How European tech founders can supercharge growth in 2021

The last year has shown that the growth of European tech is unstoppable. Tech.eu reported that January 2021 racked up 311 funding rounds in Europe and Israel, totalling just under €6.7 billion in investment size, compared with 267 deals and €5.2 billion raised in 2020 and 237 and €3.2 billion raised in 2019. On top of this, Europe is home to over 60 tech startups valued at over $1 billion. These include household names like Babylon Health, Deliveroo and Improbable, as well as B2B SaaS companies such as GoCardless which just so happens to be a member of our portfolio!

Once again the viewpoint that volatility breeds innovation and success has proven to be true, as per the 2008 credit crunch and dot com crash before that. But what should founders be doing to take advantage? In this article I’ll weigh up whether 2021 is a time for defence or offence (spoiler: it’s the latter), then share my thoughts on the latest and greatest tech trends founders should be jumping at while the investment landscape is so strong. I’ll conclude with a note on future considerations that startups should be prepared to manage.

Is 2021 a period of time for defence or offence?

When the pandemic first hit our advice to the companies in our portfolio overwhelmingly suggested that they retrench, conserve cash, extend their runway and do everything they could to be lean, efficient and focused. This was of course more relevant for those operating in sectors hard hit by the pandemic such as travel and leisure, but the future was so uncertain that the “taking stock” mindset was important regardless.

Now, a year later, it is clear that most tech companies are net beneficiaries of the pandemic’s impact. Even if firms operate in sectors that continue to be negatively affected by ongoing lockdowns, tech companies should be a catalyst for flexibility for their end-users, providing them with innovative solutions to continue to generate revenue whilst their traditional sales route is on pause.

The above is especially relevant for younger, more innovative tech companies, established over the last decade or so, that are built in the cloud rather than on-premise meaning they are relatively pandemic-proof. In some cases this has enabled younger companies to overtake more well-established competitors, as inherent weaknesses are revealed by the requirement to hustle and adapt almost overnight. So, now is a good time for tech companies to be bullish and take full advantage of any growth opportunities laid out before them, and the good news for founders is that the market for investment into innovative companies is very strong.

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Be smart and heed the latest tech trends — they aren’t going away

As a General Partner of a B2B SaaS VC I’m in a position to see the latest tech trends as new startup propositions land on my desk; this also enables me to identify where the gaps are in the market. A few of the latter are WFAnywhere technology; tools that empower companies to move their focus from location to brand; and the potential of Open Source to take on Big Tech:

  • WFAnywhere tech: Beyond communication and collaboration, the business world urgently needs tools that enable true remote working. These include as-effective-as-in-person recruitment, on-boarding, payroll, culture and team-building, brainstorming, performance management and everything else that’s needed to build, run, and grow an over-achieving remote or virtual team.
  • Moving from location to brand focused: These tools help B2B2C companies that are part digital and part physical (think restaurants and gyms) to become Internet businesses, opening up new revenue streams and transforming themselves from a location to a brand. For example, a restaurant can evolve past its location by creating meal-kits, recipe books and more; and gyms can offer on-line classes.
  • Open Source vs. Big Tech: Open Source continues to be more and more prevalent in a variety of flavours to provide faster and more open innovation and an alternative to the growing hostility to closed, inflexible and all powerful walled gardens. I anticipate open source tech will continue to have more and more of an influence putting more control on the hands of the developers and the users.

A final piece of advice I want to share with founders is, just because you managed to flex around the challenges COVID-19 posed to your business doesn’t mean you should be complacent around future challenges. Taking Brexit as an example, we are already seeing some UK firms struggle to recruit top talent from the continent; and the issue of equivalence has meant many fintechs have had to quickly set up offices in Europe to escape the impact of new regulations.

If you’re a tech founder, now is the time to be as creative and innovative as you can and take risks, but that should never come at the expense of in-depth planning that prepares you for every scenario. If 2020 has taught us anything it’s that we should always be prepared!

Written by Jos White, General Partner, Notion Capital

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