Industrial Tech is on a rapid growth trajectory, but is it still an underfunded opportunity?
Our new report, in partnership with Speedinvest shows that while traditional industry accounts for 30% of global GDP, Industrial Tech investment accounted for just 3% of European VC investment in 2020 (albeit growing rapidly, up 8.8x since 2014). The sector has an opportunity to soon be worth €300B in Europe alone, if it can attract the investment that its growth trajectory warrants.
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An inflection point for Industry 4.0
Industrial sectors like manufacturing, mining, construction, and utilities, make up a third of the global economy, with an output of $23 trillion per year. But they are also among the least digitized sectors – there is a vast opportunity for Industrial Tech startups to bring industry into the digital age.
Industrial Tech investment makes up just 3% of overall European VC investment. But investment levels have grown 8.8x since 2014, nearly three times faster than overall European VC investment which already grew 3.2x in the same period. The Industrial Tech ecosystem is now reaching an important moment of critical mass. Today, Industrial Tech is at a similar inflection point as enterprise tech/cloud was in 2010. The opportunity is compelling as we enter the industry 4.0 era.
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 digitization 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.”
Germany leads in Industrial Tech, built on industrial legacy
German and French startups lead the way for Industrial Tech in Europe, having raised €1.9 billion since 2014, roughly 45% of the European total. This corresponds with traditional industrial output in Europe. The UK has the fourth largest industrial output in Europe, but is third by Venture Capital, owing to its overall larger startup ecosystem.
Logistics is among the early movers
The European logistics sector turns over €1.1 trillion per year and employs 11.5 million people. It is now also at the forefront of this rapid move to digitization, and the fragmented market represents a massive opportunity for disruption. European logistics companies have raised €1.17B in funding since 2015, attracting nearly a third of all industrial tech funding in Europe.
In tech terms, Europe is perhaps best know for creating fintech, healthtech and enterprise software startups of global renown. With its legacy of industrial excellence, leading universities producing and supporting industrial innovation, and an ever more vibrant startup and VC industry, it may also be well positioned to take on Industry 4.0, but first it needs to come out from under the radar.