Top 10 European Startups to Watch in 2021

Europe’s Startup Environment

The first few months of Covid-19 hit the European startup market hard. With countries like Italy among the worst hit in the early days of the pandemic, startups throughout Europe were definitely rattled too.

Percent of European Startups Applying for Government Aid by Stage

Key Characteristics Holding European Startups Back

  • Domestic value pool is fragmented: At the most basic level, the fact that Europe is not a single market has large effects on what startups must focus on in their early years. Should they focus on just 1 country? Or should they focus on features that can have pan-European appeal and invest in localization/translation/etc.?
  • Lower supply of late stage capital: Large funding rounds can be challenging. Historically, it has been more difficult for European companies to raise large funding rounds due to a lower supply of late-stage capital. Based on McKinsey interviews with industry insiders, this difference was partially attributed to European investors’ risk aversion.
  • Cultural values are different: European startups face much greater pressure to perform, and to do so earlier, than startups in the United States, where having a failure in one’s past is typically seen as a badge of honor. Sentiment analysis of media coverage has shown that only about 17 percent of press coverage in Germany portrays entrepreneurship in a positive light, as compared with 39 percent in the United States.
  • Attracting the best talent can be difficult: While Europe has a tech talent cost advantage compared to the United States, the continent’s startups often lack the tools to attract the best talent. In many European countries, unfavorable equity and stock-option rules make startups less appealing to potential employees. For example, more than 75 percent of the EU countries’ stock-option rules analyzed by the European VC firm Index Ventures lagged behind those of the United States.
  • Innovation ‘superhubs’ not as densely packed with resources: “Superhubs” such as Silicon Valley and New York City, which have a high concentration of entrepreneurs, tech talent, and investors, have played a very important role in the success of the US startup ecosystem. Although London, Paris, Berlin, and Stockholm can be considered the leading hubs in Europe, they have not achieved the same concentration in terms of capital, knowledge, and talent. As a result, only about 30% of European startups have located their headquarters in a tech superhub, compared to almost 50% of startups in the US. However, Covid-19’s massive impact on remote work may make this difference less problematic and may potentially lessen the importance of superhubs.

How Did I Choose This Top 10?

2020 was an incredibly disruptive year for European startups, who as we’ve seen earlier in this post, were already struggling with several significant headwinds compared to their counterparts in the United States.

The Top 10 European Startups to Watch

  1. MediQuo: Medical Chat, Appointments, and Prescriptions
www.themodernproductmanager.com
  • Integrated POS — plug-in or custom integration; suitable for local stores that use supported ERP (cashier/POS) software
  • Plug-in POS — e-commerce plug-in; suitable for online stores

Honorable Mentions

Velmio: Pregnancy HealthTech With Personalized Advice

What European Startups Did I Miss?

I’m sure I missed quite a few prolific, fast-growing European startups. Let me know which ones on Twitter at @amitch5903!

Product @Kinsured | 5x Product Leader/Founder | Blog: medium.com/@Amitch5903 | Author: @producthandbook @disruptbook | Newsletter: bit.ly/MPMnewsletter

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