how Source: Founders could allocate 3 votes. Percentages indicate how Source: many founders would like to startup in each respective city. many founders would like to startup in each respective city. & 76 In Partnership with www.thestateofeuropeantech.com

05.4 Building and internationalising away from home “ I only invest in B2B software companies, and those can really come from anywhere. That has also been proven in Europe with category You need to look beyond defining companies emerging from beyond the tier-1/2 cities. You need to look beyond the established startup hubs to find the really the established startup interesting opportunities.” hubs to find the really Teddie Wardi interesting opportunities. Insight Venture Partners Office space is one of the largest line items on the P&L for most tech companies, and picking the right office environment and location is an important decision for Oíce space is one of the largest line items on the P&L for most tech companies and picking the right oíce founder to get right. For founders that are prepared to move, there is more choice environment and location is an important decision to get right for founders. For founders that are prepared to than ever. The wide variation of the cost of office space in different cities is just move, there is more choice than ever. The wide variation of the cost of oíce space in different cities is just one one factor to consider, though not necessarily a primary one. factor to consider, though not necessarily a primary one. Cost of prime rent ($ per square metre per London (Central), United Kingdom $1,496 year) for oíce space by city, 2Q 2018 Paris Ile-de-France, France $995 Stockholm, Sweden $852 Dublin, Ireland $819 LEGEND Zurich, Switzerland $757 Prime Rent ($ per square metre per year) Moscow, Russian Federation $729 Luxembourg City, Luxembourg $702 Milan, Italy $656 Oslo, Norway $640 Helsinki, Finland $562 Istanbul, Turkey $505 Amsterdam, Netherlands $480 Madrid, Spain $453 Berlin, Germany $443 Brussels, Belgium $369 Vienna, Austria $358 Athens, Greece $351 Budapest, Hungary $323 Warsaw, Poland $323 Copenhagen, Denmark $299 Prague, Czech Republic $292 Lisbon, Portugal $288 Kiev, Ukraine $277 Bucharest, Romania $260 Bratislava, Slovakia $239 Belgrade, Serbia $232 Zagreb, Croatia $211 Sofia, Bulgaria $197 0 250 500 750 1,000 1,250 1,500 $ per square metre per year Source: & 77 In Partnership with www.thestateofeuropeantech.com

05.4 Building and internationalising away from home There are huge potential cost benefits by placing offices in locations outside the primary hub, though the differences vary by country. In the U.K. and France, founders choosing to build outside of London and Paris stand to benefit from hugely reduced fees on the relative cost of office space. In Germany, on the other hand, the difference in the costs of office space outside Berlin is far less pronounced. There are huge potential cost bene�ts by locating o�ces in locationsT ohuetrsei adere t hheu pgeri pmoatreyn htiuabl c, tohsotu bgehn teh�ets by locating o�ces in locations outside the primary hub, though the Cost of prime rent ($ per square metre per year) for office space differences vary by country. In the UK and Paris, founders choosing tod bifufeilrde onuctess videa oryf b Lyo cnoduonnt aryn.d I Pn tahreis U sKta anndd t Poaris, founders choosing to build outside of London and Paris stand to by city in selected countries, 2Q 2018 bene�t from hugely reduced fees on the relative cost of o�ce space.b Ienn Gee�rtm faronmy, o hnu tgheely o rethdeurc headn fde,e tsh oen the relative cost of o�ce space. In Germany, on the other hand, the difference in the costs of o�ce space outside Berlin is far less pronoudnifcfeerde.nce in the costs of o�ce space outside Berlin is far less pronounced. DATASET: FRANCE DATASET: GERMANY Cost of prime rent ($ per square metre perParis (Ile-de-France) Cost of prime rent ($ per square metre pe$r995 Frankfurt am Main $562 year) for oíce space by city in selected year) for oíce space by city in selected coun Marseille co$u3n75 tries, 2Q 2018 tries, 2Q 2018 Munich $520 DATASET: FRANCE DATASET: GERMANY Lyon $351 LEGEND LEGEND Berlin $443 Prime Rent ($ per square metre per year) Nice $269 Prime Rent ($ per square metre per year) Hamburg $379 Toulouse $258 Dusseldorf $379 Lille $258 Bordeaux $234 Cologne $309 0 200 400 600 800 1,000 0 100 200 300 400 500 600 There are huge potential cost bene�ts by locating o�ces in locationsT oheurtesi adree t hhueg per pimoateryn htiuabl c, tohsot ubgehn teh�ets by locating o�ces in locations outside the primary hub, though the Prime Rent ($ per square metre per year) Prime Rent ($ per square metre per year) There are huge potential cost bene�ts by locating o�ces in locations outside the primary hub, though the differences vary by country. In the UK and Paris, founders choosing tod biffueirlde oncuetss vidaer oyf b Lyo cnoduonnt aryn. Idn P tahreis U sKta anndd t Poaris, founders choosing to build outside of London and Paris stand to differences vary by country. In the UK and Paris, founders choosing to build outside of London and Paris stand to bene�t from hugely reduced fees on the relative cost of o�ce space.b Ienn Gee�rtm fraonmy, h oung tehley o retdhuecr heda fnede, tsh oen the relative cost of o�ce space. In Germany, on the other hand, the bene�t from hugely reduced fees on the relative cost of o�ce space. In Germany, on the other hand, the Source: Source: difference in the costs of o�ce space outside Berlin is far less pronoduinffceerde.nce in the costs of o�ce space outside Berlin is far less pronounced. DATASET: SPAIN DATASET: UNITED KINGDOM difference in the costs of o�ce space outside Berlin is far less pronounced. Cost of prime rent ($ per square metre per Cost of prime rent ($ per square metre per Cost of prime rent ($ per square metre perMadrid $453 London (Central) $1,496 year) for oíce space by city in selectedLondon (Central) year) for oíce space by city in selected $1,496 year) for oíce space by city in selected coun coun tries, 2Q 2018 tries, 2Q 2018 coun tries, 2Q 2018 Barcelona $344 Manchester $513 Manchester $513 DATASET: SPAIN DATASET: UNITED KINGDOM DATASET: UNITED KINGDOM LEGEND LEGEND LEGEND Malaga $485$169 Edinburgh $485 Edinburgh Prime Rent ($ per square metre per year) Prime Rent ($ per square metre per year) Prime Rent ($ per square metre per year) Zaragoza $158 Birmingham $470 Birmingham $470 There are huge potential cost bene�ts by locating o�ces in locations outside the primary hub, though the Valencia $152 Glasgow $463 Glasgow $463 differences vary by country. In the UK and Paris, founders choosing to build outside of London and Paris stand to bene�t from hugely reduced fees on the relative cost of o�ce space. In Germany, on the other hand, the Palma de Mallorca $140 Bristol $463 Bristol $463 difference in the costs of o�ce space outside Berlin is far less pronounced. 0 100 200 300 400 500 0 250 500 750 1,000 1,250 1,500 0 250 500 750 1,000 1,250 1,500 Prime Rent ($ per square metre per year) Prime Rent ($ per square metre per year) Prime Rent ($ per square metre per year) Cost of prime rent ($ per square metre per London (Central) $1,496 year) for oíce space by city in selected coun Source: tries, 2Q 2018 Source: Source: Manchester $513 DATASET: UNITED KINGDOM LEGEND Edinburgh $485 Prime Rent ($ per square metre per year) Birmingham $470 Europe’s leading hubs have many advantages, but OFFICE SPACE COSTS BY CITY $463 they’re also far more expensive to build from Glasgow Difference in cost per square metre of Bristol $463 prime office space in Paris (Ile-de-Fance) 0 250 500 750 1,000 1,250 1,500 compared to in Marseille, the next most 2.7x expensive French city Prime Rent ($ per square metre per year) Source: & 78 In Partnership with www.thestateofeuropeantech.com

New Hubs - Where Next? European tech has huge upside if it can unlock the potential of its latent talent pools. The size of the developer pools in comparison to relative levels of historical capital invested European tech has huge upside if it can unlock the potential of its latent talent pools. The size of the developer in them suggests that countries such as Italy, Poland or Spain still have large potential to pools in comparison to relative level of historical capital invested in them suggests that countries such as Italy, punch at a greater weight in the European tech ecosystem. Poland or Spain still have large potential to punch at a greater weight in the European tech ecosystem. Scatter of countries based on size of 1,000,000 professional developer talent pool and capital invested ($M) (2013 to 9M 2018) Germany United Kingdom s r pe 750,000 o l e v e d l a n o i France s 500,000 s e f Russia o pr f o Italy Spain # 250,000 Ukraine Sweden Romania 0 -5,000 0 5,000 10,000 15,000 20,000 25,000 30,000 Capital invested ($M) Note: Chart only includes countries with greater than 50,000 Source: professional developers in 2018. There are giant talent hubs that offer huge potential if the local pool can be mobilised in the same way as in cities such as Berlin, Helsinki and Stockholm. Examples of these There are giant talent hubs that offer huge potential if the local pool can be mobilised in the same way that has large talent clusters that have not yet produced companies that have raised large sums of been in achieved in cities such as Berlin, Helsinki and Stockholm. Examples of these large talent clusters that have capital investment include Cologne, Kiev and Vienna. not yet produced companies that have raised large sums of capital investment include Cologne, Kiev and Vienna. 400,000 Scatter of cities based on size of London professional developer talent pool and capital invested ($M) (2013 to 9M 2018) s 300,000 r Paris pe o l e v e Amsterdam d l a n 200,000 o i s s Cologne e f o pr f Frankfurt am Main o # 100,000 Brussels Berlin Stockholm Budapest 0 -5,000 0 5,000 10,000 15,000 20,000 25,000 Capital invested ($M) Note: Investment amounts are based on capital invested in the city in Source: aggregate between 2012 and September 2018. & 79 In Partnership with www.thestateofeuropeantech.com

05.5 New Hubs - Where Next? This emergence of growing and more engaged tech communities in new parts of This emergence of growing and more engaged tech communities in new parts of the region is reðected too in the the region is reflected too in the list of Top 10 fastest-growing tech hubs, ranked by list of Top 10 fastest-growing tech hubs, ranked by year-on-year growth in active members of tech-related Meetup year-on-year growth in active members of tech-related Meetup groups. groups. Top 10 fastest growing hubs in Europe by YoY St. Petersburg, Russia 93% growth rate of active members Sofia, Bulgaria 81% Porto, Portugal 72% LEGEND YoY member growth 2017-2018 (%) Lviv, Ukraine 68% Bern, Switzerland 67% Cardiff, United Kingdom 65% Vilnius, Lithuania 65% Wroclaw, Poland 63% Newcastle, United Kingdom 60% Stuttgart, Germany 59% 0 20 40 60 80 100 % YoY growth Note: 2018 annualised based on active members to end of September Source: 2018 As new hubs continue to proliferate across Europe, the region's leading investors are increasingly backing founders from these locations. In the past 12 months, founders building companies in as diverse a set of cities as Lille, St Gallen and Warsaw have all raised funding from leading European VCs. As new hubs continue to proliferate across Europe, Selected investments in new tech hubs the region’s leading investors are increasingly Country Company Lead Investor Round Type Round Size ($M) Selected investments in new tech hubs Brussels Belgium Cowboy Tiger Global Series A 12 backing founders from these locations. In the past 12 months, founders building companies in as diverse Edinburgh UK Care Sourcer ADV Series A 11 a set of cities as Lille, St Gallen and Warsaw have all Gothenburg Sweden NA-KD Partech Series B 45 raised funding from leading European VCs. Lille France OpenIO Partech Series A 5 Milan Italy Freeda Media Alven Capital Series A 10 Oxford UK Ultromics OSI Series A 13 Reykjavik Iceland Teatime Games Index, Atomico Series A 7 St Gallen Switzerland Frontify Blossom Capital Series A 8 St Paul's Bay Malta FRVR Accel Seed 3 Tallinn Estonia Veriff Mosaic Series A 8 Warsaw Poland Packhelp SpeedInvest Seed 2 Source: We are probably in one of the most difficult positions – trying to produce the world’s fastest electric sportscars out of a country that never had a car industry and has zero market for our products. “ I believe that for software startups, location is not that important. It is harder for hardware startups, especially those whose products are linked to the country’s prestige. We are probably in one of the most difficult positions – trying to produce the world’s fastest electric sportscars out of a country that never had a car industry and has zero market for our products. Despite everything, we have managed to attract funding, the right customers (all major European carmakers) Mate Rimac and talent. It is possible, but probably much much harder than doing it Rimac Automobili in the “right place.” & 80 In Partnership with www.thestateofeuropeantech.com

05.5 New Hubs - Where Next? There is a wide variation in the average software engineer salary both across countries and even within them. According to Glassdoor, software engineers have the highest There is a wide variation in the average software engineer salary both across countries and even within them. median salary in Berlin, which reflects the fact that Berlin has a disproportionately low According to Glassdoor, software engineers have the highest median salary in Berlin, which reðects the fact that it density of local professional developers compared to other cities, but a large number has a disproportionately low density of local professional developers compared to other cities, but a large number of well-capitalised VC-backed companies that are chasing talent. of well-capitalised VC-backed companies that are chasing talent. Average software engineer salary per year by Berlin $58,750 city London $54,000 LEGEND Annual salary ($) Amsterdam $52,250 Vienna $51,500 Paris $49,750 Cambridge $46,000 Helsinki $44,500 Barcelona $40,250 Madrid $36,750 Milan $36,750 Lisbon $31,500 Rome $29,750 Prague $25,000 Warsaw $24,250 Note: Rounded to nearest $250. Data pulled from Glassdoor on 24 Source: Glassdoor October 2018. Glassdoor The huge spread in the cost of software SOFTWARE ENGINEER SALARIES BY CITY engineering talent across European cities is driving talent mobility and higher distribution of company Difference in the median base salary of building. a software engineer in Berlin compared 2.4x to Warsaw Glassdoor 81 In Partnership with & www.thestateofeuropeantech.com Photo: Damon Beckford

Research and Development A Look Around the Corner Europe is a research powerhouse. Its prolific research community exceeds that of the U.S. and China, and is flexing its muscle in deep tech. This research prowess can be a strong differentiator for European tech as science and tech further converge. The key to making that happen: knowledge transfer and better links between STEM and startups. ARTICLES 06.1 Mobilising Europe’s R&D talent pool 06.2 Deepening Europe’s frontier tech credentials In Partnership with & www.thestateofeuropeantech.com

Mobilising Europe’s R&D talent pool If talent represents the foundations of the European tech ecosystem, its academic institutions are the bedrock. Europe is home to 14 of the Top 50 computer science universities in the world, including 5 of the Top 10. Europe is, If talent represents the foundations of the European Europe’s universities among global top 50 in in short, a factory for producing world-class computer science talent. tech ecosystem, its academic institutions are computer science and their global rank the bedrock. Europe is home to 14 of the Top 50 University Country Europe's universities among global top 50 in 3 University of Oxford United Kingdom computer science and their global rank computer science universities in the world, including 5 of the Top 10. Europe is, in short, a factory for 4 ETH Zurich Switzerland producing world-class computer science talent. 5 University of Cambridge United Kingdom 9 Imperial College London United Kingdom 10 EPF Switzerland 14 University of Edinburgh United Kingdom 16 Technical University of Munich Germany 18 UCL United Kingdom 36 Karlsruhe Institute of Technology Germany 37 RWTH Aachen University Germany =42 Delft University of Technology Netherlands =42 Technical University of Berlin Germany 47 LMU Munich Germany 50 KU Leuven Belgium Note: 4 of the world's top 10 and 31 of the world's top 100 Compiled by the Times Higher Education Supplement and Source: Times Higher Education World University Rankings gathered by CERN. 2018 universities in engineering and technology are located in Looking beyond just computer science, Europe Europe’s universities among global top 100 in Europe engineering and technology and their global rank is home to 31 of the world’s top 100 universities in engineering and technology. These 31 universities University Country Europe's universities among global top 100 in 3 University of Oxford United Kingdom engineering and technology and their global are distributed across 11 different countries and 29 5 University of Cambridge United Kingdom rank different cities and reflect the fact that European 9 ETH Zurich Switzerland STEM talent is inherently spread across the region 10 Imperial College London United Kingdom driven by the strong academic institutions that 14 École Polytechnique Fédérale de Lausanne Switzerland exist in all corners of the region. There are, in short, 18 Delft University of Technology Netherlands clusters of world-class talent potential in every 21 Technical University of Munich Germany corner of Europe. 24 RWTH Aachen University Germany 36 UCL United Kingdom 37 KU Leuven Belgium 38 KTH Royal Institute of Technology Sweden 43 Technical University of Berlin Germany 45 University of Edinburgh United Kingdom 46 University of Manchester United Kingdom 51 Eindhoven University of Technology Netherlands 55 Karlsruhe Institute of Technology Germany 58 Technical University of Denmark Denmark 75 University of Bristol United Kingdom 77 University of Stuttgart Germany 79 Chalmers University of Technology Sweden 82 École Polytechnique France 84 University of She eld United Kingdom 85 Aalborg University Denmark 86 Norwegian University of Science and Technology Norway 87 University of Southampton United Kingdom 88 University of Freiburg Germany 90 Polytechnic University of Milan Italy 94 TU Dresden Germany 95 University of Erlangen-Nuremberg Germany 96 Lund University Sweden 99 Aalto University Finland Note: Times Higher Education 'Rank' refers to position in global list of top 100 institutions for Source: Times Higher Education World University Rankings World University Rankings 2018 engineering and technology quali cations. Compiled by the 2018 Times Higher Education Supplement and gathered by CERN. & 83 In Partnership with www.thestateofeuropeantech.com

06.1 Mobilising Europe’s R&D talent pool “ For the past decade or so, European VCs have been cheerfully ignoring the academic and scientific communities. That’s because they have been making great returns from internet For the past decade or and mobile platforms, and have developed superb domain experience and expertise in these areas. Besides, making money out of science is very hard, and there are significant barriers so, European VCs have to entry. But, to quote Bob Dylan, the times they are a changin’... First, the “easy” money from Web 2.0 is less obvious as this platform has reached maturity. Second, the many great been cheerfully ignoring challenges facing the world will require deep tech (or rather deep science) solutions. Third, the the academic and convergence of tech, AI, Genomics, etc. creating new “internet” type opportunities will create the next Googles and Amazons. Fourth, the desire for impact. A new generation of scientists, scientific communities... VCs, philanthropists, and entrepreneurs want to make the world a better place, not just get rich. They aren’t interested in the next app for drone delivered pizzas. Fifth, universities are But, to quote Bob Dylan, under pressure to engage with VCs and to enable the channelling of their research into the outside world. And finally, VCs can bring money, but more importantly their talent, to combine the times they are a with deep tech/science so this channel becomes REAL” changin’... Dave Norwood Oxford Sciences Innovation The EU has a large research community that exceeds its counterparts in the US and China in size # of researchers in EU-28, China and the US As technology and, specifically, software continue their relentless march into every part of the economy, # of researchers in EU-28, China and the US it will become critical for Europe to unlock the potential EU-28 1,764,084 LEGEND of its large research community. It will need to mobilise # of researchers in 2014 to help European tech companies succeed in new frontiers where tech meets science. The research community is a huge potential asset, exceeding both China 1,524,280 the US and China today in total numbers. USA 1,351,903 0 250,000 500,000 750,000 1,000,000 1,250,000 1,500,000 1,750,000 # of researchers Note: A researcher is a professional in conception or creation of Source: Eurostat knowledge, products, processes, methods, systems & Eurostat management of these projects. # of researchers in full-time equivalent (FTE). Data sourced from Eurostat and gathered by There are more than 1.8 million scientists and engineers across Europe, specialising in every ïeld. Germany and CERN. Data for 2014. the UK are the two largest homes to the European research community by far, with more than 300,000 in each There are more than 1.8 million scientists and engineers across Europe, specialising in There are more than 1.8 million scientists and engineers across Europe, specialising in every ïeld. Germany and respective country. France, Italy, Poland and Spain all also have sizeable communities of scientists and engineers. every field. Germany and the UK are the two largest homes to the European research the UK are the two largest homes to the European research community by far, with more than 300,000 in each There are more than 1.8 million scientists and engineers across Europe, specialising in every ïeld. Germany and community by far, with more than 300,000 in each respective country. France, Italy, Poland respective country. France, Italy, Poland and Spain all also have sizeable communities of scientists and engineers. the UK are the two largest homes to the European research community by far, with more than 300,000 in each # of scientists and engineers by country and Spain all also have sizeable communities of scientists and engineers. respective country. France, Italy, Poland and Spain all also have sizeable communities of scientists and engineers. LEGEND upto 3,500,000 # of scientists and engineers by country # of scientists and engineers by country 2,500,000 to 3,000,000 LEGEND2,000,000 to 2,500,000 LEGEND 1,500,000 to 2,000,000 upto 3,500,000 upto 3,500,000 1,000,000 to 1,500,000 2,500,000 to 3,000,000 2,500,000 to 3,000,000 500,000 to 1,000,000 2,000,000 to 2,500,000 upto 500,000 2,000,000 to 2,500,000 1,500,000 to 2,000,000 1,500,000 to 2,000,000 1,000,000 to 1,500,000 500,000 to 1,000,000 1,000,000 to 1,500,000 upto 500,000 500,000 to 1,000,000 upto 500,000 Note: Scientists and engineers refer to persons with scientiïc or Source: Eurostat technological training who are engaged in professional work on science and technology. Data is sourced from Eurostat and gathered by CERN. Latest data is 2017. Note: Scientists and engineers refer to persons with scientiïc or Source: Eurostat technological training who are engaged in professional work on science and technology. Data is sourced from Eurostat and gathered by CERN. Latest data is 2017. & 84 In Partnership with www.thestateofeuropeantech.com Note: Scientists and engineers refer to persons with scientiïc or Source: Eurostat technological training who are engaged in professional work on science and technology. Data is sourced from Eurostat and gathered by CERN. Latest data is 2017.

06.1 Mobilising Europe’s R&D talent pool Europe has some of the world’s leading research centres, and the talent coming out of these centres has increasing entrepreneurial ambitions. The trend is clearly upward. “ Europe is in the early days of tapping its R&D talent pool. There are still barriers here with regards to tech transfer and IP, access to funding to scale capital-intensive, research-based businesses, and to some degree, a perception barrier around the feasibility of ‘commercially-driven,’ non-academic careers. However, this is changing. The good news is that Europe has some of the world’s leading research centers, and the talent coming out of these Irina Haivas centers has increasing entrepreneurial ambitions. The trend is Atomico clearly upward.” Looking at the clusters of scientists and engineers relative to the overall population size of different countries, the Looking at the clusters of scientists and engineers relative to the overall population size of different countries, the highest density communities can be found in the Nordics and Switzerland. The Nordics have the highest density of researchers per capita. highest density communities can be found in the Nordics and Switzerland. Looking at the clusters of scientists and engineers relative to the overall population size of different countries, the highest density communities can be found in the Nordics and Switzerland. Share of scientists and engineers in total Share of scientists and engineers in total population population Share of scientists and engineers in total population LEGEND LEGEND upto 4.50 upto 4.50 LEGEND 3.50 to 4.00 upto 4.50 3.50 to 4.00 3.00 to 3.50 3.50 to 4.00 2.50 to 3.00 3.00 to 3.50 3.00 to 3.50 2.00 to 2.50 2.50 to 3.00 2.50 to 3.00 1.50 to 2.00 2.00 to 2.50 2.00 to 2.50 1.00 to 1.50 1.50 to 2.00 0.50 to 1.00 1.50 to 2.00 1.00 to 1.50 upto 0.50 1.00 to 1.50 0.50 to 1.00 upto 0.50 0.50 to 1.00 upto 0.50 Note: Eurostat Scientists and engineers refer to persons with scienti c or technological training who are engaged in professional work on Note: science and technology. Data is sourced from Eurostat and Scientists and engineers refer to persons with scienti c or gathered by CERN. Latest data is 2017. technological training who are engaged in professional work on science and technology. Data is sourced from Eurostat and gathered by CERN. Latest data is 2017. Source: Eurostat Source: Eurostat Note: Scientists and engineers refer to persons with scientiïc or Source: Eurostat The openness and the sharing of “ CERN’s natural environment is about collaboration and openness. technological training who are engaged in professional work on By pooling together resources, brainpower and complementary science and technology. Data is sourced from Eurostat and expertise, CERN creates unique value that opens new doors for all. information is something, I presume, gathered by CERN. Latest data is 2017. The result is more than the sum of what its Member States could tech companies will have to do more create nationally, and so the benefit is more than a financial one. For of in the future and hopefully they can this to work, CERN collaborates with a large number of partners and I believe this is something start-ups can learn from. learn from CERN in that regard. CERN has developed a collaborative model of working which is very special and its governance has proven it is capable of extraordinary advances in science and technology since its creation in 1954. The Giovanni Anelli Large Hadron Collider and the discovery of the Higgs boson are European Organization for Nuclear concrete examples that highlight the success of this international Research (CERN) collaboration. The openness and the sharing of information is something, I presume, tech companies will have to do more of in the future and hopefully they can learn from CERN in that regard.” & 85 In Partnership with www.thestateofeuropeantech.com

06.1 Mobilising Europe’s R&D talent pool The European tech ecosystem is built on top EUROPEAN RESEARCHER TALENT of a large pool of researcher talent that it has largely untapped. Total researchers in Europe 2m Eurostat Europe’s research community is an ideas and knowledge factory and produces research at a level that is globally competitive and on par with the US. Europe publishes almost as many research papers as the US # of publications in Europe, China and the US US 19,579 LEGEND Count of publications in 2017 Europe 18,070 China 9,089 0 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 # of publications (fractional count) Note: 'Count' refers to a fractional count that takes into account the percentage of authors from that institution/country and the number of aíliated institutions per paper. Data sourced via Nature Index and gathered by CERN. But it is not just quantity, but also the quality of research that originates from Europe. The European research community leads the world by share of publications in the top 10% most cited, though China is gaining ground at an impressive rate. The European Union produces the most publications in the top 10% ranked by citings, but China is catching up fast Share of publications in the top 10% most 43% cited publications US LEGEND 30% Share in 2000 (%) Share in 2014 (%) 1% China 12% 33% EU-28 32% Note: A fractional count takes into account the percentage of authors from that institution/country and the number of aíliated institutions per paper. Data sourced via European Commission Directorate-General for Research and Innovation and gathered by CERN. & 86 In Partnership with www.thestateofeuropeantech.com

06.1 Mobilising Europe’s R&D talent pool For its size, Switzerland is the publication powerhouse of Europe, driven by the strength of its world-leading For its size, Switzerland is the publication powerhouse of Europe, driven by the strength of its world-leading research institutions such as ETH Zurich and EPF Lausanne. For its size, Switzerland is the publication powerhouse of Europe, driven by the strength For its size, Switzerland is the publication powerhouse of Europe, driven by the strength of its world-leading research institutions such as ETH Zurich and EPF Lausanne. research institutions such as ETH Zurich and EPF Lausanne. of its world-leading research institutions such as ETH Zurich and EPF Lausanne. # of publications per country (fractional count) # of publications per country (fractional # of publications per country (fractional count) count) LEGEND upto 4,500 LEGEND LEGEND 3,500 to 4,000 upto 4,500 upto 4,500 3,000 to 3,500 3,500 to 4,000 2,500 to 3,000 3,500 to 4,0003,000 to 3,500 2,000 to 2,500 2,500 to 3,000 3,000 to 3,5001,500 to 2,000 2,000 to 2,500 2,500 to 3,0001,000 to 1,500 1,500 to 2,000 500 to 1,000 1,000 to 1,500 2,000 to 2,500 upto 500 1,500 to 2,000500 to 1,000 upto 500 1,000 to 1,500 500 to 1,000 upto 500 Eurostat Note: A fractional count that takes into account the percentage of Source: Eurostat authors from that institution/country and the number of Note: aíliated institutions per paper. Data is for 2017. Data sourced Source: Eurostat A fractional count that takes into account the percentage of via Nature Index and gathered by CERN. authors from that institution/country and the number of aíliated institutions per paper. Data is for 2017. Data sourced via Nature Index and gathered by CERN. Even though the largest countries in Europe publish the most papers, the share of publications in the top 10% Even though the largest countries in Europe publish the most papers, the share of Note: publications in the top 10% most cited reveals a wider group of countries contributing most cited reveals a wider group of countries contributing strongly to European research. European research Even though the largest countries in Europe publish the most papers, the share of publications in the top 10% A fractional count that takes into account the percentage of Source: Eurostat Even though the largest countries in Europe publish the most papers, the share of publications in the top 10% authors from that institution/country and the number of strongly to European research. European research talent is inherently distributed. As most cited reveals a wider group of countries contributing strongly to European research. European research talent is inherently distributed. As tech and research collide further, this will likely only further drive the already aíliated institutions per paper. Data is for 2017. Data sourced most cited reveals a wider group of countries contributing strongly to European research. European research talent is inherently distributed. As tech and research collide further, this will likely only further drive the already tech and research collide further, this will likely only further drive the already rich level of via Nature Index and gathered by CERN. rich level of geographic diversity that characterises the European tech ecosystem. talent is inherently distributed. As tech and research collide further, this will likely only further drive the already rich level of geographic diversity that characterises the European tech ecosystem. geographic diversity that characterises the European tech ecosystem. rich level of geographic diversity that characterises the European tech ecosystem. Share of publications in the top 10% most Share of publications in the top 10% most Share of publications in the top 10% most cited publications cited publications cited publications LEGEND LEGEND upto 15.0 LEGEND upto 15.0 13.0 to 14.0 upto 15.0 13.0 to 14.0 12.0 to 13.0 12.0 to 13.0 13.0 to 14.0 11.0 to 12.0 11.0 to 12.0 12.0 to 13.0 10.0 to 11.0 10.0 to 11.0 9.0 to 10.0 11.0 to 12.0 9.0 to 10.0 8.0 to 9.0 8.0 to 9.0 10.0 to 11.0 6.0 to 8.0 6.0 to 8.0 9.0 to 10.0 4.0 to 6.0 4.0 to 6.0 3.0 to 4.0 8.0 to 9.0 3.0 to 4.0 upto 3.0 6.0 to 8.0 upto 3.0 4.0 to 6.0 3.0 to 4.0 Eurostat upto 3.0 Note: A fractional count takes into account the percentage of Note: authors from that institution/country and the number of A fractional count takes into account the percentage of aíliated institutions per paper. Data is for 2014, the most authors from that institution/country and the number of recent available. Data sourced via European Commission RIO aíliated institutions per paper. Data is for 2014, the most and gathered by CERN. recent available. Data sourced via European Commission RIO and gathered by CERN. Note: A fractional count takes into account the percentage of WORLD-CLASS TECHNICAL UNIVERSITIES The European tech ecosystem is underpinned by a authors from that institution/country and the number of supply of world-class academic talent aíliated institutions per paper. Data is for 2014, the most recent available. Data sourced via European Commission RIO of the world’s Top 100 engineering and gathered by CERN. and technology universities globally 31% are European. Eurostat & 87 In Partnership with www.thestateofeuropeantech.com

Deepening Europe’s frontier tech credentials FFrraannccee,, G Geerrmmaannyy a anndd t thhee U UKK a arree t thhee l laarrggeesstt d deessttiinnaattiioonnss f foorr c caappiittaall i innvveessttmmeennttss i innttoo E Euurrooppeeaann t teecchh c coommppaanniieess,, Europe has experienced rapid growth in bbuutt t thheerree a arree m meeaanniinnggffuull su summss b beeiinngg i innvveesstteedd i innttoo d deeeepp t teecchh c coommppaanniieess a accrroossss t thhee r reeggiioonn,, i inncclluuddiinngg i innttoo investments into deep tech. ccoouunnttrriiees sus succhh a as Ss Swweeddeenn a anndd S Swwiittzzeerrllaanndd.. CCaappiittaall i innvveesstteed (d ($$MM)) i inn E Euurrooppeeaann de deeepp tteecchh DATASET: TOP 10 COUNTIRES ccoommppaanniieess b byy c coouunnttrryy UUnniitteedd KKiinnggddoomm 1,752 4,182 1,752 4,182 FFrraannccee 912 1,958 912 1,958 LLEEGGEENNDD Germany Germany 1,372 335511 1,372 22001133--22001177 Switzerland Switzerland 618 22001188 660044 618 SSwweeddeenn 145 918 145 918 Netherlands Netherlands 93 611 93 611 Spain Spain 333388 Finland Finland 331133 BBeellggiiuumm 294 294 Austria Austria 288 288 0 1,000 2,000 3,000 4,000 5,000 6,000 0 1,000 2,000 3,000 4,000 5,000 6,000 FFrraannccee,, G Geerrmmaannyy a anndd t thhee U UKK a arree t thhee l laarrggeesstt d deessttiinnaattiioonnss f foorr c caappiittaall i innvveessttmmeennttss i innttoo E Euurrooppeeaann t teecchh c coommppaanniieess,, CCaapipittaall iinnvveesstteedd (($$MM)) bbuutt t thheerree a arree m meeaanniinnggffuull su summss b beeiinngg i innvveesstteedd i innttoo d deeeepp t teecchh c coommppaanniieess a accrroossss t thhee r reeggiioonn,, i inncclluuddiinngg i innttoo ccoouunnttrriiees sus succhh a as Ss Swweeddeenn a anndd S Swwiittzzeerrllaanndd.. SSoouurrccee:: DATASET: COUNTRIES 11-20 CCaappiittaall i innvveesstteed (d ($$MM)) i inn E Euurrooppeeaann de deeepp t teecchh IrIreelalanndd 223366 3399 ccoommppaanniieess b byy c coouunnttrryy ItItaalyly 119922 8833 NoNottee:: 22001188 bbaasseedd oonn 99 momonntthhss ttoo SSeepptteembmbeerr 22001188 aanndd prproojjeeccttiioonn ffoorr NNoorrwwaayy 117700 4400 DDAATTAASSEETT:: CCOOUUNNTTRRIIEESS 1111--2200 AANNDD RREESSTT OOFF QQ44 22001188 bbaasseedd oonn QQ33 22001188.. EEUURROOPPEE CCyypprruuss 5566 115511 LLEEGGEENNDD RRuussssiaia 111144 4444 22001133--22001177 DDeennmmaarrkk 7711 8877 22001188 PPoorrttuuggaall 5577 4411 PPoolalanndd 6622 00 RRoommaanniaia 6600 00 EEssttoonniaia 5500 00 RReesstt o off E Euurrooppee 114499 44 00 5500 110000 115500 220000 225500 330000 CCaapipittaal li ninvveesstteedd ( $($MM)) NoNottee:: 22001188 b baasseedd o onn 9 9 mo monntthhss t too S Seepptteembmbeerr 2 2001188 a anndd pr proojejeccttioionn f foorr SSoouurrccee:: QQ44 2 2001188 b baasseedd o onn Q Q33 2 2001188.. The level of capital invested into European deep tech companies exceeded $5B again in 2018 across more than 800 deals. This investment encompasses both companies that are working on solving core technology problems, as well as those companies that are applying deep technology to seek to transform a range of target industries. Capital invested ($B) in and # of deals closed 5.0 1,075.0 by European deep tech companies 4.6 4.3 1,000.0 LEGEND 4.0 857.0 Capital invested ($B) ) 784.0 B 3.2 $ ( 800.0 # # of deals d 3.0 e o t f s e d v e n 615.0 2.4 a i l l s a t 600.0 pi 2.0 a C 1.6 1.0 400.0 0.7 0.0 200.0 2013 2014 2015 2016 2017 2018 Note: 2018 based on 9M to September 2018 and projection for Q4 2018 Source: based on Q3 2018. & 88 In Partnership with www.thestateofeuropeantech.com

06.2 Deepening Europe’s frontier tech credentials Many interesting deep tech companies have raised funding Many interesting deep tech companies have raised funding Many interesting deep tech companies have raised Selected investment rounds raised by European this year in Europe deep tech companies in 2018 this year in Europe funding this year in Europe. Industry Location Last round Round size ($M) Industry Location Last round Round size ($M) Selected investment rounds raised by UiPath Enterprise software Romania Series C 225 European deep tech companies in 2018 Selected investment rounds raised by UiPath Enterprise software Romania Series C 225 European deep tech companies in 2018 Ledger FinTech France Series B 69 Ledger FinTech France Series B 69 Celonis Enterprise software Germany Series B 50 Celonis Enterprise software Germany Series B 50 Darktrace Legal security United Kingdom Series E 50 Darktrace Legal security United Kingdom Series E 50 Meero Media France Series B 45 Meero Media France Series B 45 Iceye Media, Transporation Finland Series B 34 Iceye Media, Transporation Finland Series B 34 Navya Robotics, Transportation France Series C 34 Navya Robotics, Transportation France Series C 34 Varjo Media Finland Series B 31 Varjo Media Finland Series B 31 Medopad Health, Enterprise software United Kingdom Series A 28 Medopad Health, Enterprise software United Kingdom Series A 28 Tractable FinTech United Kingdom Series B 25 Tractable FinTech United Kingdom Series B 25 Note: Note: Some of the numbers converted from EUR to USD with an FX Source: Some of the numbers converted from EUR to USD with an FX rate of 1.13, the rate on 14 November 2018. rate of 1.13, the rate on 14 November 2018. Source: “ Going forward, I can see more R&D based start-ups coming out of European universities, building off multidisciplinary teams of scientists and engineers and tackling some of the large challenges of our century like sustainability and health. These businesses will likely be global from day one. Europe will then need to make sure to keep (and fund) this talent here, by creating the right incentives for the eco- system and adapting to the different requirements these businesses Irina Haivas have in terms of funding and milestone expectations, new business Atomico models and talent.” Artiïcial Intelligence continues to dominate the deep tech Arti cial Intelligence continues to dominate the deep tech landscape in terms of capital invested. landscape in terms of capital invested. Artificial Intelligence continues to dominate the Capital invested ($M) by deep tech sub-category Capital invested ($M) by deep tech sub- Artificial Intelligence 234 582 1,086 1,382 2,306 1,965 Artificial Intelligence 234 582 1,086 1,382 2,306 1,965 deep tech landscape in terms of capital invested. Hardware 408 376 1,197 1,674 943 1,282 category Capital invested ($M) by deep tech sub- Hardware 408 376 1,197 1,674 943 1,282 Internet of Things 62 223 555 837 677 684 category Internet of Things 62 223 555 837 677 684 Blockchain 45 133 66 171 223 651 3D 100 111 282 325 264 610 Blockchain 45 133 66 171 223 651 Big data 146 317 455 358 516 452 3D 100 111 282 325 264 610 Robotics 10 35 94 187 243 368 Big data 146 317 455 358 516 452 Search 96 441 458 575 328 299 Robotics 10 35 94 187 243 368 Virtual reality 7 32 160 304 652 244 Search 96 441 458 575 328 299 Computer vision 23 3 106 115 107 237 Virtual reality 7 32 160 304 652 244 Developer tools 78 156 97 142 668 205 Computer vision 23 3 106 115 107 237 Semiconductors 154 78 162 159 159 183 Developer tools 78 156 97 142 668 205 Nanotech 23 13 101 182 49 145 Semiconductors 154 78 162 159 159 183 Predictive analytics 16 353 274 273 156 120 Nanotech 23 13 101 182 49 145 Drones 7 3 70 75 29 112 Predictive analytics 16 353 274 273 156 120 Deep learning 19 31 89 63 196 71 Drones 7 3 70 75 29 112 Speech & Hearing 23 71 2 37 35 14 Deep learning 19 31 89 63 196 71 Radar 9 21 5 19 13 0 Speech & Hearing 23 71 2 37 35 14 2013 2014 2015 2016 2017 2018 Radar 9 21 5 19 13 0 Note: 2013 2014 2015 2016 2017 2018 Hardware includes hardware manufacturing. 2018 based on 9 Source: months to September 2018 and projection for Q4 2018 based on Note: Q3 2018. Hardware includes hardware manufacturing. 2018 based on 9 Source: months to September 2018 and projection for Q4 2018 based on Q3 2018. Throughout history, Europe’s been known for its innovations and even today, top research projects are led by European teams, so let’s make sure this remains the case in the coming years. “ Europe is home to the largest share of top 100 AI research institutions globally in addition to being home to half of the top computer science institutions. Throughout history, Europe’s been known for its innovations and even today, top research projects are led by European teams, so let’s make sure this remains the case in the coming years.” Rasmus Ekholhm Slush & 89 In Partnership with www.thestateofeuropeantech.com

Regulation Bridging Tech & Policy The tech and policy worlds are moving closer together as they seek to bridge any differences and avoid talking past each other. Founder opinions are balanced on GDPR and the general direction of tech policy in the region. Data privacy and content copyright continue to dominate policy discussion, and regulators are overlooking new key technology fields. ARTICLES 07.1 Embracing Regulation 07.2 Evolving Tech Policy in Europe 07.3 What Founders Want In Partnership with & www.thestateofeuropeantech.com

Embracing Regulation There is clear evidence of a strong desire from within Europe to build bridges between the There is, however, clear evidence of a strong desire from within Europe to build bridges between the tech and tech and policy spheres. A majority of founders, investors and policymakers agree that policy spheres. A majority of founders, investors and policymakers agree that there should be stronger ties there should be stronger ties between European tech startups/scaleups and governments. between European tech startups/scapeups and governments European tech startups and scale-ups need stronger ties with governments Founder or startup/scale-up employee LEGEND Agree Neither agree nor disagree Disagree Venture capitalist Policymaker or employee in the public sector 0 20 40 60 80 100 % of respondents Source: & 91 In Partnership with www.thestateofeuropeantech.com Photo: Sami Heiskanen

07.1 Embracing Regulation Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. Only 24% of total respondents believe that regulation has had a negative impact on the Founder or startup /scale-up European tech industry in the past 12 months. This varies, however, by occupation and employee Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in region. Respondents from France are most positive on the impact of regulation, while the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in founders skew slightly more negative than positive, but only by a fraction. Investor on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. Note: Company size: Founder respondents only. What impact has regulation in Europe had on DATASET: ALL RESPONDENTS Policymaker or the European tech industry in the last 12 public sector employee What impact has regulation in Europe had on months? All respondents the European tech industry in the last 12 months? All respondents LEGEND Other 0 10 20 30 40 50 60 70 80 90 100 Positive % of respondents LEGEND 0 10 20 30 40 50 60 70 80 90 100 Neutral 0 20 40 60 80 100 Positive % of respondents Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in Negative % of respondents Neutral the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive Negative Source: on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. DATASET: SUBREGION Source: Source: Central Europe & Baltics Founder or startup /scale-up employeeDACH Eastern Europe Investor France & Benelux Note: Company size: Founder respondents only. Policymaker or Nordics public sector employee Southern Europe Other UK & Ireland 0 0 20 20 40 40 60 60 80 80 100 100 Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in % of respondents Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in % of respondents the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. Source: DATASET: OCCUPATION Source: Founder or Founder or startup /scale-up startup /scale-up employee employee What impact has regulation in Europe had on Investor the European tech industry in the last 12 Investor months? Note: Note: DATASET: SUBREGIONS Company size: Founder respondents only. Company size: Founder respondents only. Policymaker or Policymaker or LEGEND public sector employee public sector employee Positive Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in Neutral Only 24% of total respondents believe that regulation has had a negative impact on the European tech industry in Other Other the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive Negative the past 12 months. This varies, however, by occupation and region. Respondents from France are most positive on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. on the impact of regulation, while Founders skew slightly more negative than positive, but only by a fraction. 0 0 20 20 40 40 60 60 80 80 100 100 % of respondents % of respondents Founder or startup /scale-up employee DATASET: COMPANY SIZE BY # OF EMPLOYEES Source: Source: Investor <=10 Note: Company size: Founder respondents only. Note: Company size: Founder respondents only. Policymaker or 11-100 public sector employee 100+ Other 0 0 10 20 20 30 40 40 50 60 60 70 80 80 90 100 100 % of respondents % of respondents Source: Source: What impact has regulation in Europe had on the European tech industry in the last 12 months? DATASET: COMPANY SIZE BY # OF EMPLOYEES & 92 LEGEND In Partnership with www.thestateofeuropeantech.com Positive Neutral Negative Note: Company size: Founder respondents only.

07.1 Embracing Regulation Six months after the implementation of GDPR, Founders across Europe view data protection and privacy as the Six months after the implementation of GDPR, Founders across Europe view data most challenging area of regulation for their business. Six months after the implementation of GDPR, Founders across Europe view data protection and privacy as the protection and privacy as the most challenging area of regulation for their business. most challenging area of regulation for their business. Which one area of regulation do you view as UK & Ireland 35 13 10 5 6 4 3 2 3 1 17 most challenging for your company in 2018? Southern Europe 25 17 15 11 9 2 3 8 2 3 6 Which one area of regulation do you view as UK & Ireland 35 13 10 5 6 4 3 2 3 1 17 most challenging for your company in 2018? Nordics 22 16 10 11 8 5 4 4 3 2 15 LEGEND Southern Europe 25 17 15 11 9 2 3 8 2 3 6 upto 35 France & Benelux 21 16 14 9 7 3 3 3 4 6 13 LEGEND Nordics 22 16 10 11 8 5 4 4 3 2 15 25 to 30 upto 35 Eastern Europe 25 7 12 13 16 7 4 3 3 1 7 20 to 25 France & Benelux 21 16 14 9 7 3 3 3 4 6 13 25 to 30 DACH 27 11 8 9 14 5 3 3 5 5 12 15 to 20 Eastern Europe 25 7 12 13 16 7 4 3 3 1 7 20 to 25 10 to 15 Central Europe & Baltics 16 14 9 14 15 6 7 4 2 6 7 15 to 20 DACH 27 11 8 9 14 5 3 3 5 5 12 5 to 10 10 to 15 y t n x n t s n g n s c n o a o h t o n o a Central Europe & Baltics a16 e14 i 9 T14 i 15 g6 n7 i 4 i 2 i 6 e 7 t t i e t s t r upto 5 v i r i m t a y t c n a a r y e c a e e s p i p t i e o p f P c l 5 to 10 d l i o o i a s n p m rt C r L c e p o h a m t o e t l t y C n x n sr n g n s n c E n o a C o h te o na of a o a e i T i g n i i t i o e i t t i em t sa t r upto 5 t v i r i m t a tu c n ae a c r y e c y as e e D sn e p i p t i e o p f Pn c l o t d l i o o o i a s o n p m rt C r L c N e r C p o h p a m o e l t E C C r a n e a f t o t o a i m a D t u D e c s n e n o t o N o r C p a t a D Note: Source: Founder respondents only Note: Source: Founder respondents only There’s a clear split in opinion within the industry on the question of whether There's a clear split in opinion within the industry on the question of whether European regulators act with the European regulators act with the interests of tech startups in mind. Founders, interests of tech startups in mind. Founders, most notably, are inclined to be sceptical of the motivations of There's a clear split in opinion within the industry on the question of whether European regulators act with the most notably, are inclined to be sceptical of the motivations of European European regulators, especially those from the DACH region interests of tech startups in mind. Founders, most notably, are inclined to be sceptical of the motivations of There's a clear split in opinion within the industry on the question of whether European regulators act with the regulators, especially those from the DACH region. European regulators, especially those from the DACH region interests of tech startups in mind. Founders, most notably, are inclined to be sceptical of the motivations of European regulators, especially those from the DACH region Where relevant, do you believe that European Central Europe & Baltics 47% 53% regulators act with the interests of tech DATASET: SUBREGION Where relevant, do you believe that European Central Europe & Baltics 47% 53% startups in mind? DACH 35% 65% regulators act with the interests of tech Central Europe & Baltics 53% Where relevant, do you believe that European 47% startups in mind? DACH 35% 65% DATASET: SUBREGION regulators act with the interests of tech Eastern Europe 54% 46% DATASET: SUBREGION DACH 65% startups in mind? 35% LEGEND Eastern Europe 54% 46% Yes LEGEND DATASET: SUBREGION France & Benelux 53% 47% No Eastern Europe 54% 46% Yes France & Benelux 53% 47% LEGEND No Nordics 47% 53% Yes France & Benelux 53% 47% No Nordics 47% 53% Southern Europe 45% 55% Nordics 47% 53% Southern Europe 45% 55% UK & Ireland 43% 57% Southern Europe 45% 55% UK & Ireland 43% 57% 0 20 40 60 80 100 UK & Ireland 43% % of respondents 57% 0 20 40 60 80 100 % of respondents There's a clear split in opinion within the industry on the question of whether European regulators act with the 0 20 40 60 80 100 Source: % of respondents interests of tech startups in mind. Founders, most notably, are inclined to be sceptical of the motivations of Source: European regulators, especially those from the DACH region DATASET: OCCUPATION Source: Where relevant, do you believe that European Academic/researcher 55% 45% regulators act with the interests of tech startups in mind? Angel investor 47% 53% DATASET: OCCUPATION Employee at a private company that is not a tech startup/scale-up 46% 54% LEGEND Yes Employee at a private tech startup or 47% 53% scale-up No Employee at a publicly listed non-tech 55% 45% company Employee at a publicly listed tech 44% 56% company Employee in the public sector 59% 41% Founder 36% 64% Media/Journalist 57% 43% Other investor 48% 52% Policymaker/regulator 73% 27% Student 60% 40% Venture capitalist 45% 55% 0 20 40 60 80 100 % of respondents Source: & 93 In Partnership with www.thestateofeuropeantech.com

07.1 Embracing Regulation This willingness to build bridges is important since key stakeholders in the European tech ecosystem take a majority view that European regulation makes it harder to This willingness to build bridges is important since key stakeholders in the European tech ecosystem take a start and scale a technology business in the region. majority view that European regulation makes it harder to start and scale a technology business in the region European regulation makes it harder to start and scale a technology business Founder or startup/scale-up employee LEGEND Agree Neither agree nor disagree Disagree Venture capitalist Policymaker or employee in the public sector 0 20 40 60 80 100 % of respondents Source: Opinions on whether startups/scaleups or large established tech companies feels Unsurprisingly then, Founders also believe they feel more of the regulatory burden in Europe than established tech the regulatory burden more keenly are split. Both founders of startups/scaleups and Unsurprisingly then, Founders also believe they feel more of the regulatory burden in Europe than established tech companies. Of course, if you ask those that work at public tech companies, they are more likely to say the those who work in public tech companies both tend to think that they shoulder most companies. Of course, if you ask those that work at public tech companies, they are more likely to say the opposite. Unsurprisingly then, Founders also believe they feel more of the regulatory burden in Europe than established tech of the regulatory burden. opposite. companies. Of course, if you ask those that work at public tech companies, they are more likely to say the Do you think the regulatory burden in Europe Academic/researcher opposite. is more felt by tech startups or established Academic/researcher Do you think the regulatory burden in Europe DATASET: OCCUPATION tech companies? Angel investor is more felt by tech startups or established tech companies? Angel investor Do you think the regulatory burden in Europe Academic/researcher DATASET: OCCUPATION Employee at a private company that is is more felt by tech startups or established DATASET: OCCUPATION not a tech startup/scale-up LEGEND Employee at a private company that is tech companies? Angel investor not a tech startup/scale-up LEGEND Employee at a private tech startup or Established tech companies DATASET: OCCUPATION scale-up Established tech companies Employee at a private tech startup or No difference Employee at a private company that is scale-up not a tech startup/scale-up LEGEND Employee at a publicly listed non-tech No difference Tech startups company Employee at a publicly listed non-tech Established tech companies Employee at a private tech startup or Tech startups company scale-up No difference Employee at a publicly listed tech company Employee at a publicly listed tech Tech startups Employee at a publicly listed non-tech company company Employee in the public sector Employee at a publicly listed tech Employee in the public sector company Founder Founder Employee in the public sector Media/Journalist Media/Journalist Founder Other investor Other investor Media/Journalist Policymaker/regulator Policymaker/regulator Other investor Student Student Policymaker/regulator Venture capitalist Venture capitalist Student 0 20 40 60 80 100 % of respondents Venture capitalist 0 20 40 60 80 100 % of respondents 0 20 40 60 80 100 Unsurprisingly then, Founders also believe they feel more of the regulatory burden in Europe than established tech Source: % of respondents Source: companies. Of course, if you ask those that work at public tech companies, they are more likely to say the opposite. DATASET: SUBREGIONS Source: Do you think the regulatory burden in Europe Central Europe & Baltics is more felt by tech startups or established tech companies? DACH DATASET: SUBREGIONS Eastern Europe LEGEND Established tech companies France & Benelux No difference Tech startups Nordics Southern Europe UK & Ireland 0 20 40 60 80 100 % of respondents Source: & 94 In Partnership with www.thestateofeuropeantech.com

07.1 Embracing Regulation A clear majority of the European tech GDPR ecosystem believes GDPR has been good for European consumers of all respondents agree that GDPR % has been a good thing for European 60 consumers, including 54% of European founders that are in agreement. The European tech industry’s sentiment around the impact of GDPR is more balanced than might be expected. Founders are more likely to agree it’s had a negative impact on The European tech industry's sentiment around the impact of GDPR is more balanced than might be expected. The European tech industry's sentiment around the impact of GDPR is more balanced than might be expected. Founders are more likely to agree it's had a negative impact on their company than disagree, but not by a large their company than disagree, but not by a large margin. Counter-intuitively, perhaps, The European tech industry's sentiment around the impact of GDPR is more balanced than might be expected. Founders are more likely to agree it's had a negative impact on their company than disagree, but not by a large margin. Counter-intuitively, perhaps, founders of larger companies (100+ employees) are more likely to agree it's founders of larger companies (100+ employees) are more likely to agree it’s had a Founders are more likely to agree it's had a negative impact on their company than disagree, but not by a large margin. Counter-intuitively, perhaps, founders of larger companies (100+ employees) are more likely to agree it's had a negative impact than founders of smaller tech companies margin. Counter-intuitively, perhaps, founders of larger companies (100+ employees) are more likely to agree it's negative impact than founders of smaller tech companies. had a negative impact than founders of smaller tech companies had a negative impact than founders of smaller tech companies GDPR has had a negative impact on my DATASET: ALL RESPONDENTS GDPR has had a negative impact on my company GDPR has had a negative impact on my company DATASET: ALL RESPONDENTS company All respondents DATASET: ALL RESPONDENTS All respondents DATASET: ALL RESPONDENTS LEGEND All respondents LEGEND Agree LEGEND Agree Neither agree nor disagree Agree 0 10 20 30 40 50 60 70 80 90 100 Neither agree nor disagree Disagree 0 10 20 30 40 50 60 70 80 90 100 Neither agree nor disagree The European tech industry's sentiment around the impact of GDPR is more balanced than might be expected. 0 10 20 30 40 50 60 70 80 90 100 Disagree % of respondents Disagree Founders are more likely to agree it's had a negative impact on their company than disagree, but not by a large % of respondents % of respondents margin. Counter-intuitively, perhaps, founders of larger companies (100+ employees) are more likely to agree it's Source: had a negative impact than founders of smaller tech companies DATASET: OCCUPATION Source: Source: GDPR has had a negative impact on my Academic/researcher company DATASET: OCCUPATION Angel investor LEGEND Employee at a private company that is Note: not a tech startup/scale-up In company sizes only founders' responses included Agree Note: Note: In company sizes only founders' responses included Employee at a private tech startup or In company sizes only founders' responses included Neither agree nor disagree scale-up Disagree Employee at a publicly listed non-tech company Employee at a publicly listed tech company Employee in the public sector Founder Media/Journalist Other investor Policymaker/regulator Student Venture capitalist The European tech industry's sentiment around the impact of GDPR is more balanced than might be expected. 0 20 40 60 80 100 Founders are more likely to agree it's had a negative impact on their company than disagree, but not by a large % of respondents margin. Counter-intuitively, perhaps, founders of larger companies (100+ employees) are more likely to agree it's had a negative impact than founders of smaller tech companies DATASET: COMPANY SIZE BY # OF EMPLOYEES Note: Source: In company sizes only founders' responses included GDPR has had a negative impact on my company <=10 DATASET: COMPANY SIZE BY # OF EMPLOYEES LEGEND Agree Neither agree nor disagree 11-100 Disagree 100+ 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Source: In company sizes only founders' responses included & 95 In Partnership with www.thestateofeuropeantech.com

07.1 Embracing Regulation Importantly, however, there is a very strong majority agreement across the board Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that from all stakeholder types that GDPR has been a good thing for European consumers. GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that One might say, therefore, that any perceived negative impact for companies is a impact for companies is a justiïable cost of scaling more ethically GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative justifiable cost of scaling more ethically. Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that impact for companies is a justiïable cost of scaling more ethically GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative GDPR has been a good thing for European impact for companies is a justiïable cost of scaling more ethically consumers DATASET: ALL RESPONDENTS GDPR has been a good thing for European DATASET: ALL RESPONDENTS consumers GDPR has been a good thing for European DATASET: ALL RESPONDENTS LEGEND consumers Agree LEGEND DATASET: ALL RESPONDENTS Neither agree nor disagree All respondents Agree LEGEND Disagree All respondents Neither agree nor disagree Agree Disagree Neither agree nor disagree All respondents Disagree 0 10 20 30 40 50 60 70 80 90 100 % of respondents 0 10 20 30 40 50 60 70 80 90 100 % of respondents 0 10 20 30 40 50 60 70 80 90 100 Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that Source: % of respondents GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative Source: impact for companies is a justiïable cost of scaling more ethically DATASET: SUBREGIONS Source: GDPR has been a good thing for European Central Europe & Baltics consumers DATASET: SUBREGIONS DACH LEGEND Eastern Europe Agree Neither agree nor disagree France & Benelux Disagree Nordics Southern Europe UK & Ireland 0 20 40 60 80 100 Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that % of respondents GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative impact for companies is a justiïable cost of scaling more ethically DATASET: OCCUPATION Source: GDPR has been a good thing for European Academic/researcher consumers DATASET: OCCUPATION Angel investor LEGEND Employee at a private company that is Agree not a tech startup/scale-up Neither agree nor disagree Employee at a private tech startup or scale-up Disagree Employee at a publicly listed non-tech company Employee at a publicly listed tech company Employee in the public sector Founder Media/Journalist Other investor Policymaker/regulator Student Venture capitalist 0 20 40 60 80 100 % of respondents Source: & 96 In Partnership with www.thestateofeuropeantech.com

Evolving Tech Policy in Europe The sentiment on the general direction of travel of European regulation around technology is also balanced Europe hasn’t made up its mind about whether European regulation is going in the amongst founders and investors. Though 23% of European founders and 22% of European VCs believe that the right direction. Founders and VCs are more likely to think it isn’t, whilst those in the direction regulation has taken in the past year has been negative, this is countered by the 35% and 37%, public sector or in policymaking roles are more favourable. respectively, of each group that take the opposite view. The direction of travel of European regulation around technology is positive for Founder or startup/scale-up employee the European tech ecosystem LEGEND Agree Neither agree nor disagree Venture capitalist Disagree Policymaker or employee in the public sector 0 20 40 60 80 100 % of respondents Source: The policy agenda in Europe around technology has been The policy agenda in Europe around technology has been The policy agenda in Europe around technology has been dominated by data dominated by data privacy and content copyright for the past dominated by data privacy and content copyright for the past privacy and content copyright for the past two years. two years. two years. Number of mentions of key tech-related Data privacy/ GDPR 121 86 Number of mentions of key tech-related Data privacy/ GDPR 121 86 issues in European Parliament legislative issues in European Parliament legislative documents by topic per year documents by topic per year Content & copyright 29 37 Content & copyright 29 37 LEGEND LEGEND Artificial Intelligence 15 24 FY 2017 Artificial Intelligence 15 24 FY 2017 2018* 2018* Brexit 17 11 Brexit 17 11 Fintech 15 11 Fintech 15 11 Digital health 7 Digital health 7 Blockchain/cryptocurrencies 6 Blockchain/cryptocurrencies 6 Autonomous vehicles 3 Autonomous vehicles 3 Drones 8 Drones 8 CRISPR, Genetic editing 1 CRISPR, Genetic editing 1 Digital tax 2 Digital tax 2 Quantum computing 1 Quantum computing 1 0 50 100 150 200 0 50 100 150 200 Number of legislative documents containing issue keywords Number of legislative documents containing issue keywords Note: This data looks at the number of citations of keywords related Note: to a number of selected technology-related issues in European Source: This data looks at the number of citations of keywords related Parliament legislation, where legislation equals documentation to a number of selected technology-related issues in European Source: related to the ongoing process of law making, actual bills, etc Parliament legislation, where legislation equals documentation related to the ongoing process of law making, actual bills, etc & 97 In Partnership with www.thestateofeuropeantech.com

07.2 Evolving Tech Policy in Europe In the UK, in particular, it’s revealing to look at the relative level of discussion of key tech issues in UK government legislative documents, activities and press releases. In the UK, in particular, it's revealing to look at the relative level of discussion of key tech issues in UK government Brexit, unsurprisingly, has swamped everything else. legislative documents, activities and press releases. Brexit, unsurprisingly, has swamped everything else. # of mentions of key tech-related issues in Brexit UK government legislative documents by topic per year Data privacy/GDPR LEGEND Artificial Intelligence Activities Press Releases Blockchain/cryptocurrencies Legislation Drones Fintech Autonomous vehicles Content & copyright Digital health Quantum computing CRISPR, Genetic editing Digital tax 0 250 500 750 1,000 1,250 1,500 1,750 Number of legislative documents containing issue keywords Note: This data looks at the number of citations of keywords related to a number of selected technology-related issues in UK Source: government legislation, activities and press releases. & 98 In Partnership with www.thestateofeuropeantech.com Photo: Esa Pekka Mattila

07.2 Evolving Tech Policy in Europe There’s a clear growth in focus on Artificial Intelligence in European Parliament There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other legislative documents, but in other key emerging technology fields, such key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other as quantum computing or autonomous vehicles, there is more ‘activity’ and 'commentary' than actual legislation key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other ‘commentary’ than actual legislation. 'commentary' than actual legislation key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and 'commentary' than actual legislation # of mentions of key tech-related issues in Artificial Intelligence 15 24 European Parliament legislation, activities DATASET: LEGISLATION # of mentions of key tech-related issues in Artificial Intelligence 15 24 and press releases by topic per year European Parliament legislation, activities Drones 8 3 # of mentions of key tech-related issues in Artificial Intelligence 15 24 DATASET: LEGISLATION and press releases by topic per year European Parliament legislation, activities Drones 8 3 DATASET: LEGISLATION LEGEND Blockchain/cryptocurrencies 4 6 and press releases by topic per year 2017 Drones 8 3 LEGEND Blockchain/cryptocurrencies 4 6 DATASET: LEGISLATION 2018 2017 Autonomous vehicles 3 3 LEGEND Blockchain/cryptocurrencies 4 6 2018 Autonomous vehicles 3 3 2017 2018 CRISPR & Genetic editing 1 Autonomous vehicles 3 3 CRISPR & Genetic editing 1 Quantum computing 1 CRISPR & Genetic editing 1 Quantum computing 1 0 10 20 30 40 Quantum computing 1 # of legislative documents containing issue keywords 0 10 20 30 40 Note: # of legislative documents containing issue keywords There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other Legislation = the ongoing process of lawmaking, actual bills, 0 10 20 30 40 Note: procedures. Activities = the questions and speeches made by key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and Source: # of legislative documents containing issue keywords Legislation = the ongoing process of lawmaking, actual bills, the elected legislators. Press Releases = the commentary and 'commentary' than actual legislation procedures. Activities = the questions and speeches made by response from the various agencies and other moving parts of Source: Note: the elected legislators. Press Releases = the commentary and government. Legislation = the ongoing process of lawmaking, actual bills, DATASET: ACTIVITIES response from the various agencies and other moving parts of procedures. Activities = the questions and speeches made by Source: government. the elected legislators. Press Releases = the commentary and # of mentions of key tech-related issues in Blockchain/cryptocurrencies 13 50 response from the various agencies and other moving parts of government. European Parliament legislation, activities and press releases by topic per year Drones 27 36 DATASET: ACTIVITIES LEGEND Artificial Intelligence 15 37 2017 2018 Autonomous vehicles 5 8 There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other CRISPR & Genetic editing 1 key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and 'commentary' than actual legislation Quantum computing 1 There's a clear growth in focus on Artiïcial Intelligence in European Parliament legislative documents, but in other # of mentions of key tech-related issues in 0 10 20 30 40 50 60 70 Artificial Intelligence 15 24 # of legislative documents containing issue keywords key emerging technology ïelds, such as quantum computing or autonomous vehicles, there is more 'activity' and European Parliament legislation, activities and press releases by topic per year 'commentary' than actual legislation Note: Drones 8 3 Legislation = the ongoing process of lawmaking, actual bills, DATASET: PRESS RELEASES DATASET: LEGISLATION procedures. Activities = the questions and speeches made by Source: the elected legislators. Press Releases = the commentary and LEGEND Blockchain/cryptocurrencies 4 6 response from the various agencies and other moving parts of # of mentions of key tech-related issues in Artificial Intelligence 24 75 government. 2017 European Parliament legislation, activities 2018 and press releases by topic per year Autonomous vehicles 3 3 Blockchain/cryptocurrencies 18 35 DATASET: PRESS RELEASES LEGEND CRISPR & Genetic editing 1 21 19 Drones 2017 2018 Quantum computing 1 10 6 Autonomous vehicles 0 10 20 30 40 Quantum computing 3 # of legislative documents containing issue keywords Note: Legislation = the ongoing process of lawmaking, actual bills, CRISPR & Genetic editing 0 procedures. Activities = the questions and speeches made by Source: the elected legislators. Press Releases = the commentary and response from the various agencies and other moving parts of 0 20 40 60 80 100 government. # of legislative documents containing issue keywords Note: Legislation = the ongoing process of lawmaking, actual bills, procedures. Activities = the questions and speeches made by Source: the elected legislators. Press Releases = the commentary and response from the various agencies and other moving parts of government. We urgently need Europe’s “ As Spotify, iZettle and Skype have shown, success breeds more success. Europe is flourishing in terms of access to later stage governments to form long- capital, and an ecosystem required to support startups on their term strategies around journey. Fintech, healthtech and social impact are just some verticals showing huge promise. But what worries me is that Europe hasn’t AI, while stepping up gotten its act together on AI – our companies risk getting crushed by the giants in US and China. We urgently need Europe’s governments investment into education to form long-term strategies around AI, while stepping up investment and basic research. The into education and basic research. The future is at stake.” future is at stake. Jacob de Geer iZettle 99 In Partnership with & www.thestateofeuropeantech.com

07.2 Evolving Tech Policy in Europe The legislative process in key European countries has been dominated by data privacy, content copyright and Brexit with much less discussion related to other The legislative process in key European countries has been dominated by data privacy, content copyright and key new technology fields. In Germany, in particular, the issues of data privacy and Brexit with much less discussion related to other key new technology ïelds. In Germany, in particular, the issues of content copyright have been top of mind for German policymakers. data privacy and content copyright have been top of mind for German policymakers. Number of mentions of key tech-related Data privacy/GDPR issues in selected countries' oícial government legislative documents by topic Content & copyright per year Brexit LEGEND France Artificial Intelligence Germany UK Drones Digital tax Blockchain/cryptocurrencies Quantum computing Autonomous vehicles CRISPR, Genetic editing Digital health Fintech 0 10 20 30 40 50 60 Number of legislative documents containing issue keywords Note: This data looks at the number of citations of keywords related to a number of selected technology-related issues in French, Source: German and UK government legislation, activities and press releases. European governments are stepping up their focus on AI with many countries having launched initiatives European governments are stepping up List of government AI initiatives in Europe their focus on AI with many countries having Initiative Launched/Announced launched initiatives. List of government AI initiatives in Europe Finland AI Strategy Dec 2017 Denmark Strategy for Digital Growth Jan 2018 Italy AI at the Service of Citizens Mar 2018 France AI Strategy Mar 2018 European Union Communication on AI Apr 2018 UK AI Sector Deal Apr 2018 Sweden AI Strategy May 2018 Germany AI Strategy Nov 2018 Source: In the coming years, “ Regulation is failing to keep pace with new technologies and business models, and the risk of overbearing regulation suffocating further balkanisation of smaller companies remains very real. In the coming years, further regulatory regimes could balkanisation of regulatory regimes could create opportunities for some European companies, but at the cost of limiting the overall create opportunities growth of the sector.” for some European Chris Yiu companies, but at the Tony Blair Institute for Global Change cost of limiting the overall growth of the sector. 100 In Partnership with & www.thestateofeuropeantech.com

What Founders Want The larger the size of a company’s employee base, the more that founders care about The larger the size of a company's employee base, the more that founders care about regulatory changes related to regulatory changes related to hiring flexibility and stock options. hiring ðexibility and stock options In your opinion, what is one regulatory change that would have a materially positive <=10 impact on the prospects of your business? LEGEND Tax Regulatory Support for Startups 11-100 Data Protection or Access Hiring Flexibility Capital Support Banking, Payment 100+ EU Harmonization Stock Option Deregulation 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Founder respondents only. Based on respondents that gave Source: explicit responses only The goal for policymakers should be to use the tools at their disposal to tackle fragmentation and reduce the cost and bureaucracy associated with starting and scaling businesses in Europe. “ The goal for policymakers should be to use the tools at their disposal to tackle fragmentation and reduce the cost and bureaucracy associated with starting and scaling businesses in Europe. However, as we look towards the next EU Commission and new legislative proposals which may follow, regulators need to better understand the impact of the changes they propose and find new ways to engage with founders at very early stages, many of whom are understandably Linda Griffin unfamiliar with the world of policy. Equally European tech companies King (of all sizes) need to engage in policy discussions if they are interested in long-term growth.” 101 In Partnership with & www.thestateofeuropeantech.com

Investors & Investment Following the Money 2018 set a new record for total capital invested in the European tech ecosystem, as European VC’s returns are now highly competitive against private equity in the U.S. The region’s investor base has also evolved as high net- worth individuals and family offices participate, even as pension funds have not stepped up their commitments and are failing to democratise European tech’s returns. ARTICLES 08.1 European Capital Flows 08.2 Capital Flows by Geography and Industry 08.3 Expanding European Investor Base 08.4 Bridging the Funding Gap 08.5 Diversifying the Institutional Investor Base In Partnership with & www.thestateofeuropeantech.com

European Capital Flows The European tech ecosystem will once again see a record level of capital investment in 2018. Total investment is projected to hit $23 billion, comfortably exceeding the $19.6 billion The European tech ecosystem will once again see a record level of capital investment in 2018. Total investment is invested in 2017 and now 4.4x up compared to the levels of investment from 2013. projected to hit $23B, comfortably exceeding the $19.6B invested in 2017 and now 4.4x up compared to the levels of investment from 2013. Capital invested ($B) and # of deals per year 25.0 3,350.0 3,500.0 3,220.0 23.0 LEGEND 20.0 19.6 Capital invested ($B) 3,000.0 # of deals ) 2,728.0 B $ ( 2,609.0 # d 14.6 e 15.0 o t 14.0 f s e d v e n 2,500.0 a i l l s a t pi a 10.0 C 8.6 5.2 2,000.0 5.0 0.0 1,500.0 Note: 2013 2014 2015 2016 2017 2018 All Dealroom.co data excludes the following: biotech, secondary transactions, debt, lending capital, grants. Please also note the data excludes Israel. 2018 based on 9M to September 2018 and projection for Q4 2018 based on Q3 2018 For additional context on annual capital investment into the European tech ecosystem, it is important to understand there is a material trend in effect that means many rounds are only captured with a significant delay (see note). For additional context on annual capital investment into the European tech ecosystem, it is important to This ‘reporting lag’ means that the final totals are not known until a significant understand there is a material trend in effect that means that many rounds are only captured with a signi cant time period has elapsed after the end of the year in question. As such, we have delay (see note). This 'reporting lag' means that the nal totals are not known until a signi cant time period has indicatively adjusted the annual totals to account for this reporting lag to enable a elapsed after the end of the year in question. As such, we have indicatively adjusted the annual totals to account like-for-like comparison of overall investment trends at the European level. for this reporting lag to enable a like-for-like comparison of overall investment trends at the European level. 30 Capital invested ($B), annual, 2013-2018, adjusted for reporting lag effect 25 $3B LEGEND ) B $ ( 20 $1B Capital invested ($) r a e y Adjusted for reporting lag r pe d 15 e t $B s $B e v n i l $23B a t 10 pi $20B a C $B $14B $15B 5 $B $9B $5B Note: 0 2013 2014 2015 2016 2017 2018 The reporting lag is the difference between the date of a round’s disclosure and the reported date of a round’s occurrence, resulting in a material % of rounds only being added with a long delay. This is estimated at 97% for 2017 and 90% for 2018. 103 In Partnership with & www.thestateofeuropeantech.com

08.1 European Capital Flows For additional context on the annual number of deals in the European tech ecosystem, it is important to understand that there is a material trend in effect that means that many rounds For additional context on the annual number of deals in the European tech ecosystem, it is important to are only captured with a significant delay (see note). This ‘reporting lag’ means that the final understand there is a material trend in effect that means many rounds are only captured with a signi cant delay totals are not known until a significant time period has elapsed after the end of the year in (see note). This 'reporting lag' means that the nal totals are not known until a signi cant time period has elapsed question. As such, we have indicatively adjusted the annual totals to account for this reporting after the end of the year in question. As such, we have indicatively adjusted the annual totals to account for this lag to enable a like-for-like comparison of overall investment trends at the European level. reporting lag to enable a like-for-like comparison of overall investment trends at the European level. Number of rounds, annual, 2013-2018, adjusted for reporting lag effect 358 1,343 LEGEND # of deals Adjusted for reporting lag 3,350 3,220 2,728 2,609 2,174 1,712 Note: The reporting lag is the difference between the date of a 2013 2014 2015 2016 2017 2018 round’s disclosure and the reported date of a round’s occurrence, resulting in a material % of rounds only being added with a long delay. This is estimated at 90% for 2017 and 70% for 2018. In 2013, $1 billion of capital invested per quarter in Europe was the norm, but as the ecosystem has evolved that bar has consistently been raised higher. Europe has In 2013, $1B of capital invested per quarter in Europe was the norm, but as the ecosystem has evolved that bar has now seen more than $3 billion invested per quarter for 15 consecutive quarters and consistently been raised higher. Europe has now seen more than $3B invested per quarter for 15 consecutive even $5 billion per quarter for the past 6 straight quarters. quarters and even $5B per quarter for the past 6 straight quarters. Capital invested ($B) and # of deals per 1,215.0 1,159.0 6.4 1,200.0 quarter 6.0 1,063.0 1,073.0 5.4 5.1 5.3 5.0 5.1 LEGEND ) B 1,000.0 $ ( Capital invested ($B) 4.2 900.0 # d 4.0 e 4.0 o t 4.0 3.8 f # of deals s e d v 3.4 3.4 e n 3.3 a i 3.2 l l 759.0 800.0 s a 2.9 t pi 2.5 a C 646.0 2.2 638.0 2.0 2.0 1.6 1.7 1.2 1.2 600.0 1.1 0.0 400.0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 3 4 5 6 7 7 8 1 3 3 3 1 4 4 4 1 5 5 5 1 6 6 6 1 7 1 7 1 8 8 0 1 1 1 0 1 1 1 0 1 1 1 0 1 1 1 0 1 0 1 0 1 1 2 0 0 0 2 0 0 0 2 0 0 0 2 0 0 0 2 0 2 0 2 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Of course, the exact quarterly investment amounts per quarter are subject to ups and downs so it is helpful to look at trailing 12-month totals to get a sense for the ‘smoothed’ Of course, the exact quarterly investment amounts per quarter are subject to ups and downs so it is helpful to look long-term investment trends in the region. On this basis, the overall trajectory of the at trailing 12-month totals to get a sense for the 'smoothed' long-term investment trends in the region. On this European tech ecosystem since late 2013 is very clear. basis, the overall trajectory of the European tech ecosystem since late 2013 is very clear. 25.0 Trailing 12-month capital invested ($B) and # 4,576.0 4,445.0 22.022.2 of deals by quarter 4,224.0 20.7 4,500.0 20.0 19.6 LEGEND 3,925.0 18.0 3,930.0 ) 4,000.0 B 15.9 $ Capital invested ($B) ( 14.7 14.6 14.7 # d 15.0 14.0 14.3 14.1 3,496.0 e o t 13.1 f # of deals s e 3,500.0 d v 11.9 e n a i l l s a 10.2 t 10.0 pi a 8.3 8.6 C 7.1 3,000.0 5.2 5.8 5.0 2,500.0 0.0 2,000.0 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 4 5 6 7 7 8 3 1 4 4 4 1 5 5 5 1 6 6 6 1 7 1 7 1 8 8 1 0 1 1 1 0 1 1 1 0 1 1 1 0 1 0 1 0 1 1 0 2 0 0 0 2 0 0 0 2 0 0 0 2 0 2 0 2 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 104 In Partnership with & www.thestateofeuropeantech.com

08.1 European Capital Flows Sentiment within the European tech ecosystem around the capital raising environment is broadly positive. 72% of European founders and 84% of European investors believe Sentiment within the European tech ecosystem around the capital raising environment is broadly positive. 72% of that it has either stayed the same or has become easier to raise VC in Europe in the past European founders and 84% of European investors believe that it has either stayed the same or has become easier 12 months. This is very similar to responses from 2017’s survey, where the equivalent to raise VC in Europe in the past 12 months. This is very similar to responses from 2017's survey, where the responses were 73% of founders and 83% of VCs. equivalent responses were 73% of founders and 83% of VCs. In your opinion, is it easier or harder to raise venture capital in Europe than it was 12 months ago? LEGEND Easier to raise capital Founders The capital environment remains unchanged Harder to raise capital 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Founder respondents only. There are interesting perception gaps between founders and investors at the sub-regional level. The generally high levels of optimism among investors about the changing state of the capital raising environment in Europe over the past 12 months stand in contrast to a DACH region shows the largest gap between founders and more mixed view from founders in the UK, DACH and Eastern Europe. investors in how they perceive the fundraising environment In your opinion, is it easier or harder to raise venture capital in Europe than it was 12 months ago? LEGEND Founders, Easier to raise capital Investors, Easier to raise capital Founders, The capital environment remains unchanged Investors, The capital environment remains unchanged Founders, Harder to raise capital Investors, Harder to raise capital FoundersInvestors FoundersInvestors Founders Founders Founders FoundersInvestors FoundersInvestors Central Europe DACH Eastern Europe France & Nordics Southern UK & Ireland & Baltics Benelux Europe Founders remain upbeat about the environment for RAISING CAPITAL IN EUROPE raising capital in Europe of European founders believe the capital % environment has remain unchanged over 71 the past 12 months, or become easier 2018 has again set a new record for total capital CAPITAL INVESTMENT IN EUROPE invested in the European tech ecosystem Projected total capital investment in $ B European tech in 2018, up 4.3x since 2013 23 105 In Partnership with & www.thestateofeuropeantech.com

08.1 European Capital Flows Europe has seen a 7x increase in the number of large rounds of $50M+, growing to 70 Only the smallest rounds have seen a slight decrease in both capital invested and number of deals, which indicates rounds in 2018 from just 10 in 2013. that round sizes are increasing Capital invested ($M) and # of deals by round DATASET: CAPITAL INVESTED size 10,000 LEGEND 8,868 Round size $0-2M 7,549 Round size $2-5M s 7,500 l a e Round size $5-10M d f o # 5,544 Round size $10-20M / ) M Round size $20-50M $ ( 5,000 4,606 d e 4,154 Round size $50M+ t s 3,781 e v n i 3,193 l a 2,930 2,930 t 2,579 pi a 2,292 C 2,500 1,898 1,803 2,103 2,054 1,491 1,430 1,151 1,144 660 834 0 2013 2014 2015 2016 2017 2018 Only the smallest rounds have seen a slight decrease in both capital invested and number of deals, which indicates that round sizes are increasing DATASET: # OF DEALS 2,500 Capital invested ($M) and # of deals by round 2,208 size DATASET: # OF DEALS 2,000 1,890 1,922 s l a LEGEND e d f 1,540 o 1,430 Round size $0-2M # 1,500 / ) 1,267 Round size $2-5M M $ ( d e Round size $5-10M t s e v1,000 Round size $10-20M n i l a Round size $20-50M t pi 602 599 632 a Round size $50M+ C 500 389 320 232 300 251 301 186 113 143 74 73 42 31 0 2013 2014 2015 2016 2017 2018 Note: 2018 based on 9M to September 2018 and projection for Q4 Note: 2018 based on Q3 2018 2018 annualised based on data to September 2018. 106 In Partnership with & www.thestateofeuropeantech.com www.thestateofeuropeantech.com Photo: Sami Heiskanen

Capital Flows by Geography and Industry On a cumulative basis since 2013, the UK has attracted $26 billion in total capital investments, just under 2x as much as Germany, which ranks second with $13.6 billion. On a cumulative basis since 2013, the UK has attracted $26B in total capital investments, just under 2x as much as Germany that ranks second with $13.6B. Those two countries, together with France, account for almost 60% of Those two countries, together with France, account for almost 60% of total capital total capital invested in Europe since the start of 2013. invested in Europe since the start of 2013. Capital invested ($M) by country, cumulative DATASET: TOP 10 COUNTRIES (2013 - 9M 2018) United Kingdom $25,976M LEGEND Germany $13,588M Cumulative capital invested ($M) 2013 - 9M 2018 France $11,302M Sweden $5,683M Spain $3,818M Netherlands $2,952M Switzerland $2,463M Russia $2,263M Ireland $1,741M Finland $1,534M On a cumulative basis since 2013, the UK has attracted $26B in total capital investments, just under 2x as much as 0 5,000 10,000 15,000 20,000 25,000 Germany that ranks second with $13.6B. Those two countries, together with France, account for almost 60% of total capital invested in Europe since the start of 2013. Capital invested ($M) DATASET: COUNTRY 11-20 Capital invested ($M) by country, cumulative (2013 - 9M 2018) Denmark $1,158M DATASET: COUNTRIES 11-20 Belgium $857M LEGEND Italy $772M Cumulative capital invested ($M) 2013 - 9M 2018 Austria $748M Luxembourg $734M Norway $711M Portugal $585M Poland $472M On a cumulative basis since 2013, the UK has attracted $26B in total capital investments, just under 2x as much as Iceland $417M Germany that ranks second with $13.6B. Those two countries, together with France, account for almost 60% of Estonia $358M total capital invested in Europe since the start of 2013. 0 200 400 600 800 1,000 1,200 Capital invested ($M) Capital invested ($M) by country, cumulative (2013 - 9M 2018) DATASET: THE REST DATASET: THE REST LEGEND Turkey $300M Cumulative capital invested ($M) 2013 - 9M 2018 Cyprus $276M Greece $248M Malta $160M Lithuania $125M Romania $98M Czech Republic $94M Bulgaria $83M Ukraine $56M Latvia $44M Slovenia $27M Slovakia $12M Serbia $5M Albania $3M 0 50 100 150 200 250 300 Capital invested ($M) 107 In Partnership with & www.thestateofeuropeantech.com

08.2 Capital flows by geography and industry The UK, France and Germany dominate stories about European investment levels given the multibillion-dollar scale of capital investments into these countries, but digging beneath the surface, there is an important trend emerging whereby many other European countries are now hitting their stride and are also on trajectories to consistently surpass $1 billion+ in annual capital investment. The UK, France and Germany dominate stories about European investmTehnet U leKv,e Flrsa gnicveen a tnhde G merumltai-nbyil dlioonm sincaatlee o sftories about European investment levels given the multi-billion scale of capital investments into these countries, but digging beneath the surfaccaep,i ttahle irnev iess atmn iemnpts iornttaon tt threesend c eomunetrrgieinsg, but digging beneath the surface, there is an important trend emerging whereby many other European countries are now hitting their stride anwdh aelsreob oyn m traanjeyc ottohreier Es tuor copoenasnis cteonutnlytries are now hitting their stride and also on trajectories to consistently surpass $1B+ in annual capital investment. surpass $1B+ in annual capital investment. Capital invested ($M) DATASET: UNITED KINGDOM DATASET: GERMANY by country per year Capital invested ($M) by country per year 8,000 Capital invested ($M) by country per year $7,404M $7,168M $4,036M DATASET: UNITED KINGDOM DATASET: GERMANY 4,000 LEGEND LEGEND United Kingdom 6,000 Germany ) )3,000 $2,990M M M $2,821M $ $ ( ( $4,861M d d e e t $4,374M t s s e e v v n n i 4,000 i l l a a2,000 $1,878M t t $1,728M pi pi a a C $2,637M C 2,000 1,000 $930M $1,437M The UK, France and Germany dominate stories about European investmTehnet U leKv,e Flrsa gnicveen a tnhde G merumltai-nbyil dlioonm sincaatlee o sftories about European investment levels given the multi-billion scale of 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 capital investments into these countries, but digging beneath the surfaccaep,i ttahle irnev iess atmn iemnpts iornttaon tt threesend c eomunetrrgieinsg, but digging beneath the surface, there is an important trend emerging Note: Note: whereby many other European countries are now hitting their stride anwdh aelsreob oyn m traanjeyc ottohreier Es tuor copoenasnis cteonutnlytries are now hitting their stride and also on trajectories to consistently 2018 based on 9M to September 2018 and projection for Q4 2017 Source: 2018 based on 9M to September 2018 and projection for Q4 2017 Source: based on Q3 2018. based on Q3 2018. surpass $1B+ in annual capital investment. surpass $1B+ in annual capital investment. DATASET: FRANCE DATASET: SWEDEN Capital invested ($M) by country per year 4,000 Capital invested ($M) by country per year $3,774M 1,500 $1,501M DATASET: FRANCE DATASET: SWEDEN LEGEND LEGEND $1,232M France ) 3,000 Sweden ) $1,124M M M $ $2,579M $ ( ( $2,501M $987M d d 1,000 e e t t s s e e v v n n i i 2,000 l l a a t $1,688M t pi pi $638M Note: a a 2018 based on 9M to September C C 2018 and projection for Q4 2018 500 1,000 $941M $396M based on Q3 2018 $619M 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Note: Note: 2018 based on 9M to September 2018 and projection for Q4 2017 Source: 2018 based on 9M to September 2018 and projection for Q4 2017 Source: based on Q3 2018. based on Q3 2018. Italy, Norway and Switzerland have seen the significant expansion of deal volume in 2018, as investment activity in these relatively less mature countries continues to grow. The overall top 5 countries in Europe by total number of deals in 2018 remains the same as in 2017 with the UK, followed by France, Germany, Sweden and the Netherlands. Italy, Norway and Switzerland have seen the signiïcant expansion of deItaall vy,o Nluomrwe iany 2 a0n1d8 S, awsit iznevrelasntmd henatv ae scteivienty t ihne signiïcant expansion of deal volume in 2018, as investment activity in these relatively less mature countries continues to grow. The overall totph 5ese co ruenlatrtiievse ilyn le Esus mropaet buyre t cotoaul nnturmiebs cero onftinues to grow. The overall top 5 countries in Europe by total number of deals in 2018 remains the same as in 2017 with the UK, followed by Frandceea, Gls iernm 2a0n18y, r Sewmeadines then and sa thme Ne aesth ine 2rla0n17d ws.ith the UK, followed by France, Germany, Sweden and the Netherlands. # of deals by country DATASET: UNITED KINGDOM DATASET: GERMANY per year # of deals by country per year 1,000 # of deals by country per year 895 887 884 500 495 DATASET: UNITED KINGDOM 821 DATASET: GERMANY 453 LEGEND LEGEND 429 750 730 United Kingdom Germany 400 371 613 s s l l a a 297 e e300 278 d d f 500 f o o # # 200 250 100 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Italy, Norway and Switzerland have seen the signiïcant expansion of deItaall vy,o Nluomrwe iany 2 a0n1d8 S, awsit iznevrelasntmd henatv ae scteivienty t ihne signiïcant expansion of deal volume in 2018, as investment activity in Note: Note: these relatively less mature countries continues to grow. The overall totph 5ese co ruenlatrtiievse ilyn le Esus mropaet buyre t cotoaul nnturmiebs cero onftinues to grow. The overall top 5 countries in Europe by total number of 2018 based on 9M to September 2018 and projection for Q4 2018 Source: 2018 based on 9M to September 2018 and projection for Q4 2018 Source: based on Q3 2018. based on Q3 2018. deals in 2018 remains the same as in 2017 with the UK, followed by Frandceea, Gls iernm 2a0n18y, r Sewmeadines then and sa thme Ne aesth ine 2rla0n17d ws.ith the UK, followed by France, Germany, Sweden and the Netherlands. DATASET: FRANCE DATASET: SWEDEN # of deals by country per year # of deals by country per year 666 686 500 502 499 DATASET: FRANCE DATASET: SWEDEN LEGEND 600 LEGEND France Sweden 535 400 s s l l a a e e300 d 400 d 273 270 f 362 f o o # # Note: 275 200 2018 based on 9M to September 171 2018 and projection for Q4 2018 200 199 based on Q3 2018 100 102 0 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Note: Note: 2018 based on 9M to September 2018 and projection for Q4 2018 Source: 2018 based on 9M to September 2018 and projection for Q4 2018 Source: based on Q3 2018. based on Q3 2018. 108 In Partnership with & www.thestateofeuropeantech.com

08.2 Capital flows by geography and industry The diversification of European tech is reflected at the city level too, as exemplified The diversi�cation of European tech is re�ected at the city level too, as exempli�ed by increased capital invested by increased capital invested into a new generation of cities that are not typically into a new generation of cities that are not typically considered among Europe's most active tech hubs, such as considered among Europe’s most active tech hubs, such as Hamburg, Milan and Oslo. Hamburg, Milan and Oslo. London 892 1,622 3,011 3,065 5,654 4,426 Top 20 European hubs by capital invested Paris 333 600 1,065 1,332 1,686 2,607 ($M) Berlin 592 1,165 2,270 948 1,824 2,221 Barcelona 70 262 334 258 568 1,044 Stockholm 374 522 916 1,044 1,016 793 Hamburg 18 82 134 247 191 761 Madrid 67 109 116 263 307 441 Dublin 98 128 99 332 309 420 Oxford 9 32 135 201 53 372 Cambridge 20 49 94 74 116 352 Zurich 70 55 53 55 110 321 Helsinki 184 79 83 127 108 290 Moscow 130 295 72 127 608 286 Copenhagen 22 72 135 91 64 262 Munich 111 109 167 170 253 251 Tallinn 24 18 53 16 6 249 Amsterdam 218 556 277 144 354 240 Oslo 8 12 57 119 121 207 Milan 11 36 44 131 63 148 Lausanne 17 4 31 102 28 138 2013 2014 2015 2016 2017 2018 Note: Source: 2018 annualised based on data to September 2018. This trend is also reflected in data showing deal volume by city, where the rise in investment activities in new generation tech hubs like Milan and Oslo has This trend is also re�ected in data showing deal volume by city, where the rise in investment activities in new been significant in 2018. generation tech hubs like Milan and Oslo has been signi�cant in 2018. London 414 581 641 608 598 489 # of deals in Top 20 European hubs (ranked Paris 126 174 223 352 332 288 by capital invested in 2018) Berlin 184 238 261 271 210 149 Barcelona 47 66 91 93 105 71 Stockholm 46 102 157 305 312 209 Hamburg 12 16 30 39 20 19 Madrid 65 53 69 60 56 49 Dublin 38 36 41 95 49 47 Oxford 3 8 11 10 11 24 Cambridge 9 18 20 24 19 27 Zurich 14 29 31 35 42 52 Helsinki 34 48 57 67 67 51 Moscow 45 38 28 65 71 67 Copenhagen 27 38 47 39 56 44 Munich 40 43 47 49 47 48 Tallinn 13 19 17 20 8 12 Amsterdam 71 77 123 115 97 84 Oslo 9 10 14 50 45 72 Milan 23 34 38 47 35 64 Lausanne 4 4 14 23 7 12 2013 2014 2015 2016 2017 2018 Note: Source: 2018 annualised based on data to September 2018. 109 In Partnership with & www.thestateofeuropeantech.com

08.2 Capital flows by geography and industry On average, approximately one-third of all investments into European tech companies by On average, approximately one-third of all investments into European tech companies by European VCs involve a European VCs involve a cross-border transaction, where an investor from one country cross-border transaction, where an investor from one country invests into a company from another European invests into a company from another European company. The larger the investment round, company. The larger the investment round, the greater the share of total investment activity that happens in this the greater the share of total investment activity that happens in this way. way. Share of investments made by European VCs y b 42% into international (non-domestic) companies e d 40 ma by round size 37% s t n me 33% t LEGEND s 31% 31% e v n 30 i s 2013 - 2015 ) C 27% c i V t s n 2016 - 9M 2018 mea o pe d o 21% 21% - r 20% n u20 19% o E n 17% ( l a n o 13% i t a n r 10 e t n i f o % 0 <$2M $2M-$5M $5M-$10M $10M-$20M $20M-$50M $50M+ Source: Fintech remained the single largest vertical for CAPITAL INVESTMENT BY INDUSTRY capital investment in Europe in 2018 projected total capital investment into $ B European fintech companies in 2018 5 110 In Partnership with & www.thestateofeuropeantech.com Photo: Jussi Hellsten

08.2 Capital flows by geography and industry There is a high level of industry diversity in terms of where capital is being invested in the European tech ecosystem at scale. The dominant industries in 2018 are fintech, software There is a high level of industry diversity in terms of where capital is being invested in the European tech for enterprise applications, digital health and transportation, all of which are on track to be ecosystem at scale. The dominant industries in 2018 are ntech, software for enterprise applications, digital health in excess of $2.5 billion in total capital invested in 2018. Beyond those four industries, there and transportation, all of which are on track for in excess of $2.5B in total capital invested in 2018. Beyond those are a further four industries that will all surpass $1billion in capital invested this year. four industries, there are a further ve industries that will all surpass $1B in capital invested this year. Capital invested ($M) by industry DATASET: CAPITAL INVESTED $2B+ IN 2018 5,000 $4,839M LEGEND Fintech $4,222M Enterprise software 4,000 Health ) $3,571M M $3,235M $ ( Transportation d e t3,000 s $2,622M e v $2,424M n i l a $2,054M t pi a2,000 C $1,520M $1,612M $1,414M $1,363M $936M $1,011M 1,000 $822M $552M There is a high level of industry diversity in terms of where capital is being invested in the European tech $465M $172M ecosystem at scale. The dominant industries in 2018 are ntech, software for enterprise applications, digital health 0 and transportation, all of which are on track for in excess of $2.5B in total capital invested in 2018. Beyond those 2013 2014 2015 2016 2017 2018 four industries, there are a further ve industries that will all surpass $1B in capital invested this year. LEGEND DATASET: CAPITAL INVESTED $1B-$2B IN 2018 Home $1,514M Media 1,500 Energy $1,297M 1,250 $1,192M Marketing $1,093M $1,120M ) $1,062M $1,015M Fashion M $989M $ $955M ( 1,000 d $883M e $867M t s $801M e v n i $701M l 750 a t pi $571M a $554M C 500 $431M $345M $346M $266M $204M There is a high level of industry diversity in terms of where capital is being invested in the European tech 250 ecosystem at scale. The dominant industries in 2018 are ntech, software for enterprise applications, digital health 0 and transportation, all of which are on track for in excess of $2.5B in total capital invested in 2018. Beyond those 2013 2014 2015 2016 2017 2018 four industries, there are a further ve industries that will all surpass $1B in capital invested this year. LEGEND DATASET: CAPITAL INVESTED $500M-$1B IN 2018 Travel $1,570M Food Internet of Things 1,500 $1,390M Education Gaming ) M $1,027M $ ( $975M Real estate d e 1,000 t $873M s e v $795M n $755M i $728M l $691M a t $662M pi a C $516M $516M 500 $437M $397M $409M $300M $347M $251M $262M $195M There is a high level of industry diversity in terms of where capital is being invested in the European tech $181M ecosystem at scale. The dominant industries in 2018 are ntech, software for enterprise applications, digital health $17M and transportation, all of which are on track for in excess of $2.5B in total capital invested in 2018. Beyond those 0 2013 2014 2015 2016 2017 2018 four industries, there are a further ve industries that will all surpass $1B in capital invested this year. LEGEND DATASET: CAPITAL INVESTED $250M-$500M IN 2018 Music 1,000 $943M Robotics HR & Recruitment Construction 750 $687M ) $638M Semiconductors M $633M $ ( d Security e t s e $484M $493M Telecom v n i 500 l $432M a t $389M $387M pi $365M $352M a C $292M $312M $272M $275M $250M 250 $197M $178M $189M $124M $100M $84M $64M $11M $22M $34M 0 2013 2014 2015 2016 2017 2018 Note: 2018 based on 9M to September 2018 and projection for Q4 2018 based on Q3 2018. & 111 In Partnership with www.thestateofeuropeantech.com

Expanding European Investor Base One of the most critical ways in which the European tech ecosystem has evolved has been the buildout of the investor base supporting it, which has grown in depth and, importantly, One of the most critical ways in which the European tech ecosystem has evolved has been the build out of the sophistication. One way to demonstrate the remarkable expansion of the investor base investor base supporting it, which has grown in depth and, importantly, sophistication. One way to demonstrate is to look at the number of unique institutional investors that have made at least one the remarkable expansion of the investor base is to look at the number of unique institutional investors that have investment in European tech per year. In 2018, this reached more than 2,500 unique made at least one investment in European tech per year. In 2018, this reached more than 2,500 unique institutions, up 2.8x since 2013 institutions, up 2.8x since 2013 # of unique institutions that have DATASET:AT LEAST 5 ROUNDS participated in at least 1 and 5 investment 300 285 291 rounds in Europe per year 267 235 LEGEND s Unique investors r o 200 t s e v n 151 i e qu i 117 n One of the most critical ways in which the European tech ecosystem has evolved has been the build out of the u f o 100 # investor base supporting it, which has grown in depth and, importantly, sophistication. One way to demonstrate the remarkable expansion of the investor base is to look at the number of unique institutional investors that have made at least one investment in European tech per year. In 2018, this reached more than 2,500 unique institutions, up 2.8x since 2013 0 2013 2014 2015 2016 2017 2018 # of unique institutions that have DATASET:AT LEAST 1 ROUND participated in at least 1 and 5 investment 2,468 2,513 rounds in Europe per year 2,500 s 2,068 DATASET: AT LEAST 1 ROUND r o t s2,000 e v n LEGEND i 1,554 e qu Unique investors i1,500 n u 1,195 f o # 1,000 905 500 Note: Number of unique investors (incl. investment funds, 0 Note: corporate investors & accelerators, but excl. angel 2013 2014 2015 2016 2017 2018 Number of unique investors (incl. investment funds, corporate investors) that have participated in at least 1 investment investors & accelerators, but excl. angel investors) that have round per year. 2018 annualised based on data to participated in at least 1 investment round per year. 2018 September 2018. Source: annualised based on data to September 2018. It’s important to note, however, that more capital and more investors alone are not enough. In order to maximise the chances of success for early-stage European startups, it’s important It's important to note, however, that more capital and more investors alone are not enough. In order to maximise that capital is allocated to sophisticated investors best able to support young companies the chances of success for early-stage European startups, it's important that capital is allocated to sophisticated as they navigate the scaling journey. This is proven in data. Startups raising Seed from top investors best able to support young companies as they navigate the scaling journey. This is proven in data. Startups raising Seed from top investors are signi cantly more likely to raise a Series A. investors are significantly more likely to raise a Series A. Median conversion rates to Series A within 36 40 40% ) months of Seed round, by investor quartiles % ( A s e i r LEGEND e 30 S o t Conversion to Series A (%) d e e 24% Median conversion rate to Series A (%) S m 19% 19% 19% 19% o r f 20 e t a r n o i 13% s r e v n 10 o C 7% Note: 0 Based on disclosed Seed and Series A rounds, conversion Top quartile Second quartile Third quartile Bottom quartile rates calculated for VC funds that made at least 8 Seed rounds since 2012, and at least 75% of rst investments at Seed/Pre- Seed. See: https://blog.dealroom.co/the-journey-to-series-a- in-europe/ Source: 112 In Partnership with & www.thestateofeuropeantech.com

08.3 Expanding European investor base European banks are clearly leading the charge as the most active and frequent corporate investors in the European tech ecosystem with many having built substantial tech company portfolios in Europe European banks are clearly leading the charge as the most active and frequent corporate investors in the European tech ecosystem with many having built substantial tech company portfolios in Europe Country CIty # of rounds in the last 12M Portfolio size in Europe Portfolio % in Europe Top 10 most active corporate investors in BNP Paribas France Paris 28 85 81 European tech ZKB - Zürcher Kantonalbank Switzerland Zurich 20 42 98 Next47 (Siemens) Germany Munich 13 13 14 Barclays United Kingdom London 10 35 65 Allianz X Germany Munich 9 6 43 Robert Bosch Venture Capital Germany Stuttgart 9 21 52 Sabadell Venture Capital Spain Barcelona 8 20 100 Deutsche Telekom Capital Partners Germany Hamburg 8 36 44 AXA Venture Partners France Paris 8 18 44 Axel Springer Germany Berlin 7 71 76 Source: Corporate investors are very active in the European CORPORATE INVESTMENT ACTIVITY tech ecosystem unique corporate investors have invested in at least one investment round in Europe 681 in 2018, up more than 3x from 220 in 2013 The growth in the investor base has been supported by a diverse set of The growth in the investor base has been supported by a diverse set of new entrants that are deploying capital in new entrants that are deploying capital in European tech for the first European tech for the rst time. As in other regions, corporate investors have become active in Europe in time. As in other regions, corporate investors have become active in signi cantly greater numbers. In 2018, more than 680 unique corporates participated in at least one investment in Europe in significantly greater numbers. Europe, up 3.1x from 220 in 2013. # of unique corporate investors per year and 688 number of rounds involving at least one 681 corporate investor 648 s 586 l a 600 e d / s LEGEND r 510 o t s 441 # of unique corporate investors e v n i e # of deals t 400 387 a r po r o c e 265 qu i n 220 u f 200 o # 0 Note: 2013 2014 2015 2016 2017 2018 Unique corporate investor count is based on number of corporate (i.e. non investment fund) investors that have participated in at least 1 round per year. 2018 annualised based Source: on data to September 2018. 113 In Partnership with & www.thestateofeuropeantech.com

08.3 Expanding European investor base US investors continue to invest actively in European tech companies, although the number of unique institutions that have participated in at least US investors continue to invest actively in European tech companies, although the number of unique institutions one investment round in 2018 is down slightly on 2017. that have participated in at least one investment round in 2018 is down slightly on 2017. # of unique US institutions that have participated in at least 1 investment round in 311 300 Europe per year 276 279 LEGEND s 235 r o 212 t # of unique US investors s e v200 n i e qu i 153 n u f o # 100 0 2013 2014 2015 2016 2017 2018 Note: Number of unique investors (incl. investment funds, corporate Source: investors & accelerators, but excl. angel investors) that have participated in at least 1 investment round per year. 2018 annualised based on data to September 2018. The top US investors continue to invest actively in Europe, though they The top US investors continue to invest actively in Europe, remain opportunistic and selective though they remain opportunistic and selective. # of deals made by Tier 1 US investors 81 LEGEND # of deals 63 62 58 49 49 2013 2014 2015 2016 2017 2018 Note: Based on investment rounds in Europe led by a selection of 22 Source: leading US VC funds. 2018 annualised based on data to September 2018. The influence of Asian investors in the European tech ecosystem has grown significantly in recent years and hit a new record in 2018 in terms of The in�uence of Asian investors in the European tech ecosystem has grown signi�cantly in recent years and hit a capital invested in rounds involving Asian investors, approaching close to a new record in 2018 in terms of capital invested, approaching close to a projected $4B, up from less than $200M in projected $4billion, up from less than $200 million in 2013. 2013. Capital invested ($M) by # of deals involving 152 4,000 3,815 Asian investors 150 3,323 127 LEGEND 125 Capital invested ($M) )3,000 M $ ( 100 # # of deals d 89 e o t 83 f s e d v e n a i l s l2,000 75 a t pi 55 a 1,536 C 1,117 50 1,000 27 816 25 165 0 0 2013 2014 2015 2016 2017 2018 Note: Source: 2018 annualised based on data to September 2018 & 114 In Partnership with www.thestateofeuropeantech.com

08.3 Expanding European investor base Asian investors are starting to deploy large sums of ASIAN INVESTMENT ACTIVITY IN EUROPE capital into European tech startups Increase in total investment into European tech companies via rounds involving Asian 23X investors over the past 5 years, from less than $200million in 2013 to a projected $3.8 billion in 2018 The rapid growth in investor interest in Europe from Asia has been underpinned by a large expansion of capital invested in Europe from China. Chinese investors will have The rapid growth in investor interest in Europe from Asia has been underpinned by a huge expansion of capital participated in rounds totalling more than $1 billion in commitments to European tech invested in Europe from China. Chinese investors are on track to surpass more than $1B in commitments to companies in 2018 for the first time, a more than 10x increase since 2013. European tech companies in 2018 for the ïrst time, a more than 10x increase since 2013. Capital invested ($M) and # of deals by 33 Chinese investors in Europe 1,062 1,000 30 LEGEND Amount ($M) ) 24 776 M $ 750 21 ( # # of deals d e o t f s 20 e d v e n a i l s l a t 500 pi a 12 C 363 10 250 6 248 90 76 0 0 2013 2014 2015 2016 2017 2018 forecast Note: Source: Forecast created by Dealroom.co 115 In Partnership with & www.thestateofeuropeantech.com Photo: Jussi Hellsten

Bridging the Funding Gap European VCs are on track for a third consecutive year of raising more than $8 billion and have raised more than $40 billion since 2013. Larger funds (>€100 million) account for a European VCs are on track for a third consecutive year of raising more than $8 billion and have raised more than growing share of total funds raised in the region. $40 billion since 2013. Larger funds (>€100 million) account for a growing share of total funds raised in the region. VC funds raised ($B) and # of VC funds DATASET: FUNDS RAISED closed per year by fund size (€M) 10 LEGEND <€25M d e €25-50M s o l c 8 €50-100M s d n u f €100-250M f o # €250M+ / ) B 5 $ ( d e s i a r s d n u F 3 0 2013 2014 2015 2016 2017 H1 2018* European VCs are on track for a third consecutive year of raising more than $8 billion and have raised more than $40 billion since 2013. Larger funds (>€100 million) account for a growing share of total funds raised in the region. DATASET: FUNDS CLOSED VC funds raised ($B) and # of VC funds 200 closed per year by fund size (€M) DATASET: FUNDS CLOSED d e s o 150 l LEGEND c s d <€25M n u f f o €25-50M # / ) 100 €50-100M B $ ( d €100-250M e s i a r €250M+ s d n u 50 F Note: 0 Number of unique investors (incl. investment funds, 2013 2014 2015 2016 2017 H1 2018* corporate investors & accelerators, but excl. angel Note: investors) that have participated in at least 1 investment Total funds raised are displayed in USD, but the grouping of round per year. 2018 annualised based on data to funds by fund size is based on EUR. Taken from the European Source: September 2018. Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 preliminary. 116 In Partnership with & www.thestateofeuropeantech.com

08.4 Bridging the Funding Gap First-time VC funds have raised $10 billion across more than 250 funds since 2013, but First-time VC funds have raised $10 billion across more than 250 funds since 2013, but follow-on funds, follow-on funds, unsurprisingly, account for the overwhelming majority (>75%) of total unsurprisingly, account for the overwhelming majority (>75%) of total funds raised by VCs in Europe. The data for funds raised by VCs in Europe. The data for the first half of 2018 shows a decline in total the rst half of 2018 shows a decline in total funds raised by First-Time VC funds compared to the comparative funds raised by First-Time VC funds compared to the comparative totals for 2017 and 2016. totals for 2017 and 2016. Funds raised ($B) and number of funds DATASET: FUNDS RAISED closed per year by fund type 10.0 LEGEND d e s o First-Time VC Fund l c s d First-Time VC Fund of Established Firm n 7.5 u f f o Follow-on VC Fund # / ) B $ ( 5.0 d e s i a r s d n u First-time VC funds have raised $10 billion across more than 250 funds since 2013, but follow-on funds, F 2.5 unsurprisingly, account for the overwhelming majority (>75%) of total funds raised by VCs in Europe. The data for the rst half of 2018 shows a decline in total funds raised by First-Time VC funds compared to the comparative totals for 2017 and 2016. 0.0 2013 2014 2015 2016 2017 H1 2018* Funds raised ($B) and number of funds DATASET: FUNDS CLOSED closed per year by fund type DATASET: FUNDS CLOSED d e s o l LEGEND c 150.0 s d First-Time VC Fund n u f f o First-Time VC Fund of Established Firm # / ) Follow-on VC Fund B100.0 $ ( d e s i a r s d n u F 50.0 0.0 Note: 2013 2014 2015 2016 2017 H1 2018* Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, Note: the rate on 30 Sep 2018. H1 2018 data preliminary and Taken from the European Data Collective, developed by Invest subject to change. Source: Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data preliminary and subject to change. The European investor base continues to be bolstered by the launch of new first-time funds, often founded by investors with strong existing track records, such as Stride.VC and The European investor base continues to be bolstered by the launch of new rst-time funds, often founded by The European investor base continues to be bolstered by the launch of new rst-time funds, often founded by Five Seasons Ventures. investors with strong existing track records, such as Stride.VC and Five Seasons Ventures investors with strong existing track records, such as Stride.VC and Five Seasons Ventures Fund size ($M) Country Announced/Launched Fund size ($M) Country Announced/Launched Selecte rst-time fund launches in Europe Corviglia Capital Fund 250 Luxembourg 4Q 2018 Selecte rst-time fund launches in Europe Corviglia Capital Fund 250 Luxembourg 4Q 2018 since Q4 2017 since Q4 2017 Trust Esport 11 France 4Q 2018 Trust Esport 11 France 4Q 2018 Norselab 10 Norway 4Q 2018 Norselab 10 Norway 4Q 2018 Imec.xpand 131 Belgium 3Q 2018 Imec.xpand 131 Belgium 3Q 2018 Raise Ventures 67 France 3Q 2018 Slingshot Ventures 64 Netherlands 3Q 2018 Raise Ventures 67 France 3Q 2018 Indaco Venture Partners 146 Italy 2Q 2018 Slingshot Ventures 64 Netherlands 3Q 2018 Stride.VC 64 UK 2Q 2018 Indaco Venture Partners 146 Italy 2Q 2018 Ring Capital 170 France 1Q 2018 Stride.VC 64 UK 2Q 2018 Maki.vc 78 Helsinki 1Q 2018 Five Seasons Ventures 67 France 1Q 2018 Ring Capital 170 France 1Q 2018 Luminar Ventures 56 Sweden 1Q 2018 Maki.vc 78 Helsinki 1Q 2018 Brighteye Ventures 56 France 4Q 2017 Five Seasons Ventures 67 France 1Q 2018 Market One Capital 40 Poland 4Q 2017 Luminar Ventures 56 Sweden 1Q 2018 Source: Brighteye Ventures 56 France 4Q 2017 Market One Capital 40 Poland 4Q 2017 Source: 117 In Partnership with & www.thestateofeuropeantech.com

08.4 Bridging the Funding Gap The rise of a new generation of funds is positive for founders, but is also delivering returns to investors. The European Investment Fund’s data shows that emerging The rise of a new generation of funds is positive for founders, but is also delivering returns to investors. The managers, defined as managers from Fund I through Fund III, account for a European Investment Fund's data shows that emerging managers, deïned as managers from Fund I through Fund significant proportion of the best-performing funds in their portfolio. III, account for a signiïcant proportion of the best-performing funds in their portfolio. Distribution of top-performing EIF-backed VC fund managers split by emerging versus established funds LEGEND IRR, Emerging TVPI, Emerging IRR, Established TVPI, Established IRR TVPI IRR TVPI IRR TVPI Top 5 Top 10 Top 20 Note: Data relates to EIF-backed European ICT funds only. Emerging funds are deïned as any fund between Fund I and III. Data as of Source: 31 March 2018. The level of VC funds raised on a per capita basis per country varies widely across Europe and serves to highlight those places that are tracking beneath the The level of VC funds raised on a per capita basis per country varies widely across Europe and serves to highlight European average. VCs in Spain and Italy, most notably, have raised significantly those places that are tracking beneath the European average. VCs in Spain and Italy, most notably, have raised less in total funds since 2013 compared to the European average. signi cantly less in total funds since 2013 compared to the European average. VC funds raised per capita by country of GP DATASET: TOP 10 by year 250 LEGEND $222 Funds raised per capita (2013-1H 2018) $204 ) 200 $184 $ ( European average a t $158 pi a c 150 r pe $119 d $117 e s i $101 a $93 r 100 s $72 $72 $72 $72 $72 $72 $80 $72 d n u F 50 $48 0 s y d e d n d y n d a n m c n e n n i n w a o n a d a a a a r l d a l e l p l r g r n e m S r o e i w r r e z n F F I h N t i S e i K G t w e S d N e t i n U The level of VC funds raised on a per capita basis per country varies widely across Europe and serves to highlight those places that are tracking beneath the European average. VCs in Spain and Italy, most notably, have raised signiïcantly less in total funds since 2013 compared to the European average. DATASET: 11-20 VC funds raised per capita by country of GP $72 $72 $72 $72 $72 $72 $72 $72 $72 $72 $72 $72 $72 75 by year DATASET: 11-20 ) $ ( a t LEGEND pi a 50 c $45 Funds raised per capita (2013-1H 2018) r $41 pe $39 d e European average s i $32 a r s d n 25 $24 $23 u F $11 $9 $6 $5 $4 $2 $0 0 k y a y s c d a e l a e r r m i l i i a i r a c l n r c n a a u t t i b a e g n i i I t l a u a a m g g s l u g e t r n n l u a p o l r r m k e u e A B e P u G o o U D H B R B P R Note: h c Taken from the European Data Collective, developed by e z Invest Europe. EDC data converted at EUR:USD of 1.1605, C the rate on 30 Sep 2018. Table excludes Luxembourg, Note: which has raised $1,074 per capita since 2013. H12018 Taken from the European Data Collective, developed by Invest data preliminary and subject to change. Europe. EDC data converted at EUR:USD of 1.1605, the rate on Source: 30 Sep 2018. Table excludes Luxembourg, which has raised $1,074 per capita since 2013. H12018 data preliminary and subject to change. & 118 In Partnership with www.thestateofeuropeantech.com

08.4 Bridging the Funding Gap As the European VC ecosystem has matured, there has been a clear trend of increasing fund sizes to better capitalise European fund managers and enable them to write larger As the European VC ecosystem has matured, there has been a clear trend of increasing fund sizes to better initial cheques, to follow on more meaningfully and also to build more diversified portfolios. capitalise European fund managers and enable them to write larger initial cheques, to follow on more meaningfully This trend continued in 2018 and has seen the median VC fund size increase to $100 million, and also to build more diversi ed portfolios. This trend continued in 2018 and has seen the median VC fund size doubling from $51 million in 2017 and up more than 3x from $29 million in 2013. increase to $100 million, doubling from $51 million in 2017 and up more than 3x from $29 million in 2013. $129M Median and mean fund size ($M) at nal 125 closing by year $114M DATASET: ALL VC FUNDS $100M $100M 100 LEGEND ) $82M M All VC Funds - Mean $ ( 75 e $63M $63M z i All VC Funds - Median s d $52M n $51M u F 50 $39M $37M $29M 25 0 2013 2014 2015 2016 2017 H1 2018* Note: Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data is preliminary and subject to change. Source: The small size of European VC funds has generally been viewed as a hurdle for the European ecosystem due to the perceived inability of European VCs to support The small size of European VC funds has generally been viewed as a hurdle for the European ecosystem due to the companies by writing meaningful growth cheques. This challenge of sub-scale funds perceived inability of European VCs to support companies by writing meaningful growth cheques. This challenge has started to change in the region’s largest countries, but it’s clear fund sizes remain of sub-scale funds has started to change in the region's largest countries, but it's clear fund sizes remain small in small in many sub-regions across Europe many sub-regions across Europe. Median and mean fund size at nal closing by UK & Ireland $102M year by sub-region $161M DACH $85M $130M LEGEND France & Benelux $34M Median $63M Mean $32M Southern Europe $49M Nordics $20M $73M Central & Eastern Europe $20M $31M Europe $45M $89M 0 25 50 75 100 125 150 175 Note: Fund size at nal closing ($M) Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018. Source: The scale of European VC fundraising is put into perspective when compared Of course, one reason for the difference in LP commitments is as simple as the scale of the different asset against the volume of capital that flows to the region’s Buyout funds. Even taking classes. European Buyout funds typically raise 7-8x as much per year as European VC funds with much larger into account the record levels of funds raised by European VCs since 2016, those average fund sizes. As such, LP types that have minimum allocation requirements can commit without the sums are dwarfed by the amounts committed to European Buyout funds. concern of being too concentrated as an anchor source of funds for an individual fund manager. Funds raised by fund type per year 80.0 $75.5B $71.8B LEGEND Buyout Funds 60.0 ) $51.1B VC Funds B $ ( $42.3B d e $38.3B s $37.5B i 40.0 a r d n u F 20.0 $9.5B $8.9B $4.4B $5.7B $6.9B $4.7B 0.0 Note: 2013 2014 2015 2016 2017 H1 2018 Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data is preliminary and subject to change. Source: & 119 In Partnership with www.thestateofeuropeantech.com

08.4 Bridging the Funding Gap “ Venture capital fund managers now span the European continent. This means investors can access best-in-class funds from the Venture capital fund Nordics to Central and Eastern Europe, and back dynamic businesses managers now span the which are becoming the next wave of European and world leaders.” European continent. Nenad Marovac Invest Europe “ Invest Europe has worked long and hard to tackle the issue of scale in European venture capital. The pan-European fund of funds Steady growth in programme, seeded with €410 million of EU money, will give larger investors a new way into VC. But we should not expect the response to fundraising will be more be immediate - steady growth in fundraising will be more sustainable sustainable for investors for investors and fund managers alike.” and fund managers alike. Michael Collins Invest Europe 120 In Partnership with & www.thestateofeuropeantech.com www.thestateofeuropeantech.com Photo: Samuli Pentti / Sami Valikangas

08.4 Bridging the Funding Gap Beyond government agencies, corporate investors and private individuals/family offices Beyond government agencies, corporate investors and private individuals/family o ces are the largest investors are the largest investors in European VC funds. Pension funds, meanwhile, have only in European VC funds. Pension funds, meanwhile, have only invested $2.4 billion into European VCs in the ve invested $1.7B into European VCs in the five years since 2013. years since 2013. Share of funds committed to VC funds by LP Government agencies 25.2% type (2013-2017) Corporate investors 15.2% LEGEND % of total funds raised Private individuals 13.6% Fund of funds 8.6% Other asset managers (including PE 7.4% houses other than fund of funds) Pension funds 6.7% Family offices 6.2% Banks 5.1% Endowments and foundations 4.6% Insurance companies 3.7% Capital markets 2.0% Sovereign wealth funds 1.1% Academic institutions 0.7% 0.0 5.0 10.0 15.0 20.0 25.0 Share of total funds committed (%) Note: Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018. European tech growth and success has not gone unnoticed by family o ces and high net-worth individuals (HNWs). Over the last ve years, they have collectively invested over $5 billion in European venture capital funds. Private individuals & family offices have contributed $5B to European VC since 2013. Only government agencies have invested more in European VC in that same period. Top 3 LP types in European VC by % of total funds committed (2013-2017) Government agencies 25% LEGEND VC funds ($B) Private individuals & Family offices 20% Corporate investors 15% 0 5 10 15 20 25 % of total funds committed 2013-2017 Note: Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018. “ We are seeing an increased appetite for investment in European technology companies coming from HNW families and family Private investors, offices. Private investors, and especially multi-generational families with millennial family members, are increasingly looking to make and especially multi- impactful investments in tomorrow’s new enterprises and in ideas generational families that could re-shape the future. The potential for very high financial returns isn’t always the major criteria driving allocations. The with millennial family attractiveness of taking part in the fascinating world of today’s tech entrepreneurs and contributing to resolve global challenges plays a members, are increasingly crucial role in investment decisions.” looking to make impactful Pierre Stadler investments in tomorrow’s Pictet Alternative Advisors new enterprises and in ideas that could re-shape the future. 121 In Partnership with & www.thestateofeuropeantech.com

Diversifying the Institutional Investor Base European VC has been transformed in the past decade and is, as a result, not only now performing well, but is also highly competitive on a forward-looking comparison against The poor historical performance of European VC relative to US VC and also to European Private Equity is no secret. both European Private Equity and US VC But European VC has been transformed in the past decade and is, as a result, not only now performing well, but is also highly competitive on a forward-looking comparison against both European Private Equity and US VC Horizon Pooled Return (Net) by Fund Index, June 2018 30.0 29.8% LEGEND ) 25.0% % ( n Europe Developed Venture Capital Index r 21.7% u t 20.3% e Europe Developed Private Equity Index R 20.0 t 17.2% 17.2% Ne Cambridge Associates US Venture Capital Index d 16.0% 15.6% 16.0% e 15.3% l 15.0% MSCI Europe Index o o P 12.5% n o z i r 10.3% 10.2% o 10.0 H 8.2% 8.4% 7.5% 6.8% 7.4% 6.2% 5.3% 4.0% 4.2% 2.4% 0.0 25-Year 20-Year 15-Year 10-Year 5-Year 3-Year 1-Year Note: Source: Cambridge As of June 30, 2018. Associates “ Pension funds now more interested in European venture because pension funds look for good returns, and European venture has Venture capital fund shown an uplift in returns over last years. However, there are some things holding others back from allocating to European VC. managers now span the Those include the fact that VC investments tend to have long and European continent. deep J-curves, which requires long-term capital that can handle illiquidity. Furthermore, a secondary market in European VC is under development but is still immature.” Christina Brinck Sixth Swedish National Pension Fund The European Investment Fund is, to nobody’s surprise, the single most frequent supporter of European venture capital funds, but there is a growing list of LPs that are consistently backing European fund managers. Investor name # of known fund commitments Investor name # of known fund commitments Top 15 most active LPs in tech-focused VC 1 European Investment Fund 179 Top 15 most active LPs in tech-focused VC 1 European Investment Fund 179 funds in Europe funds in Europe 2 Finnish Industry Investment 28 2 Finnish Industry Investment 28 3 CDC Entreprises 26 3 CDC Entreprises 26 4 British Business Bank 20 4 British Business Bank 20 5 AP-Fonden 6 18 6 Access Capital Partners 16 5 AP-Fonden 6 18 7 LGT Capital Partners 15 6 Access Capital Partners 16 8 CDC Group 12 7 LGT Capital Partners 15 9 Pantheon 12 8 CDC Group 12 10 European Regional Development Fund 11 11 Bpifrance 10 9 Pantheon 12 12 Enterprise Ireland 10 10 European Regional Development Fund 11 13 European Bank for Reconstruction and Development 10 11 Bpifrance 10 14 Industry Pension Insurance 10 12 Enterprise Ireland 10 15 ARKimedes Management 9 13 European Bank for Reconstruction and Development 10 14 Industry Pension Insurance 10 15 ARKimedes Management 9 122 In Partnership with & www.thestateofeuropeantech.com

08.5 Diversifying the institutional investor base There are very interesting differences between the LP bases supporting European VC GPs in different sub-regions. Typically, the more mature the VC ecosystem in a sub-region, the more the LP base diversifies towards private, institutional capital There are very interesting differences between the LP bases supporting European VC GPs in different sub-region. and away from dependency on government agencies. There are also important Typically, the more mature the VC ecosystem in a sub-region, the more the LP base diversi es towards private, differences in the level of pension fund commitments across sub-regions. On this institutional capital and away from dependency on government agencies. There are also important differences in front, the Nordics lead the way with pension funds accounting for 16% of total VC the level of pension fund commitments across sub-regions. On this front, the Nordics lead the way with pension funds raised since 2013, more than 7x the European average. funds accounting for 16% of total VC funds raised since 2013, more than 7x the European average. VC funds raised by GP region and LP type (2013-2017) UK & Ireland LEGEND Government agencies France & Benelux Fund of funds Corporate investors Nordics Endowments and foundations Pension funds DACH Private individuals Other asset managers (including PE houses other than fund of funds) Southern Europe Family o ces Capital markets CEE Sovereign wealth funds Banks 0 20 40 60 80 100 % of funds raised (2013-2017) Insurance companies Academic institutions Note: Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on Source: 30 September 2018. The composition of LP types that invest in European VC funds is very different to those that represent the largest sources of capital to European Buyout funds. The composition of LP types that invest in European VC funds is very different to those that represent the largest Most notably, where European VCs are heavily dependent on government agencies, sources of capital to European Buyout funds. Most notably, where European VCs are heavily dependent on corporate investors and family offices, European Buyout funds are backed government agencies, corporate investors and family oíces, European Buyout funds are backed primarily by primarily by allocations from pension funds and sovereign wealth funds. allocations from pension funds and sovereign wealth funds. Funds raised by fund type and LP type (2013- Government agencies 25.2% 2017) 2.2% Corporate investors 15.2% 1.4% LEGEND Private individuals 13.6% VC Funds 4.3% Buyout Funds 8.6% Fund of funds 14.1% Other asset managers (including PE 7.4% houses other than fund of funds) 5.6% Pension funds 6.7% 37.1% Family offices 6.2% 4.9% Banks 5.1% 3.9% Endowments and foundations 4.6% 4.1% Insurance companies 3.7% 9.7% Capital markets 2.0% 0.5% Sovereign wealth funds 1.1% 12.1% Academic institutions 0.7% 0.1% 0.0 10.0 20.0 30.0 40.0 Share of funds raised (2013-2017) Note: Taken from the European Data Collective, developed by Invest Source: Europe. 123 In Partnership with & www.thestateofeuropeantech.com

08.5 Diversifying the institutional investor base A material share of Europe’s VCs have experienced an increase in appetite amongst LPs for investing in European venture. Corporate LPs, family offices and private A material share of Europe's VCs have experienced an increase in appetite amongst LPs for investing in European individuals are leading the way, while pension funds and endowments, foundations venture. Corporate LPs, family o�ces and private individuals are leading the way, while pension funds and and academic institutions appear to lag endowments, foundations and academic institutions appear to lag VC views on change in appetite of LPs for Corporate investors European venture investment by LP type (past 12m) Family Offices & Private HNW Individuals Government agencies (e.g. EIF) LEGEND Increased appetite Insurance companies Stayed the same Fund of Funds Decreased appetite Sovereign Wealth Funds Pension Funds Endowments, Foundations & Academic Institutions 0 20 40 60 80 100 % of respondents Note: Venture capitalist respondents only. Respondents who Source: answered 'Not able to comment' �ltered out. Of course, one reason for the difference in LP commitments is as simple as the scale of the different asset classes. European Buyout funds typically raise 7-8x as much per Of course, one reason for the difference in LP commitments is as simple as the scale of the different asset year as European VC funds with much larger average fund sizes. As such, LP types that classes. European Buyout funds typically raise 7-8x as much per year as European VC funds with much larger have minimum allocation requirements can commit without the concern of being too average fund sizes. As such, LP types that have minimum allocation requirements can commit without the concentrated as an anchor source of funds for an individual fund manager. concern of being too concentrated as an anchor source of funds for an individual fund manager. Funds raised by fund type per year 80.0 $75.5B $71.8B LEGEND Buyout Funds 60.0 VC Funds ) B $51.1B $ ( d e s $42.3B i a r 40.0 $38.3B $37.5B d n u F 20.0 $9.5B $8.9B $4.4B $5.7B $6.9B $4.7B 0.0 2013 2014 2015 2016 2017 H1 2018 Note: Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on Source: 30 Sep 2018. H1 2018 data is preliminary and subject to change. “ At Top Tier we’ve been investing in European venture capital funds since our inception, but most were transatlantic. Currently, we see We expect to be more a real opportunity with Europe-focused funds as returns improve, valuations remain reasonable and the ecosystem develops. The active in Europe through venture business is global, and we see a proliferation of highly investments in venture qualified and experienced European entrepreneurs and fund managers investing behind innovative technology and life science capital funds, secondaries trends to build global businesses - just like what we see in the US. As a result, we expect to be more active in Europe through investments in and co-investments. venture capital funds, secondaries and co-investments.” Lisa Edgar Top Tier Capital Partners 124 In Partnership with & www.thestateofeuropeantech.com www.thestateofeuropeantech.com

08.5 Diversifying the institutional investor base Pension funds have committed 45x more capital to European Buyout funds than VC funds, Pension funds have committed 45x more capital to European Buyout funds than VC funds, equivalent to around Pension funds have committed 45x more capital to European Buyout funds than VC funds, equivalent to around equivalent to around $75B. In fact, European VCs account for just 2% of the total capital $75B. In fact, European VCs account for just 2% of the total capital committed to European Buyout/VC funds by $75B. In fact, European VCs account for just 2% of the total capital committed to European Buyout/VC funds by committed to European Buyout/VC funds by pension funds since 2013. pension funds since 2013. pension funds since 2013. VC Funds Buyout Funds VC as % of Total Commitments to European VC and Buyout Multiple VC Funds Buyout Funds VC as % of Total Commitments to European VC and Buyout Multiple ($B) ($B) Funds (Buyout/VC) Funds committed to VC and Buyout Funds by ($B) ($B) Funds (Buyout/VC) Funds committed to VC and Buyout Funds by Sovereign wealth funds 0.3 24.5 1% 90.1 LP type (2013-2017) Sovereign wealth funds 0.3 24.5 1% 90.1 LP type (2013-2017) Pension funds 1.7 75.6 2% 45.2 Pension funds 1.7 75.6 2% 45.2 Insurance companies 0.9 19.1 5% 20.7 Insurance companies 0.9 19.1 5% 20.7 Fund of funds 2.2 28.6 7% 13.3 Fund of funds 2.2 28.6 7% 13.3 Endowments and foundations 1.1 8.4 12% 7.4 Endowments and foundations 1.1 8.4 12% 7.4 Family o ces 1.6 9.9 14% 6.4 Family o ces 1.6 9.9 14% 6.4 Banks 1.3 7.8 14% 6.2 Banks 1.3 7.8 14% 6.2 Other asset managers 1.8 11.4 14% 6.2 Other asset managers 1.8 11.4 14% 6.2 Private individuals 3.4 8.3 29% 2.5 Private individuals 3.4 8.3 29% 2.5 Capital markets 0.5 1.1 29% 2.4 Capital markets 0.5 1.1 29% 2.4 Academic institutions 0.2 0.2 42% 1.4 Academic institutions 0.2 0.2 42% 1.4 Corporate investors 3.8 2.8 58% 0.7 Corporate investors 3.8 2.8 58% 0.7 Government agencies 6.3 4.6 58% 0.7 Note: Government agencies 6.3 4.6 58% 0.7 Other asset managers include PE houses other than fund of Total of the LP types 24.9 202.3 11% 8.1 Note:funds. Data taken from the European Data Collective, Total of the LP types 24.9 202.3 11% 8.1 Other asset managers include PE houses other than fund of developed by Invest Europe. EDC data converted at EUR:USD funds. Data taken from the European Data Collective, of 1.1605, the rate on 30 September 2018. developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018. European Buyout funds raise from a diverse LP geographic European Buyout funds raise from a diverse LP geographic footprint, but European VCs are footprint, but European VCs are overwhelmingly backed from overwhelmingly backed from Europe. Europe. Funds raised by fund type and LP region (2013-2017) VC Funds LEGEND Europe North America Asia & Australia Rest of the world Buyout Funds 0 20 40 60 80 100 % of funds raised by LP region Note: Taken from the European Data Collective, developed by Invest Europe. Total may not sum to 100% due to rounding. LPs can now see that huge success can be found in Europe but the challenge of staying locked up in a 5+5 year fund cycle remains unattractive. We have to remember investors don’t just compare VCs to other VCs, they have the option of investing into any asset class. “ We believe that investors need to see different structures rather than just the constrictive 5+5 year limited partnership. This is driven by many issues such as liquidity, access, flexibility in the market as well as the need for longer term capital to build bigger companies in Europe. LPs can now see that huge success can be found in Europe but the challenge of staying locked up in a 5+5 year fund cycle remains unattractive. We have to remember investors don’t Simon Cook just compare VCs to other VCs, they have the option of investing into Draper Esprit any asset class. More liquidity is also attractive to entrepreneurs, who want to be able to reward employees for hard work in the face of huge competition for talent.” 125 In Partnership with & www.thestateofeuropeantech.com

Great European Companies Success of a global stage 2018 has been a truly remarkable and record-breaking year for outsized outcomes in the European tech industry. Another 17 European companies hit billion- dollar valuations, and three of the ten biggest venture- backed public listings came from Europe, including that of blockbuster Spotify. Doubts about the region’s tech prowess have definitively been put to rest. ARTICLES 09.1 Billion-Dollar Companies 09.2 Blockbuster European Tech IPOs 09.3 Spotify: Celebrating a European Milestone 09.4 The European Exit Environment In Partnership with & www.thestateofeuropeantech.com

Billion-Dollar Companies 2018 set another record for the number of new European 2018 set another record for the number of new European tech companies to surpass a $1 tech companies to surpass a $1 billion+ milestone for the ïrst billion+ milestone for the first time. time. # of new and total $1B+ European tech companies per year founded since 2003 LEGEND 17 Existing New in Year 8 7 9 44 8 36 29 4 20 8 12 1 1 1 1 1 1 2 4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: Source: $1B+ European tech companies founded since 2003 Europe saw a record number of tech companies hit a EUROPEAN $B+ TECH COMPANIES $1 billion+ milestone for the first time in 2018 number of European tech companies that first surpassed a $1 billion+ milestone in 17 2018, an all-time record for the region $1 billion+ European tech companies have now emerged from 14 unique countries in the region, led by the UK, Germany and Sweden $1 billion+ European tech companies have now emerged from $1 billion+ European tech companies have now emerged from 14 unique countries in the 14 unique countries in the region, led by the UK, Germany and # of $1B+ European tech companies by UK 13 6 Sweden region, led by the UK, Germany and Sweden country of origin Germany 8 3 LEGEND UK 6 # of $1B+ European tech companies by 13 Existing $1B+ companies Sweden 6 1 country of origin Added in 2018 Germany 8 3 LEGEND Netherlands 2 2 Existing $1B+ companies Sweden 6 1 Added in 2018 Russia 4 Netherlands 2 2 Denmark 2 1 Russia 4 France 3 Denmark 2 1 Finland 2 France 3 Ireland 1 1 Finland 2 Spain 1 1 Ireland 1 1 Estonia 1 Spain 1 1 Romania 1 Estonia 1 Slovenia 1 Romania 1 Switzerland 1 Slovenia 1 Note: Source: $1B+ European tech companies founded since 2003. Switzerland 1 Note: Source: $1B+ European tech companies founded since 2003. 127 In Partnership with & www.thestateofeuropeantech.com

09.1 Billion-Dollar Companies The gripe used to be that Europe had yet to prove it could be home to multiple $1 billion+ businesses. We have decisively put that question to rest. The gripe used to be that Europe had yet to prove it could be home to multiple $1 billion+ businesses. We have decisively put that question to rest. Momentum has accelerated, and now we are able to regularly build businesses that surpass the $5 billion+ threshold and have produced two in the $15 billion+ range. However, what we are missing “ still is an iconic and enduring category leading business, based in Europe that has scaled globally and is valued over $50 billion. I do Sonali de Rycker believe this too is just a matter of time.” Accel European founders have built huge businesses in a wide European founders have built huge businesses in a wide range of categories range of categories # of $1B+ European tech companies founded Software for Enterprise Apps 14 since 2003 Financial Services 11 LEGEND Retail 9 # of $1B+ companies Interactive Entertainment 8 Travel & Transportation 6 Social & Consumer Apps 5 Food and Drink 3 Real Estate 3 Adtech 1 Healthcare 1 Note: Source: $B+ European tech companies founded since 2003 The 2010s have already produced 15x more $1B+ companies by Year 8 (2018) of the decade compared to the equivalent point (2008) of the 2000s. The cohort from that The 2010s have already produced 15x more $B+ companies by Year 8 (2018) of the decade compared to the earlier decade grew from 2 in 2008 to 31 today. Based on a similar expansion of the equivalent point (2008) of the 2000s. The cohort from that earlier decade grew from 2 in 2008 to 31 today. Based cohort from the 2010s, it’s not far from unrealistic to imagine 30 companies today on a similar expansion of the cohort from the 2010s, it's not far from unrealistic to imagine 30 companies today from this decade growing to more than 100. from this decade growing to more than 100. # of European tech companies by founding year decade that had reached a $1B+ 100 100 milestone by Year 8 and Year 18 of the decade s e (Year 18 for 2010s cohort illustrative only) i n mpa75 o c LEGEND h c e t 2000s n a 2010s pe o 50 r u E + B 1 $ 31 f 30 o # 25 2 0 Year 8 Year 18 Note: $1B+ European tech companies split by the decade of the Source: founding year. The 100 number shown for Year 18 of the 2010s is illustrative only. 128 In Partnership with & www.thestateofeuropeantech.com

09.1 Billion-Dollar Companies Europe is now consistently producing companies exceeding Europe is now consistently producing companies exceeding $5B+ in value $5B+ in value # of $1B+ European tech companies by latest valuation $1B+ 49 LEGEND # of $1B+ companies $5B+ 7 $10B+ 5 0 5 10 15 20 25 30 35 40 45 50 55 # of $1B+ companies Note: $1B+ European tech companies founded since 2003. Latest Source: valuation as of 31 October 2018. Europe is now producing $1B+ tech companies at a EUROPEAN $B+ TECH COMPANIES rate that is greater than an order of magnitude higher than the last decade increase in the number of $1B+ companies founded per decade that hit a $1B+ by Year X 8 of this decade (2010s) compared to Year 8 15 of the last decade (2000s) Europe’s $1B+ tech companies are finding shareholder liquidity via IPOs and M&A and Europe's $B+ tech companies are ïnding shareholder liquidity via IPOs and M&A and helping to release capital & helping to release capital & experienced talent back into the ecosystem experienced talent back into the ecosystem # of $1B+ European tech companies by ownership status Private 28 LEGEND Ownership status Public 23 Acquired 10 0 5 10 15 20 25 30 # of $B+ European tech companies Note: $1B+ European tech companies founded since 2003. Latest Source: ownership status as of 31 October 2018. 129 In Partnership with & www.thestateofeuropeantech.com

Blockbuster European Tech IPOs 2018 has been a truly remarkable and a record-breaking year for outsized outcomes in the European tech industry, capped by Spotify’s giant $25B direct listing. Country City Amount raised ($M) Value at IPO ($M) Country City Amount raised ($M) Value at IPO ($M) Top 10 largest VC-backed IPOs by market cap Top 10 largest VC-backed IPOs by market cap Spotify Sweden Stockholm 9,200 26,500 at exit in 2018 Spotify Sweden Stockholm 9,200 26,500 at exit in 2018 Adyen Netherlands Amsterdam 1,045 7,810 Adyen Netherlands Amsterdam 1,045 7,810 Farfetch United Kingdom London 885 5,800 Farfetch United Kingdom London 885 5,800 Avast Software Czech Republic Prague 195 3,168 Avast Software Czech Republic Prague 195 3,168 Elastic Netherlands Amsterdam 252 2,500 Elastic Netherlands Amsterdam 252 2,500 Funding Circle United Kingdom London 396 1,980 Funding Circle United Kingdom London 396 1,980 Home24 Germany Berlin 165 660 Home24 Germany Berlin 165 660 Westwing Germany Munich 145 605 Westwing Germany Munich 145 605 Navya France Villeurbanne 38 190 Marley Spoon Germany Berlin 51 145 Navya France Villeurbanne 38 190 Marley Spoon Germany Berlin 51 145 Source: Source: Europe has delivered more large tech IPOs in 2018 EUROPEAN TECH IPOS than the US Number of European tech IPOs with an enterprise value of more X$ B than $5B in 2018, versus just one 4 5 from the US As we have demonstrated in previous iterations of the State of European Tech, there are more tech IPOs per year from Europe than the US. There are many reasons that underpin this long-standing trend, but it is best summarised by the fact that there are completely different characteristics that shape the environment The number of tech IPOs from European companies has around access to the public markets for tech companies. steadily increased, far surpassing the US # of tech IPOs by region 69 70 63 LEGEND Europe 60 n o US i 49 g e 50 r y b 43 s 41 O P I h 40 c 34 e t f o 30 29 # 30 28 28 20 20 10 2013 2014 2015 2016 2017 2018 9M Source: 130 In Partnership with & www.thestateofeuropeantech.com

09.2 Blockbuster European Tech IPOs “ Since 2014, European tech companies have IPO’d at rates far exceeding that of US tech companies – European markets, like European tech has London’s AIM, are structured to support tech listings of all sizes, and Europe’s public market investors back them. But as Europe has arrived, and whether stretched its lead with smaller caps, 2018 also heralded the arrival of they’re valued in tens of a series of long awaited, high profile listings, all well in excess of $1bn in market cap, and a surge of Fintech companies on public markets. millions or tens of billions, European tech has arrived, and whether they’re valued in tens of millions or tens of billions, they bust the myths about European tech they bust the myths about with each new listing.” European tech with each James Clark new listing. London Stock Exchange In the US, for example, most tech IPOs tend to be sponsor-backed. This means there are financial investors, whether VCs or PE funds, that play a ‘sponsoring’ role in bringing these companies to the public market. While the numbers of sponsor-backed tech IPOs per region are similar in Europe and the US, because Europe sees far more IPO, the percentage share of European tech IPOs that are ‘sponsored’ are typically lower, which is a reflection of The number of sponsor-backed tech IPOs is stable both in a greater diversity in types of companies that have access to public markets. Europe and the US # of sponsor-backed tech IPOs by region 15 14 LEGEND Europe s O 11 P I US h 10 10 10 c 10 e t 9 d e k c 8 8 a b - r 7 o s n 6 po s f 5 o # 3 3 0 2013 2014 2015 2016 2017 2018 9M Source: European tech IPOs far exceed those in the US by volume due to the fact that European Many more European tech SMEs choose to go public capital markets are supportive of enabling companies of all sizes by enterprise value, indicating Europe's supportive listing environment for earlier whether $1B+ or sub-$100M, to come to market. stage companies # of tech IPOs with less than $1B market cap 62 at IPO by year and region O60 P 56 I t a p a c LEGEND t50 46 e k Europe r ma B US 140 36 $ n a h t 29 s 28 s e30 l h t 23 wi s O20 16 P I 15 15 h c 11 e t f o 10 # 0 2013 2014 2015 2016 2017 2018 9M Source: 131 In Partnership with & www.thestateofeuropeantech.com

09.2 Blockbuster European Tech IPOs Smaller cap European tech companies make up the majority of European tech companies, a reflection of the fact that founders of European tech companies take advantage of the fact that there are many different paths to raising the capital required to support and grow their companies. The US still have two times more $1B+ exits than Europe # of tech IPOs with $1B+ market cap at IPO by year and region 17 O P 15 15 I 15 t LEGEND a p a c Europe t e 12 k US r 11 ma + 10 B10 1 $ h t wi s 7 7 O P I h c 5 5 e t 5 f o # 3 0 0 2013 2014 2015 2016 2017 2018 9M Source: “ The advantage of European startups is that they have an aptitude for complexity in their DNA. This comes from looking at various The advantage of markets, making sure their intellectual property is protected internationally, and approaching customers with a multicultural European startups is that focus. The nimbleness of European startups - which comes from they have an aptitude for not having as much capital chasing them as U.S. startups - has also taught them well what the essentials of their business are and how complexity in their DNA. to be customer facing.” Natalie Massenet Imaginary Ventures Europe’s notably strong performance in terms of delivering its largest ever crop of large-cap venture-backed European tech IPOs has also been followed with European tech IPO vintages have been able to compete with strong weighted aftermarket performance. Americans in aftermarket performance Weighted aftermarket performance of Tech 222% IPOs by vintage year (%) e200 c LEGEND n 165% ma Europe r o 149% f r150 US pe t e k r ma r 100% 100% 100% e t f100 a d e t h 64% g i e W 50 39% 42% 0 2013 2014 2015 2016 2017 2018 9M Source: 132 In Partnership with & www.thestateofeuropeantech.com

09.2 Blockbuster European Tech IPOs Questions are often raised about the sophistication of institutional investors in the European capital markets and their ability and willingness to invest into tech. The data shows very clearly, however, that there is a strong pool of European investors that have built deep and sophisticated understanding of tech by having built large portfolios of holdings in global tech companies. Parent # of Global Tech companies they invest in Parent # of Global Tech companies they invest in Top 10 European Investors in global tech Top 10 European Investors in global tech Graubundner Kantonalbank (Private Banking) Graubundner Kantonalbank 1 748 Graubundner Kantonalbank (Private Banking) Graubundner Kantonalbank 1 748 companies companies Norges Bank Investment Management Government of Norway 1 746 Norges Bank Investment Management Government of Norway 1 746 DWS Investment GmbH Deutsche Bank AG 1 657 DWS Investment GmbH Deutsche Bank AG 1 657 Deutsche Asset Management (UK) Ltd. (Investment Management) Deutsche Bank AG 1 394 Deutsche Asset Management (UK) Ltd. (Investment Management) Deutsche Bank AG 1 394 Legal & General Investment Management Ltd. Legal & General Group Plc 1 311 Legal & General Investment Management Ltd. Legal & General Group Plc 1 311 UBS Asset Management (UK) Ltd. UBS Group AG 1 264 UBS Asset Management (UK) Ltd. UBS Group AG 1 264 Credit Suisse AG Credit Suisse Group AG 1 259 Credit Suisse AG Credit Suisse Group AG 1 259 Zurcher Kantonalbank (Investment Management) State of Zurich 1 248 Zurcher Kantonalbank (Investment Management) State of Zurich 1 248 UBS AG (Investment Management) UBS Group AG 1 199 UBS AG (Investment Management) UBS Group AG 1 199 Barclays Bank Plc (Private Banking) Barclays Plc 1 038 Barclays Bank Plc (Private Banking) Barclays Plc 1 038 Source: Source: Ownership in European public tech companies is more widely distributed than in their Ownership in European public tech companies is more widely counterparts in the US and China distributed than in their counterparts in the US and China Average free ðoat for tech issuance by year 35 34% and region 33% 33% 32% 31% LEGEND 30% 30 Europe % t USA a o ð e China e ð 24% 24% e25 g a 23% r e v 22% A 21% 21% 20% 20 19% 18% 17% 15 2013 2014 2015 2016 2017 2018 9M Source: European founders need to adopt a moonshot mentality if they are to build the next Google or Amazon. There is no playing it safe. European founders need to adopt a moonshot mentality if they are to build the next Google or Amazon. There is no playing it safe. As a founder you need to show investors that you’re passionate, that you have the drive to make it happen, and that you understand the market from a global perspective. Don’t obsess about building the “ perfect product – start shipping, and figure things out as you go. Lastly, the best founders will have a strong sense of purpose and a Jacob de Geer vision that guides their company through the difficult moments – iZettle there will be many!” 133 In Partnership with & www.thestateofeuropeantech.com

Spotify: Celebrating a European Milestone Spotifiers are founding, building and investing in a new generation of European tech companies Founder Investor Builder Note: This is just a small selection of former Spotifiers that are now helping to build or invest in a new generation of companies. Due to constraints, it is not intended to be complete. Spotify is truly a game changer for the “ Spotify is truly a game changer for the entrepreneurial ecosystem across all of Europe. With a relentless focus on doing things better entrepreneurial ecosystem across all and differently, they successfully outcompeted even giants such as of Europe. With a relentless focus on Apple, Google and Amazon. The direct listing was another example of Spotify’s famous out of the box thinking. Having concluded that doing things better and differently, they the traditional and outdated way to IPO wasn’t optimal neither for the company nor its shareholders and prospective shareholders, they successfully outcompeted even giants embarked on a course few other companies would have dared - and succeeded. such as Apple, Google and Amazon. The founders Daniel Ek and Martin Lorentzon had decided already at the get go on April 1, 2006 to go big or go home. They were successful entrepreneurs already then and managed to attract the best talent around when they set out to disrupt a notoriously difficult industry Pär-Jörgen Pärson that had already claimed a number of startup casualties. They Northzone respected the rights-holders and managed to convince an industry to change its business model over a period of five years. Today, the music business is as healthy as ever, and Spotify enabled that change. I am so grateful and humbled to have played a role as first institutional investor and board member over 9 years in a seminal company.” 134 In Partnership with & www.thestateofeuropeantech.com www.thestateofeuropeantech.com

The European Exit Environment 2018 has been a truly remarkable and a record-breaking year for outsized outcomes in the European tech industry, capped by Spotify’s giant $25B direct listing 2018 has been a truly remarkable and a record-breaking year for outsized outcomes in the European tech industry, 2018 has been a truly remarkable and a record-breaking year for outsized outcomes in the European tech industry, capped by Spotify's giant $25B direct listing. In total, the Top 10 exits of 2018 had a combined of more than $50B. capped by Spotify's giant $25B direct listing. In total, the Top 10 exits of 2018 had a combined of more than $50B. Exit type Country City Value at IPO / EV in M&A ($M) Exit type Country City Value at IPO / EV in M&A ($M) Top 10 largest VC-backed exits by value at Spotify IPO Sweden Stockholm 26,500 Top 10 largest VC-backed exits by value at Spotify IPO Sweden Stockholm 26,500 exit in 2018, IPO & M&A exit in 2018, IPO & M&A Adyen IPO Netherlands Amsterdam 7,810 Adyen IPO Netherlands Amsterdam 7,810 Farfetch IPO United Kingdom London 5,800 Farfetch IPO United Kingdom London 5,800 Avast Software IPO Czech Republic Prague 3,168 Avast Software IPO Czech Republic Prague 3,168 Zoopla M&A United Kingdom London 2,904 Zoopla M&A United Kingdom London 2,904 Elastic IPO Netherlands Amsterdam 2,500 Elastic IPO Netherlands Amsterdam 2,500 iZettle M&A Sweden Stockholm 2,200 iZettle M&A Sweden Stockholm 2,200 Funding Circle IPO United Kingdom London 1,980 Funding Circle IPO United Kingdom London 1,980 Mendix M&A Netherlands Amsterdam 730 Trendyol M&A Turkey Istanbul 728 Mendix M&A Netherlands Amsterdam 730 Trendyol M&A Turkey Istanbul 728 Source: Source: Country City EV ($M) Country City EV ($M) Top 10 largest VC-backed M&A exits by value Zoopla United Kingdom London 2,904 Top 10 largest VC-backed M&A exits by value Zoopla United Kingdom London 2,904 at exit in 2018 at exit in 2018 iZettle Sweden Stockholm 2,200 iZettle Sweden Stockholm 2,200 Mendix Netherlands Amsterdam 730 Mendix Netherlands Amsterdam 730 Trendyol Turkey Istanbul 728 Trendyol Turkey Istanbul 728 CCP Games Iceland Reykjavik 425 CCP Games Iceland Reykjavik 425 Shazam United Kingdom London 400 Shazam United Kingdom London 400 NewVoiceMedia United Kingdom Basingstoke 350 NewVoiceMedia United Kingdom Basingstoke 350 Relayr Germany Berlin 300 Relayr Germany Berlin 300 Gram Games Turkey Istanbul 250 MetaPack United Kingdom London 230 Gram Games Turkey Istanbul 250 MetaPack United Kingdom London 230 Source: Source: 135 In Partnership with & www.thestateofeuropeantech.com

09.4 The European Exit Environment Building on top of several large European tech IPOs, Europe has also seen significant exit value via M&A in 2018. Multibillion-dollar acquisitions, such as Building on top of several large European tech IPOs, Europe has also seen signi cant exit value via M&A in 2018. iZettle’s $2B+ sale to PayPal, have helped to drive the total value of M&A of VC- Multi-billion acquisitions, such as iZettle's $2B+ sale to PayPal, have helped to drive the total value of M&A of VC- backed European tech companies to $31B in the first nine months of 2018. backed European tech companies to $31B in the rst nine months of 2018. European M&A exit value ($B) and count by DATASET: EXIT VALUE company type (VC-backed or not) 120 LEGEND VC-backed exit value Non-VC-backed exit value 61 52 45 35 32 31 Building on top of several large European tech IPOs, Europe has also seen signi cant exit value via M&A in 2018. 12 25 19 Multi-billion acquisitions, such as iZettle's $2B+ sale to PayPal, have helped to drive the total value of M&A of VC- backed European tech companies to $31B in the rst nine months of 2018. 2013 2014 2015 2016 2017 2018 9M European M&A exit value ($B) and count by company type (VC-backed or not) DATASET: EXIT COUNT DATASET: EXIT COUNT 584 543 552 LEGEND VC-backed exit count Non-VC-backed exit count 303 256 268 259 243 142 135 159 94 2013 2014 2015 2016 2017 2018 9M Note: Note: M&A exit value based on total enterprise value of all M&A exit value based on total enterprise value of all tracked tracked transactions transactions Strong activity in M&A of VC-backed European tech companies has been underpinned by a record number of acquisitions with an enterprise value of more A strong for M&A of VC-backed European tech companies has been underpinned by a record number of than $500 million at exit, as well as record numbers of acquisitions of European VC- acquisitions with an enterprise value of more than $500M at exit, as well as record numbers of acquisitions of backed companies acquired for between $250 million and $500 million. European VC-backed companies acquired for between $250M and $500M. VC-backed M&A exit count by deal size DATASET: DISCLOSED EXIT VALUE LEGEND 50 45 $0-$100M 41 42 $100-$250M 40 $250-$500M $500M+ s 30 l 24 25 a e d f 19 o # 20 17 13 14 11 11 10 7 9 9 5 6 5 4 A strong for M&A of VC-backed European tech companies has been underpinned by a record number of 1 acquisitions with an enterprise value of more than $500M at exit, as well as record numbers of acquisitions of 0 2013 2014 2015 2016 2017 2018 9M European VC-backed companies acquired for between $250M and $500M. LEGEND DATASET: UNDISCLOSED EXIT VALUE Undisclosed 103 100 s 75 65 l a e d f o 50 # 36 20 23 25 12 0 2013 2014 2015 2016 2017 2018 9M 136 In Partnership with & www.thestateofeuropeantech.com

09.4 The European Exit Environment Contrary to the popular but false narrative that European tech companies exit primarily to US-based buyers, the share of M&A transactions of European tech Contrary to the popular, but false narrative that European tech companies exit primarily to US-based buyers, the companies that involved European acquirers exceeded more than 50% of all M&A share of M&A transactions of European tech companies that involved European acquirers exceeded more than transactions in 2018, as it has done in each of the past four years. 50% of all M&A transactions in 2018, as it has done in each of the past four years. 100 Share of M&A exits by buyer region by year LEGEND Europe 75 % 0 USA and Canada 0 1 o t Asia d e k c 50 Other (incl. unknown buyer counry) a t s s l a e d f o # 25 0 2013 2014 2015 2016 2017 2018 9M Note: Only VC-backed deals included. 2018 numbers estimated by Source: Dealroom.co. Europe’s traditional companies continue to look at M&A as a strategy to accelerate Europe's traditional companies continue to look at M&A as a strategy to accelerate their response to the their response to the digitization of their core industries and in several cases took Europe's traditional companies continue to look at M&A as a strategy to accelerate their response to the digitization of their core industries and in several cases took material bets of more than $500M. The largest single material bets of more than $500M. The largest single acquisition in 2018 involved digitization of their core industries and in several cases took material bets of more than $500M. The largest single acquisition in 2018 involved Richemont's completion of the 100% acquisition of digital commerce company, Yoox Richemont’s completion of the 100% acquisition of digital commerce company, acquisition in 2018 involved Richemont's completion of the 100% acquisition of digital commerce company, Yoox Net-a-Porter, for an implied enterprise value of $6B. Yoox Net-a-Porter, for an implied enterprise value of more than $5B. Net-a-Porter, for an implied enterprise value of $6B. Acquiror Date EV ($M) Acquiror Date EV ($M) Largest acquisitions of European tech Yoox Net-a-Porter Richemont May 2018 5,500 Largest acquisitions of European tech Yoox Net-a-Porter Richemont May 2018 5,500 companies by European non-tech companies companies by European non-tech companies Mendix Siemens Aug 2018 730 in 2018, by EV Mendix Siemens Aug 2018 730 in 2018, by EV Payvision ING Group Mar 2018 528 Payvision ING Group Mar 2018 528 relayr Munich Re Sep 2018 300 Tails Nestlé Apr 2018 192 relayr Munich Re Sep 2018 300 Chargemaster BP Global Jun 2018 166 Tails Nestlé Apr 2018 192 FreeAgent RBS Mar 2018 75 Chargemaster BP Global Jun 2018 166 Source: FreeAgent RBS Mar 2018 75 Source: 137 In Partnership with & www.thestateofeuropeantech.com Photo: Samuli Pentti

Challenges Priorities for Despite the region’s blockbuster year, European tech faces challenges. The journey for founders is still convoluted, diversity lags, and institutional capital must European Tech be more accessible. Finally, Europe needs to unlock research potential, and tech and policymakers must align more effectively. ARTICLES 10.1 There’s Lots to Overcome In Partnership with & www.thestateofeuropeantech.com

There’s Lots to Overcome This year’s report is another strong indication of the upward trend in European tech. There is much to celebrate, but the report also highlights some obvious challenges we need to address if we are to continue the progress of the past decade. Prioritise diversity and Europe’s diversity and inclusion in any meaningful way in recent years. inclusion challenges are stark. Just 4% of VC The result: Europe has lost untold funds go to female or mixed gender talent and value due to these issues. teams in Europe. The level of funding to This is not somebody else’s problem. It other underrepresented groups is even is our problem. Why are we not taking lower. Those numbers have not budged more positive action? Mobilise hidden talent pools There are at least 15 cities across most cases. By contrast, Stockholm, Europe that have more than 50,000 which has around 80,000 professional professional developers but have seen developers, has attracted almost $5B less than $1B in total capital investment over that period. How can we get all of since 2013 and less than $500M in those cities to punch at that level? 10x pension fund Pension funds have committed just European VC is now competitive with commitments to European $2.4B to European VCs in aggregate US VC and European private equity. VC since 2013, equating to less than $500M How can we educate and create the per year. This equates to just 0.01% of right incentives and allocation models total European pension fund assets to entice more pension funds to under management of around $4 support a European VC ecosystem? trillion. All of that despite the fact that Build density through Europe’s ecosystem is unique in its flows across borders and 28% of interconnectivity geographic diversity. In response to Europe’s founders and employees have this, the region’s interconnected hubs also moved across hubs. How can we are achieving density in a uniquely strengthen this interconnectivity even European way. More than a third of all further? investments by European VC already Lose the inferiority complex There is no better proof that European never deviated from its long-term vision tech companies can compete on the despite untold distractions. And they global stage than Spotify. It is hard to still ended up as the global category think of a company anywhere that has leader and a trusted consumer brand had to fight fiercer competition from the world over. What can we learn from the world’s largest tech companies and Daniel and his team? 139 In Partnership with & www.thestateofeuropeantech.com

10.1 There’s lots to overcome Build an investor base to The transformation of the European have access to the same capital and target underrepresented investor base into a deep and advice as those in London, Paris or communities increasingly sophisticated network Berlin. This means a new generation of interconnected sources of funding of sophisticated investors in new has elevated European tech to geographies and explicitly seeking to another level. But the job is not close invest in diverse groups of founders. to being finished. Europe’s challenge What can we do to help incentivise is to identify and support emerging and support this next generation of fund managers and angels that can investors? target the communities that do not Bridge the tech and policy European tech leaders and and help strengthen the European tech divide to harness tech for policymakers want to work more closely ecosystem. How can we build a bridge good together, but they are still speaking to create a European tech ecosystem across each other today. If aligned that is working in concert with its more closely we could create better policymakers to unlock the potential of products and services for consumers using tech for good? Stop living in the past and People still talk about Europe like it region of multiple democratic countries drop the cliches can’t do tech. And for sure, Europe and languages. We need to throw away has historically not created as much disparaging clichés about European enterprise value from tech as the US tech. Europe’s tech ecosystem is and China. That isn’t surprising. The US flourishing and rapidly gaining ‘market tech ecosystem has a 30-year headstart share’ on the global stage. If we can’t on the European ecosystem. China is a stop talking about the past, how can we closed market with heavy government focus on the future? support which cannot be replicated in a Compensate talent and Europe’s biggest challenge, arguably, back from overseas. Europe now bring it to Europe remains a shallow pool of executive offers compelling opportunities to level talent with experience scaling tech join amazing companies, but needs to companies to thousands of employees, align compensation to compete with millions of users and billions of revenue. benchmarks elsewhere. What can The ecosystem is, therefore, reliant Europe do to help incentivise talent on attracting global talent to Europe more effectively? or to luring home European talent Prioritise diversity and This challenge is so great, it should be and stakeholders even if it solves all the inclusion Europe’s first and most urgent priority. other challenges. Some people have If Europe fails to make meaningful started to make a difference. Diversity progress on this, it will still be unable VC has created a toolkit for founders to reach its full potential in terms of to address diversity and inclusion. So, creating value for consumers, business what are you doing? & 140 In Partnership with www.thestateofeuropeantech.com

Mythbusting Don’t Bring Anecdotes #fakenews about European tech? We put those myths to rest. to a Data Fight ARTICLES 11.1 Myths Aplenty Around European Tech 11.2 2018 Mythbusting In Partnership with & www.thestateofeuropeantech.com

Myths Aplenty Around European Tech Those working within the European tech ecosystem regularly Those working within the European tech ecosystem Those working within the European tech ecosystem regularly regularly encounter a large number of myths about encounter a large number of myths about what is happening encounter a large number of myths about what is happening what is happening in the region in the region in the region Biggest myth by SOET region Baltics Baltics Biggest myth by SOET region LEGEND DACH LEGEND Lack of Ecosystem DACH France & Benelux Capital Availability Lack of Ecosystem Global Competitiveness France & Benelux Capital Availability Nordics Market Fragmentation Global Competitiveness Rest of Europe Slow Moving Nordics Not Innovative Market Fragmentation Talent Availability Southern Europe Slow Moving Rest of Europe Overly Regulated Not Innovative UK & Ireland Diversity Startup Unfriendly Southern Europe Talent Availability 0 10 20 30 40 50 60 70 80 90 100 Overly Regulated % of respondents UK & Ireland Diversity Startup Unfriendly Source: 0 10 20 30 40 50 60 70 80 90 100 % of respondents Note: Based on respondents that gave explicit responses only Source: Note: Founders and investors are aligned that the biggest Based on respondents that gave explicit responses only myths are the lack of an ecosystem, the level of Founders and investors are aligned that the biggest myths are the lack of an ecosystem, the level of capital Founders and investors are aligned that the biggest myths are the lack of an ecosystem, the level of capital capital availability and its global competitiveness availability and its global competitiveness availability and its global competitiveness Lack of Ecosystem 15% 15% What, in your opinion, is the biggest myth you Lack of Ecosystem 18% 18% What, in your opinion, is the biggest myth you 14% regularly encounter about the state of the Global Competitiveness 12% 14% regularly encounter about the state of the Global Competitiveness European tech ecosystem? 14% 12% European tech ecosystem? Capital Availability 17% Capital Availability 12% 14% LEGEND Market Fragmentation 17% Founder or startup/scale-up employee Slow Moving 11% 12% LEGEND Market Fragmentation Investor Talent Availability 9% Founder or startup/scale-up employee Slow Moving 8% 11% Overly Regulated 9% Investor 4% 9% Talent Availability 8% Not Innovative 8% 13% Diversity 5% 9% Overly Regulated 4% Startup Unfriendly 4% 8% Not Innovative 13% 0 3 5 8 10 13 15 18 20 Diversity 5% % of respondents Startup Unfriendly 4% Source: 0 3 5 8 10 13 15 18 20 % of respondents Note: Founder and investor respondents only. Based on respondents that gave explicit responses only Source: Note: Founder and investor respondents only. Based on respondents that gave explicit responses only 142 In Partnership with & www.thestateofeuropeantech.com

2018 Mythbusting Europe is irrelevant as its share of public tech market cap versus the US and China is small Busted: If you choose to look at all the data, then yes, the market cap of public European tech companies make up just 8% compared to the market caps of US and Chinese tech companies. However, given that most the US companies’ market cap is Busted: If you choose to look at all the data, then yes, the market cap of public European tech companies make up just 8% compared to the market caps of US and Chinese tech companies. However, given that most the US taken up by just five companies (Alphabet, Amazon, Apple, Facebook and Microsoft) companies’ market cap is taken up by just ve companies (Alphabet, Amazon, Apple, Facebook and Microsoft) and and most of them are over 20 years old, it is much better to look at the market caps most of them are over 20 years old, it is much better to look at the market caps of those public tech companies of those public tech companies founded after 2006 if you want to understand the founded after 2006 if you want to understand the direction of future travel. Once you do that, then Europe begins direction of future travel. Once you do that, then Europe begins to punch a lot harder. to punch a lot harder. Share of total market cap of public Internet & 68% Software companies by region p 60 a c t LEGEND e 47% k r All public tech companies ma l a t 40 All public tech companies founded since 2006 o t 33% f o % 23% 21% 20 8% 0 China Europe US Note: Share of total public Internet & software market cap by region and cohort. % distribution based on share of total value of US, China and Europe. Total may not sum to 100% due to rounding. S&P Global Market Intelligence All the best European founders want to move to Silicon Valley It's often said that European founders 'all want to move to the Valley'. This is not what the data shows. Only 6% of The overwhelming majority of European founders do European founders would choose to found and build their company in Silicon Valley if given the chance to start not feel the allure of moving to Silicon Valley over again. If you were to start over, where would you I would stay where we are now 63.9% choose to found and build your company? A different European city 19.3% LEGEND % of founders Silicon Valley/Bay Area 6.2% Somewhere else (e.g. Asia) 3.7% Other (please specify) 3.6% A different US city (not Silicon Valley/Bay 3.0% Area) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 % of respondents Note: Founder respondents only 143 In Partnership with & www.thestateofeuropeantech.com

11.2 Mythbusting European tech founders don’t understand how to use stock options Busted: European tech companies have historically lagged behind those from the US in their use of stock options as an effective tool to attract, incentivise and retain talent. However, looking at Advanced-HR’s latest employee ownership survey, there are signs that the latest generation of companies from Europe are now properly rewarding their most talented executives and employees. While there is likely sample bias because most founders who participate in the survey are likely to a) understand the issue more and b) be better at remunerating their employees, it is a positive sign. There is still work to do but thanks to leading European VCs, such as Index Ventures and Balderton, more founders are starting to take this issue seriously and the rest will hopefully follow suit. European governments need to pay attention too and ensure the implementation of progressive policies around use of stock options do not lag behind this evolved attitude among European founders. If you support enabling more effective use of stock options to incentivize talent in Europe, we recommend The average level of employee ownership by funding round checking out the Not Optional initiative at www.notoptional.eu. stage is broadly similar in Europe compared to the US Employee ownership by funding round stage 20.0 in 50th percentile by region LEGEND 15.0 Executives (Europe) p i h s Executives (US) r e wn10.0 Staff + Other (Europe) o f o Staff + Other (US) % Unissued (Europe) Unissued (US) 5.0 0.0 Note: Europe US Europe US Europe US Europe US This details equity held by executive-level employees, staff- Seed Series A Series B Series C level employees and remaining unissued options. It excludes Founder’s Shares and equity allocations displayed as a percentage of fully diluted shares. Equity not related to salary nor incentives GDPR has been a disaster for all concerned The European tech community actually takes a surprisingly positive view on the impact of GDPR, especially in terms of whether it has been a good thing for European consumers. There is a more nuanced perspective on whether it has had Importantly, however, there is a very strong majority agreement across the board from all stakeholder types that a negative impact on their own companies, but if it is generally seen as positive for GDPR has been a good thing for European consumers. One might say, therefore, that any perceived negative consumers then it’s possible to argue it is a necessary cost to scale ethically. impact for companies is a justi able cost of scaling more ethically GDPR has been a good thing for European consumers DATASET: ALL RESPONDENTS LEGEND Agree All respondents Neither agree nor disagree Disagree 0 10 20 30 40 50 60 70 80 90 100 % of respondents 144 In Partnership with & www.thestateofeuropeantech.com

Predictions What’s Coming Next We explore how some of last year’s predictions played out, and give our forecasts for European tech in 2019. ARTICLES 12.1 What We Got Right and Wrong Last Year 12.2 Predictions for 2019 In Partnership with & www.thestateofeuropeantech.com

What We Got Right and Wrong Last Year In last year’s report, we made some predictions about what 2018 would hold for European tech It would be a bit cheeky of us not to look back at them and see how we did... So, er, how did we do? 2017 Prediction Founders will come to see regulation as a source of potential competitive advantage The ‘move fast and break things’ Cycles, Kry or Babylon in the healthcare mentality has never sat well with heavily market. They are all early examples regulated markets. As founders realise of companies that have embarked they can gain an advantage through upon - and come out on the other regulatory compliance, it will go from side of - lengthy regulatory approval being seen as a perceived handcuff processes to gain an advantage on their to being seen as a potential source of competitors. competitive advantage. Think of Natural We totally got this right! Mark: 1/1 This trend came through hard and fast Netherlands respectively. Perhaps the in 2018 across numerous industries. strongest example of the change in Financial services has long since founder attitudes towards regulation, been an industry where venture- however, has come in the emerging backed companies, such as N26 and micro-mobility market. European Monzo, actively leveraged their fully micro-mobility startups such as VOI and licensed banking status to strengthen Tier have explicitly pointed to their pro- their market positions. In the digital regulation approach as a key source of health space, messaging-centric competitive advantage as they seek applications such as Forward Health to capture the hearts and minds of and Siilo have overcome barriers to European consumers and policymakers become powerful new services in their and to steal a march on US players local health systems in the UK and entering the European markets. 146 In Partnership with & www.thestateofeuropeantech.com

12.1 What We Got Right and Wrong Last Year A venture-backed European tech startup will exit for a $B+ to a traditional non-tech European giant Non-tech European corporates have millions (for example, BNP Paribas and already made billion-dollar tech Compte Nickel). This will change in 2018 acquisitions (Anglo-Dutch Unilever as European non-tech corporates put picked up Dollar Shave Club), but some of their combined $1.5 trillion acquisitions within Europe have cash holdings to work. typically been in the hundreds of We...sort-of got this maybe half-right Mark: 0.5/1 In the purest sense, this did not come enterprise value of around $6 billion. to pass. There was no single acquisition Siemens, the German industrial giant, of a European VC-backed company acquired Mendix, a Netherlands- for more than $1 billion to a traditional born, -funded and -raised enterprise non-tech European giant. But that’s software company, for $730 million. not to say that there was not plenty of In other smaller, but still meaningful relevant M&A activity that validated transactions, ING Group acquired this trend. In fact, the year started in Payvision for a fee that valued the January with Richemont’s acquisition of business at more than $500 million, full control of the European, formerly- while Munich Re acquired Berlin’s Relayr VC-backed, but now public company for $300 million. All this taken together, Yoox Net-a-Porter for an implied total we think this deserves a half mark. European founders will increase efforts to tap engineering talent pools outside of traditional hubs The battle for talent in Europe is ensuring talent flows are not a one- intensifying. Not only are there more way street into tech. In order to stay venture-backed startups that are better competitive in this context, European funded and hungrier for engineering founders will look for creative ways to talent than ever, but global tech giants best exploit the untapped engineering are also expanding aggressively in the talent pools in less obvious places. region with inflated salaries on offer for For example, we expect to see more the most talented. At the same time, satellite offices opening up across the European corporates are fighting back, region in upcoming hubs. Yeah, we nailed this one too Mark: 1/1 This trend has certainly taken hold in already opened satellite offices to Europe in 2018, driven by increasing tap new talent pools and 80% of levels of competition for talent in core those founders expressed increased European tech hubs and a growing interested in opening additional awareness of the depth of talent in offices. As one example, N26 has emerging hubs. According to the more opened its first major office outside of than 1,000 founders that responded Berlin, choosing Barcelona to build an to this year’s State of European Tech office that will quickly expand to 100 Survey, more than 50% of companies employees. with more than 100 employees have 147 In Partnership with & www.thestateofeuropeantech.com

12.1 What We Got Right and Wrong Last Year A top tier, established European VC will participate in a token offering/ICO In 2017, top tier US funds (including newest funds, such as Blueyard. But the Andreessen Horowitz and Union Square region’s most established funds have Ventures) actively invested directly yet to participate. This will change in in tokens via Initial Coin Offerings. 2018. They were joined by some of Europe’s Yeah...no, this didn’t happen Mark: 0/1 This did not happen, at least not through the year, but under the surface publicly. In 2018, making any sort of European teams have continued to prediction around the state of the make progress and raise funds from crypto market proved particularly top tier European investors, often via dangerous given the extreme level of traditional equity. Argent, for example, volatility in the market and an enduring raised capital from Index Ventures and bear market. The price of crypto assets Creandum. has inevitably dominated the headlines So how did we do overall? We think 2.5/4 isn’t bad going...now onto our predictions for next year... 148 In Partnership with & www.thestateofeuropeantech.com Photo: Riku Kyla / Juuso Hmlinen

Predictions for 2019 Investing in Underrepresented Founders First-time funds targeting underrepresented European communities emerge The figures are damning. Only 7% funded today. We cannot shy away of all capital invested in European from how difficult it will be to turn tech companies in 2018 went to this tide. Established VC firms have female or mixed gender founding a responsibility to look harder, and teams. We cannot measure the face down their unconscious biases. imbalance in funding allocated to Dedicated funds targeting investment other underrepresented communities, into these communities are also part but those figures would only be of the answer. These numbers have to harder to read. It is even harder to change if we are to fulfil our potential. consider just how much talent and 2019 is the year that new funds will start value has evaporated away from our to make this happen. industry because they are not being Build From Home Founders choose to stay where they are and build from home According to the European Centre for their companies, and the second was Policy Studies, tech talent in Europe defined by entrepreneurs staying to is 10x more likely to move than the build from Europe but choosing one of average citizen in Europe. This is the region’s major hubs (London, Berlin, extraordinary and owes much to the etc.); then we’re entering a third phase historic geographic opportunities where founders choose to stay where of European tech. Europe is set to they are, emboldened by the quality of enter a third phase in the evolution of the local ecosystems they see arising entrepreneurial tech talent mobility. around them all across Europe. The If the first phase was defined by the more that founders and talent choose frequent flow of talented European to build from home, the more that 10x entrepreneurs moving to the US to build difference will contract. 149 In Partnership with & www.thestateofeuropeantech.com

Semicorns? $500 million+ rounds become a thing Softbank Vision Fund has mostly the 12 $5 billion+ companies that have set its eyes on the US, but it has also been founded in the past 15 years and been active in Europe, leading giant as more growth stage capital lines up to $500 million+ rounds into Improbable capture the European tech opportunity, and Auto1. As Europe produces more we should expect $500 million+ rounds multibillion-dollar companies to go with to become more common. EuroSaaS European SaaS companies take the public stage European founders and investors are going to predict who makes it out first, the first to admit that Europe started but we do think 2019 will see the next behind the curve in SaaS. But Europe’s set of European SaaS IPOs to follow leading SaaS companies are making in the footsteps of pioneers such as up for lost time and scaling quickly. Mimecast. It’s about time too. We’re looking at you, UIPath. We are not 150 In Partnership with & www.thestateofeuropeantech.com

About Who, How, What, Why ARTICLES 13.1 Our Data Partners 13.2 Our Contributors 13.3 Acknowledgements 13.4 About Atomico 13.5 About Slush 13.6 About Orrick 13.7 About Studio Lovelock In Partnership with & www.thestateofeuropeantech.com

Our Data Partners Advanced HR CBRE European Organization Dealroom European for Nuclear Research Investment Fund (CERN) Indeed Invest Europe LinkedIn London Stock Meetup Exchange Politico Pro Preqin Quid Stack Overflow Startup Heatmap Intelligence Europe 152 In Partnership with & www.thestateofeuropeantech.com

Our Contributors Thanks to all of the following people for their assistance and insight in developing this year’s State of European Tech Report Giovanni Anelli Alice Bentinck Elsa Bernadotte Christina Brinck Ophelia Brown CERN EF Karma Sixth Swedish National Blossom Capital Pension Fund Tugce Bulut James Clark Michael Collins Simon Cook Rosie Dallas Streetbees London Stock Invest Europe Draper Esprit Fat Llama Exchange Jacob de Geer Sonali de Rycker Lisa Edgar Rasmus Ekholm Linda Griffin iZettle Accel Top Tier Capital Slush King Partners Irina Haivas Taavet Hinrikus Pip Jamieson Baroness Martha Nenad Marovac Atomico TransferWise The Dots Lane Fox Invest Europe Doteveryone 153 In Partnership with & www.thestateofeuropeantech.com

13.2 Our Contributors Natalie Massenet Jamie McFarlane Raj Mukherjee Dave Norwood Steve O’Hear Imaginary Creator Fund Indeed Oxford Sciences TechCrunch Ventures Innovation Pär-Jörgen Pärson Sharmadean Reid Mate Rimac Naren Shaam Sebastian Northzone Beautystack Rimac Automobili GoEuro Siemiatkowski Klarna Pierre Stadler Juan Urdiales Munish Varma Caroline Walerud Teddie Wardi Pictet Alternative Jobandtalent SoftBank Vision Voumental Insight Venture Advisors Fund Partners Check Warner Sara Wimmercranz Chris Yiu Niklas Zennström D