The Financial Times’ yearly report of Europe’s fastest-growing companies saw tech once again dominate the rankings.
Twenty percent of the companies on the list are based in the tech sector. While Europe has traditionally lagged behind the U.S. in producing tech giants – see Apple, Google, Meta, and Amazon – the continent is beginning to carve out a niche in some tech sectors.
Let’s look at five thriving tech sectors in Europe right now.
1. Fintech
Fintech stands for financial technology and refers to software, mobile apps, and other technologies that automate and improve the delivery of traditional forms of finance. For instance, opening a bank account online or using a smartphone to monitor and pay for transactions are all examples of fintech. So is using your smartphone as a digital wallet to pay for goods and services.
In contrast, banks are financial institutions licensed to accept deposits from their customers and make loans. The four pillars of fintech are artificial intelligence, blockchain, cloud computing, and data.
Why is fintech successful in Europe?
Fintech is a robust market in Europe. Some of the continent’s most highly prized startups are fintech companies. These include Klarna, Checkout.com, and Revolut.
Additionally, Europe itself represents over 25 percent of all fintech unicorns globally. Following the Great Recession of 2008, governments opened the financial markets to more competition. This has proven to be the springboard for fintech’s success, opening up new markets and possibilities.
[bctt tweet=”Additionally, Europe itself represents over 25 percent of all fintech unicorns globally.” username=”globalpeo”]
One significant piece of legislation was the EU’s Revised Payment Service Directive, PSD2. This required banks to create open APIs so customers could share their data with third-party providers effortlessly. Fintech simply means more choices of financial services; for companies, it means increased efficiency in operations.
As a result, the PSD2 legislation has enabled fintech to flourish. It allows customers to access better and more cost-effective services like fintech.
Does fintech have a future?
As a result of the pandemic, increased reliance on technology has driven consumers toward digital services like fintech. Even banks have begun to partner with fintech companies to improve their services around transparency and speed. This largely stems from the realization that brand loyalty is decreasing in favor of the benefits that fintech provides.
For instance, research by Morgan Stanley found that close to 80 percent of Generation Z smartphone users were using mobile banking in 2019. This is largely seen as proof that banks will have to abandon traditional formats to entice younger generations to use their services, thus breaking fertile ground for fintech.
Where is fintech strongest in Europe?
The UK is recognized as one of the leading global fintech hubs. According to 2022 research by Deloitte there are more than 2,500 fintech companies across the UK, with London establishing itself as the second highest fintech location in the world.
Germany is also dominant in the fintech market. Berlin alone has more than 1,000 fintech companies. These include unicorns like N26, Wefox, and Trade Republic.
2. Climate tech
Climate tech is defined as technologies focused on reducing greenhouse gas emissions and addressing global warming. Climate tech aims to improve existing markets by replacing how they operate with greener and more sustainable alternatives. These can include developing:
- Renewables
- Alternative protein
- Engineered-carbon capture
- Natural-based carbon removal
- Water recycling
- Nature conservation
The rise of climate tech
According to a recent report by Dealroom.co, Europe is now the fastest growing region for climate tech, with investment growing seven times since 2016. The same report states that, in total, there are 16 climate tech unicorns in Europe. Amazingly, 11 of these were created in 2021 alone. These include:
- Arrival: aims to replace all vehicles with affordable electric solutions produced by local micro-factories.
- Northvolt: delivers batteries with an 80 percent lower carbon footprint compared to those made using coal energy.
- Voi: offers efficient, affordable transportation solutions, including e-scooters.
- Freyr: produces high-density and cost-competitive lithium-ion batteries.
- Enpal: offers solar roofs via a subscription model.
Why is climate tech growing in Europe?
Climate tech employs over 50,000 people in Europe. Thanks to consumers demanding climate responsibility from brands, there is a boom in the growth rate of sustainable products. This is nurturing ideal conditions for climate tech innovation.
Europe’s Green New Deal is a policy initiative to convert climate and environmental obstacles into growth opportunities. The central aim is to make the EU’s economy sustainable. That means zero net greenhouse gas emissions across the continent by 2050.
Where is climate tech strongest in Europe?
Germany, the UK, and France are home to the highest number of climate tech startups in Europe. Germany accounts for 252 of those. These include electric-powered air vehicles (Lilium) and a vertical farming company (Inafarm). The UK houses 103 climate tech startups, while France is the location of 96 companies.
3. Edtech
Edtech refers to digital technology dedicated to developing and applying software and hardware tools that will promote education. EdTech aims to make learning easier, more cost-effective, and accessible to students, regardless of learning differences. Another aim of edtech is to innovate educational institutions while simultaneously reducing the costs of doing so.
Why is edtech important?
Edtech does not mean adding technological devices to the classroom, such as aiding students with laptops or iPads. Edtech is intended to use technology to facilitate and deliver a new form of learning. That enables personalized learning for students based on their individual needs.
This can include using data to understand the most effective ways for a student to learn. Edtech is particularly useful in an era where many schools operate on limited budgets. Moreover, the teacher-to-student classroom ratio can be well above recommended guidelines due to staff shortages.
For example, edtech tools can use virtual technology (VR) devices that help students visualize a concept or an idea while providing an immersive experience. Edtech tools can also consist of science-based platforms that utilize big data and analytics to help teachers identify learning habits and subsequently create personalized lesson plans for each student.
Are edtech startups booming in Europe?
Edtech has forever changed the concept of learning. Naturally, online education and the ability to upskill remotely greatly benefit employees who want to grow. Because of that, edtech may be seen as an intelligent avenue to explore for businesses and investors.
Despite talks of a recession, edtech companies continue to hold firm in Europe. The European edtech market has had 40 percent more funding in the first half of 2022 than it did at the halfway mark of 2021. Leading hubs include Germany, the UK, and France, while Austria is currently the second most invested country in the EU.
Where is edtech strongest in Europe?
With over 150 edtech companies, Italy has been labeled a sleeping giant of edtech in Europe. It is the fastest growing country in southern Europe for edtech.
4. Digital health
Digital health uses information and communication technology to manage illnesses and health risks, and promote wellness. This can include everything from Fitbit devices to electronic health records and meditation apps. Digital technologies improve health in several ways.
For instance, electronic health records support clinical trials and provide comprehensive observational data.
What is the size of the digital health market?
The European digital health market was estimated at USD 39.3 billion in 2021 and is expected to reach USD 47.6 billion in 2022. The advancement of technology, combined with a shortage of medical professionals in Europe to deal with common health concerns like chronic diseases and aging populations, is a significant driver of market growth.
Moreover, since the Covid pandemic began, huge funds have been funneled toward creating a new EU health security framework that will address future preparedness around health threats.
Why is digital health important?
DIGITALEUROPE’s 2020 and 2021 Future Unicorn Award winners were both AI-healthcare scale-ups. This signifies how the emergence of digital health technology in Europe will benefit people, healthcare systems, and the economy. Digital technologies like 5G mobile communication, artificial intelligence, and supercomputing offer new opportunities to transform how we receive and provide health and care services.
For instance, diabetes management has been revolutionized by easy access to health apps that, for example, allow users to monitor glucose readings through smartphones. Additionally, healthcare professionals and patients have found it increasingly convenient to use remote-video technology for online consultations and treatments. Moreover, one of the significant benefits of digital health technology has been the ability to store and access data, meaning healthcare professionals can retrieve patient data from anywhere in the world.
Where is digital health strongest in Europe?
Estonia is one of the leading European countries regarding digital health. For example, each citizen has an online health record. This integrates data from multiple healthcare providers to create a standard document that can be easily accessed by both doctors and patients themselves. In addition, Estonians benefit from digital health services like e-Prescription and e-Ambulance.
5. HR tech
HR technology relates to software and associated hardware that automates the human resources function in a company. It includes:
- Employee payroll and compensation
- Talent acquisition and management
- Workforce analytics
- Performance management
- Benefits administration
HR technology helps companies make better, faster, hiring decisions. HR software can include an applicant tracking system to manage the hiring process and build a database of qualified résumés that companies can search and call on when a position opens. According to the AIHR report, HR technology trends in 2022 aim to improve employee sentiment by developing a two-way communication strategy to help build future communications based on information gathered.
The Verified Market Research report expects that the HR technology market will be valued at USD 38.36 billion by 2030.
Why is HR tech important?
HR professionals improve their skills through the growth and introduction of artificial intelligence (AI) and machine learning (ML). HR tech helps securely store data, automate day-to-day processes, and provide analytical tools to make more strategic decisions. Automating wages, benefits, and recruitment processes saves companies time and money.
HR tech decreases the chance of human error by limiting liability and preventing costly mistakes. This makes it vital for a company’s success.
How can HR tech help hire global talent?
The right HR tech can help scale companies and allow teams to function more efficiently from anywhere in the world. Trying to expand internationally can be fraught with complications for HR teams. But outsourcing international HR functions can save time and money.
For instance, researching unfamiliar employment and tax laws or customary benefits can cause unnecessary headaches. Partnering with an HR tech solution provides a streamlined service for the trickier aspects of international hiring, including compensation and benefits, payroll, and legal compliance.
G-P acts as your trusted global guide to handle the time-consuming and costly HR and legal processes involved in international hiring, so you can build your anywhere workforce in confidence. Through our marketing-leading SaaS-based platform, we will help you find, hire, onboard, pay, and manage your global remote teams – with just one login and one global partner.
To learn more about how G-P HR tech can help you compliantly hire the best talent in the world, request a proposal today.