In the meantime, complaints about the poor situation for follow-up financing for Austrian startups have become a regular habit. However, there has been a steady improvement in this area, as indicated by the Startup Report Austria 2018 which was published today. Generally speaking, there is a clear upward trend with respect to startup investments in Austria. The report’s mastermind Florian Kandler has summarized the most important findings for us. The entire report can be download free of charge at startupreport.at.
More funding rounds of over EUR 5 million
Eleven domestic startups managed to attract EUR5 million or more in funding from investors in 2018. On balance, these eleven firms generated about EUR 145 million altogether from their backers. This is more than all the EUR 33 million received by all the 63 companies listed in the Startup Report Austria 2017. A total of 99 startups are included in this year’s Startup Report Austria 2018. All in all, these companies amassed approx. EUR 236 million in investments.
More deals of all sizes
On balance, with the assistance of the community, we were able to pinpoint 101 investments which were confirmed either officially or based on direct contact with the project team of Startup Report Austria. There were more deals in all listed categories than in the previous year. The number of deals in the EUR 1-2 million range also increased. Such transactions are considered to be particularly difficult, because they are usually too large for business angels and frequently too small for venture capital companies. In such cases the aws Gründerfonds often step in and help startups to advance to the next level.
Austrian startups are maturing
Even if the actual number of deals is increasing across the board, a look at the amounts invested shows an interesting trend. The total amount of investments rose sharply by 63 percent from 2017 to 2018, but in fact there had already been a major increase from 2016 to 2017. However, funding rounds exceeding EUR 2 million climbed much more strongly in 2018 than the smaller rounds of financing of under EUR 2 million. Domestic startups have matured in recent years and can now successfully raise larger amounts. The total sum of these large investments rose 66 percent in 2018 compared to the prior-year level.
The runners up to Vienna
There were two major deals in Carinthia, namely bitmovin and Symvaro (both of which have already been included in the Startup Report Austria 2017). As a result, Carinthia was the federal province with the second highest total investments in 2018 behind Vienna (the biggest single investment was made in TourRadar). In terms of the number of deals, Styria surpassed Upper Austria to take second place in 2018. A look at total startup investments in the two federal provinces is of particular interest. Millions in investments were made in Styrian startups in 2018, led by USound in the category of more than EUR 5 million, followed by sendhybrid, Stirtec and eyeson. In contrast, with the exception of Tractive and View Elevator, Upper Austria particularly saw numerous smaller investments. A lot is also happening in Tyrol. This federal province generated the fourth highest number of transactions. Vorarlberg has also attracted our attention and was rated fourth in terms of the amount of money invested. The biggest deal involved crate.io, which generated funding surpassing EUR 9 million.
Investors find something faster
The average search for domestic startups on the part of investors lasted about six months in 2018, similar to the previous year. Nevertheless, an increasing number of founders succeed in attracting investors in less than six months (which is generally considered to be a benchmark). At the same time, there are more company founders in 2018 who looked for funding for a period of nine months or more (13 percent compared to 7 percent in 2017). Both are indications than more money is available than in the past. Startups quickly lure investors when they constitute a conventional investment case for risk capital, so the theory goes, because there is a bigger offering. At the same time, niche startups also benefit from investments, even if their search takes longer, because there are suitable investors for more and different kinds of startups.
Many rounds of talks are needed before funding is secured
On average, successful founders contacted 34 investors and met them for personal talks thirteen times on average before they could successfully conclude rounds of financing. The data clearly shows that founders looking for investors for the very first time have to contact more investors and meet them more frequently in order to generate investments than experienced founders who can build upon an existing network.