Europe’s industrial tech investment lags despite high growth potential

Europe’s industrial tech sector is struggling to attract investment and accounts for just 3% of venture capital (VC) investment in the region this year, according to a new report.

Traditional industry, which includes verticals such as manufacturing, mining and construction, is a powerhouse for global economic activity. These industries are worth $23tn combined, accounting for 30% of the global economy.

However, many of these industries have been slow to digitise. According to a report by Speedinvest and Dealroom, increased investment in industrial tech startups could help modernise these sectors and unlock a new wave of growth.

Despite lagging behind other sectors, industrial tech investment has been on an upward trajectory since 2014, when it accounted for 1.1% of European VC investment. This year European industrial tech startups are on course to raise €1.2bn, according to Speedinvest and Dealroom’s figures.

Marie-Helene Ametsreiter, lead partner for industrial tech at Speedinvest, said: “Industrial innovation is a huge opportunity, and particularly in Europe, where our world-class universities and research departments have skewed industry towards high value-add sectors. The success of this digitisation is dependent on startups receiving the support they need to provide this innovation, and we are committed to ensuring Europe is able to capitalise on its head start in industrial tech.”

One industrial tech sector at the forefront of digital transformation is logistics. Companies such as Amazon and Ocado have demonstrated how technology can improve warehouse and delivery efficiencies.

In Europe, the logistics sector creates €1.1tn in revenue per year. The sector has attracted nearly a third of all industrial tech funding in Europe since 2015, with companies raising €1.17bn. Germany currently leads the way for European logistics turnover, generating a quarter of Europe’s total.

Yoram Wijngaarde, founder of Dealroom, said: “Industrial tech is at a similar inflection point as enterprise tech/cloud was in 2010. Digital adoption is accelerating. The pandemic, political climate and actual climate change have accelerated the sense of urgency around themes like decentralization, cybersecurity, customization, sustainability and more – all of which contribute to the snowballing momentum of industry 4.0.”