European tech lending boomed to $14.77bn last year as startups looked beyond equity finance to fuel growth, a new report has found.
The debt market for European startups more than doubled from $6.85bn in 2020, as debt financing rounds jumped to 246 from 149 in 2020, according to a report from tech investment firm GP Bullhound.
Analysts at the firm said the UK led the charge with 32 per cent of overall tech lending but European markets were catching up fast as tech ecosystems across the continent matured.
“We believe the landscape is changing. Unlike just a few years back, great companies are being built across Europe no longer concentrated in the major hubs such as London, Stockholm or Berlin,” the analysts said.
“Sixty-five European cities have produced at least one $1bn startup. Given the transformative companies being formed across Europe, we expect the UK to decrease as a proportion going forward.”
GP Bullhound said a gap had now opened up in the market for lenders targeting high-growth mid market firms, which had been underserved compared to the market for early-stage and mature tech companies.
“With more than 5000 firms valued at over 50m euros and with a combined EV of 2.8tn euros, the addressable market for growth loans is huge,” analysts said.
The debt market will now balloon in the next 10 years, GP Bullhound predicted, as international financiers look to tap into fast-growth tech firms across the continent.
The boom in debt financing last year came as venture capital investment into European startups sailed beyond $100bn, spurred by pent up cash stored up through the pandemic.