Atomico’s recent report on the State of European tech provides a deep dive into the tech landscape across Europe in 2019. The report points to encouraging new investment and growth figures, but also key challenges for policy makers that need to be met to ensure the growth of Europe’s tech sector.

2019 has shown promising results for tech investment in Europe, as despite the economic slowdowns in the UK and EU, European tech continues to break records. In the last five years, capital invested in European tech has increased by 124%, with a 39% increase between 2018 and 2019 alone, reaching $34.3bn of capital investment for 2019. This compares to reductions in capital investment in both the US and Asia between 2018 and 2019.

However despite this growth, investment in European tech remains significantly smaller than its rival sectors in the US and Asia, with US tech investment still 3.4 times higher than EU tech investment ($116.7bn) in 2019, while investment in Asia, is just under 2 times larger ($62.5bn).

Nevertheless, the clear trajectory for the EU tech sector is up, with a long-term trend of increasing capital invested in the region, along with significant growth in key industries such as FinTech and Enterprise software, Europe’s two fastest growing tech industries.

Within this mix the UK remains the EU’s largest tech sector, across Europe’s five largest tech industries, fintech, enterprise software, health, energy and transport, the UK was the number one destination in terms of the share of capital invested in each of these industries in 2018-2019 (tying only with Sweden for capital investment in energy tech). In fintech in particular the UK has established a strong lead, accounting for 50% of capital investment in European fintech in 2018-19, while London remains the EU’s largest tech hub both in terms of investment and numbers of uniquely funded companies.

The UK’s position as integrated into EU markets is one of its core strengths as a destination for tech investment. While good connections between the UK’s tech and financial services sector and those of the rest of the EU have helped create an ecosystem that is mutually beneficial and has supported the growth of the sector across the region. If the UK is to leave the EU then this relationship will change and one of the UK’s core strengths will be put into question, with the associated benefits potentially put at risk.