Industrial Tech Report: 3 Takeaways From Europe's Best Year Ever

Despite the broader market downturn, European industrial tech funding is on track for its best year ever.

In partnership with Dealroom.co, our third annual Industrial Tech report finds that between January and September of this year, VC investment in European industrial tech totalled $4.7 billion –– and with $6 billion in VC investment projected by year’s end –– the sector is on track to surpass 2021 investment levels.

“The soaring rates of investment in Europe’s industrial tech landscape is highly encouraging. Industrial tech breakthroughs are key to improving Europe’s productivity, but it’s also key to ensuring the continent meets its carbon emissions targets via climate tech innovations,” said Marie-Helene Ametsreiter, General Partner at Speedinvest. “With total VC investment projected to be $6 billion by year’s end, this report shows how investors of all stripes have cottoned onto this fact––and how this has made industrial tech one of the fastest-growing verticals in European VC.”

We breakdown the key takeaways and drivers of the industry below, including the increasing role Climate Tech and corporate investment are playing in the industry.

And we dive deep into the numbers and trends in the full report. Download it now.

Climate Tech and Industrial Tech are holding up strongly despite the challenging market environment

We all witnessed (and are still following) the market downturn in recent months. Naturally, we asked ourselves: How have Climate Tech and Industrial Tech held up?

The answer is quite reassuring. Despite a challenging macro environment, investors have continued to pour capital into the sector. In fact, with $4.7 billion so far and $6.1 billion expected by the end of the year, VC investment in European Climate Tech and Industrial Tech has already nearly surpassed the entirety of 2021.

With that, it’s been one of the fastest-growing sectors for VC funding in Europe over the past year. Logistics dominated the field just (as it had the year before) with $2.5 billion in funding followed by robotics with $776 million.

Climate tech continues to gain traction

Given the massive amount of dry powder that’s flowing into the field, B2B Climate companies have seen a further increase in funding from an already steep incline in 2021. As of this writing, we’re already at $1.1 billion this year and on track to reach $1.4 billion. What’s changed, however, is a clear trend of establishing later stage rounds. For example, Forto raised a $250 million Series D in 2022, and our portfolio company, Sylvera, announced a $32 million Series A in January.

Advanced materials and energy are the segments attracting the most funding, followed by robotics and logistics. But climate-focused startups can be found in almost every industrial tech segment.

Now, when we look at the investor side, we’re getting even more excited. There are now over 60 European climate-focused VCs investing in Industrial Tech. This movement will propel climate innovation forward with unprecedented force and it’s fair to say that the sector in itself is on its way to becoming a mature ecosystem with enough capital to support growth-stage companies towards an IPO.

The corporate sector is playing an increasingly important role in Industrial Tech

We see it every day in our work. Corporates increasingly understand the importance of collaborating and working with startups to sustain their own success and longevity. We can also see this in the numbers. In 2022, we saw the highest level of CVC activity ever with close to $802 million to date and a projected full year volume of $1 billion.

That being said, we observe a clear trend towards topics like drones and drone software, AR/VR, and cybersecurity. Given that most corporate investors operate in the industrial space, they often see clear strategic incentives in these areas. In contrast to that, more and more corporate investment arms understand the importance of establishing a clear level of independence when it comes to search grid definition and dealmaking, and they’re setting up their funds accordingly.

“Industrial tech in Europe is showing strong signs of growth. Europe is home to leading global corporates in several industrial segments ranging from automotive to energy and chemicals, and 2022 has seen them significantly step up their investments in industrial tech,” said Yoram Wijngaarde, CEO & founder of Dealroom.co. “Between this and increased VC activity, industrial tech is at an exciting stage of its development  with great promise for industry, the continent, and the world as a whole.”

-

Want to learn more about the state of European Climate Tech and Industrial Tech? Download the third edition of our annual Industrial Tech report. You’ll get more insights on what we touched upon above, learn about recent trends, and better understand the status of both Industrial Tech and the European B2B Climate Tech sector.

If you have any questions or comments on the report, feel free to reach out to the Climate Tech and ndustrial Tech Team. If you’re a Climate Tech founder addressing climate change in the industrial world, click here. We'd love to chat!