Funding and talent are perceived to be the biggest challenges facing the European tech ecosystem
Respondents to our survey provided free-text answers to the question: "What, if anything, do you see as the greatest challenge facing the European tech ecosystem in the next 12 months?". We analysed the keywords in their responses to categorise their opinions into core themes. The two most frequently-cited themes related to funding and talent, which were raised by 25% and 21% of respondents respectively. Responses from founders skewed higher for mentions of funding-related keywords, but lower for keywords related to talent. These two dimensions are inextricably linked as one begets the other from the perspective of founders. In other words, funding is a key enabler to allow founders to attract and reward the best talent competitively in a market currently experiencing a so-called 'war for talent'.
📣 Take repeat founders at their word
As Europe's tech ecosystem has developed, it has built an increasingly deep pool of talent. This is being recognised by founders. 43% of repeat founders with significant experience perceive that the depth of the talent has improved over the past year. Experienced founders are slightly more likely to feel this way compared to first-time founders (40%).
As the world becomes connected, I'm very confident that certain types of software are much easier to build in Europe than the US.
Europe has the advantage of sitting 'on the middle of the world' and can cooperate with Asia and the US fairly efficiently in regards to the timezone. On top of that, the salary of developers in Europe is still 2x lower than in the US while the average quality remains the same. With that, engineering heavy products can be built much more efficiently in Europe while still having a big enough market to serve and get feedback from.
🇬🇧🇪🇺🦠Brexit and the pandemic takes its toll on talent
Our survey reveals some significant differences in how founders perceive the talent pool depending on where they are based. 33% of UK-based founders believe that the depth of the talent pool is better compared to 12 months ago, but an even greater share (37%) say it has worsened. By comparison, the equivalent numbers for France-based founders is 54% (better) and 19% (worse). The Netherlands is the only other country where the share of founders thinking the depth of the talent pool has worsened (36%) is greater than those thinking it has improved (32%). It is likely that factors such as the pandemic, heightened competition for talent and Brexit, drive the differences.
A window into the talent pipeline
In order to better understand the talent pool in the European tech ecosystem, we partnered with Dealroom on a data-driven analysis of thousands of companies and tens of thousands of their founders and senior leaders. The resulting sample includes close to 5,000 private tech companies headquartered in Europe that have raised at least $2M of capital from venture investors since 1 January 2020. These startups and scale-ups are distributed across a range of countries, industries and stages. The dataset also gathers publicly-available data on close to 45,000 unique profiles of founders and senior leaders, who either currently work or once worked at one of these companies. To further refine the dataset, and to focus on a current snapshot of the talent pool, we limited the analysis to 38,000 unique founders and leaders (C-level executives, department heads) with recent experience at one of the companies in the sample. In other words, the profiles we analysed all worked at one of these companies at some point in the past two years, though they may have moved on since.
Dealroom also analysed the individual journeys taken by people working in tech, mapping over 105,00 unique 'work experiences' within the sample. To provide further insights into the dataset, we also segmented the profiles to understand those that have recent experience working at a European unicorn. Where country-level data is presented in the analysis that follows, it includes only countries where the sample size is statistically significant. Our hope is that this dataset provides a unique and fresh perspective on the depth of the talent pool in European tech today. So what did we learn?
💥 Our experiment reveals the depth of experience of the current talent pool
At a high level, 38% of the founders and leaders in Dealroom's sample have 'multi-generational' experience, meaning they have gained experience at two or more tech companies from different 'generations'. Generation is defined here by the founding year cohort to which the companies belong. Additionally, we learned that 19% of the profiles in the sample have gained experience working at a $1B+ European tech company, either in their current role or through historical experiences. The talent pool in this dataset is also geographically mobile: 16% of them have moved countries at some point in their career to gain international experience.
Now that I’m based in Europe again I see the playing field as more level and the market for talent as truly global.
Over the past 18 months we’ve all reevaluated what it means to collaborate and be productive as a technical team. Developers can do amazing work when remote. Designers don’t need to be face-to-face to be successful. And engineers can sprint whether in the office or not. So even though a hybrid approach may be most effective--and it’s the one that I personally prefer--Covid has smashed the stigma about remote work.
Europe has a highly-educated, highly-mobile talent pool
In addition to professional career 'mobility', we mapped the degree of international mobility of profiles with regards to their academic credentials. We found that 42% of the founders and leaders in our sample are currently based and working in a different country different to where they completed their academic studies. Further, we also identified that 20% of profiles in the sample attended an 'elite' university, which is defined as a university ranked in the top 50 universities globally based on the QS World University Ranking 2022. This is particularly striking given there are an estimated 25,000 universities worldwide.
Share of founders and leaders in sample by type of studies
- Notes
- Based on Dealroom's analysis of 19,000 unique founders and leaders as defined in the methodology. Elite education is define as studies from one of the top 50 universities as per the QS World University Ranking 2022.
Many EU-based companies are much more comfortable with hiring talent from other EU countries rather than just from their home country.
Talent concentration was always an issue. For certain roles, you pretty much had to go to the Bay Area for talent with relevant experience. The sudden shift to remote-first approach helped distribute that talent and skill set across multiple places. It'll take a few more years to fully benefit from this trend though — it takes time to build new ecosystems.
Time zones remain a big issue. US talent is still very much locked in US time zones and European talent in European timezones. One thing has changed significantly — many EU-based companies are much more comfortable with hiring talent from other EU countries rather than just from their home country.
The UK, Germany and France capture the lion's share of the tech talent market
The largest share of founders and leaders in the sample are based in the UK, Germany and France. Together, these three countries alone account for 64% of the talent pool mapped in the dataset. This isn't that surprising given both the absolute size of those markets, and the underlying maturity of their tech ecosystems. In fact, the same three countries also captured 64% of the capital invested in European tech over the past five years.
Talent is not measured by years of experience
Talent, of course, is not measured by years of experience. There are, however, notable differences across countries. The median experience in Europe is 7.5 years for founders and 5.7 years for leaders. UK and Swedish founders stand out for their greater overall years of experience (median of 8.8 years). Ireland also stands out for having particularly experienced founders and leaders. The large number of European headquarters of mature US tech companies in Ireland is one possible contributing factor. On the other end, countries like France and Germany have a relatively 'younger' talent pool of founders and leaders.
Germany and France have a larger share of founders and leaders with limited experience
We analysed the distribution of founders and leaders in the dataset across different cohorts of experience. In other words, we asked what share of the sample have 0-5 years of experience, 6-10 years of experience, and so on. Looking at this on a country-level basis provides an interesting view of the relative share of the talent pool in each country that has more recently entered the tech industry. In the sample dataset for France and Germany, there was a greater share of founders and leaders in the most inexperienced bracket of 0-5 years. The UK stands out for having a share of highly experienced (20+ years of experience) founders and leaders that is around twice as high as its two main 'rival' countries.
Betting on people, betting on tech
Tech makes a bet on people and people are making a bet on tech. Close to 50% of the leaders in our sample have less than 5 years experience. By contrast, founders are more experienced on average and are more likely to hire talent with less experience into leadership roles. It's clear that tech is happy to make a bet on people. But it's also true that people are making a bet on tech, by choosing to join startups and scale-ups within five years of them entering the job market.
The ratio of women leaders to founders is incredibly low
The gender distribution of the profiles in the sample dataset is dominated by men, as would be expected given it is based on a snapshot of companies that raised funding over the past two years. For context, 86% of deals in 2021 across Europe were raised by all-men founding teams. There are important differences in gender distribution between founders and leaders. 25% of the leaders in the sample are women, whereas 15% of the founders are women. If we see a proportion of these leaders converting to become founders at in the future, it may cause the founder balance to shift in a positive direction towards parity. It is also interesting to note that the ratio of women leaders to founders is high. For every founder in the sample that is a woman, there are nine leaders that are women. By contrast, for every male founder there are only 4.6 leaders that are men. Put differently, the relative conversion from leader to founder is twice as high for men.
Young, talented women leaders are represented, but can European tech retain them?
This snapshot looks at the distribution of leaders in the sample by gender, across each of the experience cohorts. It is revealing. Women make up almost 30% of the least experienced or 'youngest' cohort of leaders with 0-5 years of experience. By contrast, women account for only 16% of the most experienced cohort (20+ years of experience). On one hand, it's positive – given metrics on gender diversity explored elsewhere in this report– to see that women make up nearly a third of the next generation of leaders operating in the European tech ecosystem. However, it's also a wake-up call to the industry to find the most effective ways to retain that talent. The data brings into focus the importance of diversity and inclusion initiatives to ensure that tech companies become more supportive for women, in order to increase retention in years to come. A topic further explored in the chapter: Empowering a new generation.
Gendered roles in tech may account for lack of diversity among founders
We analysed our sample of founders to identify all that had prior leadership experience before starting their current company. This equated to 43% of the total founder profiles in the dataset. In that context, it is notable that for the other 57%, we were unable to identify any prior leadership experience matching the definition used in the methodology. Although it is an imperfect approach, it partly explains why founders see value in investors providing them with leadership coaching support (see Chapter 'VC: Disrupt or be disrupted'). Looking at those founders that do have prior leadership experience, they most often come from functional roles in Tech (e.g. CTO, Head of Engineering) or Sales (e.g. Chief Revenue Officer, VP Sales). When we then apply the lens of gender, and return to the distribution of women leaders by functional area, it reveals key differences in the distribution of functional leadership experience for women, and the most common paths to become a founder. Again, this serves to highlight the need for the industry to focus on creating pathways for diverse talent to enter all functional areas, as well for investors to be open-minded about founders that have different areas of functional expertise.
Where are today's tech and product leaders?
Looking beyond founders, we mapped the roles and functional experiences of around 12,000 leaders. The geographic distribution of leadership talent by country and function is essentially aligned to the distribution of companies and the flow of capital across Europe. There are a few interesting things that stand out. Germany, for example, over-indexes on leadership talent in Tech and Product, as well as in People and HR. France over-indexes on Sales and Marketing talent, as does the UK.
Combining profit and purpose is not only key to attracting talent but to retaining it. People who join us today are optimising for complexity and purpose. Solving previously unsolved problems combined with purpose is what motivates people.
The current generation of talent expects authentic social responsibility and impact from the companies they purchase products and services from, let alone where they invest the next decade of their lives and careers. Our mission has been a critical component in our ability to attract high caliber talent early on in the journey. There is a clear dichotomy between the US and European talent when it comes to their appetite for risk in joining early stage startups. In our case, we managed to mitigate that due to our transformative mission that is changing the way people think about families while offering hope to the many that can’t afford one.
💪 Competition for tech talent is fierce
The war for talent in European tech is real. We partnered with Indeed to gain insight into how competition is playing out across the region. Indeed's 'hard to fill' metric is an interesting proxy for this, calculating the share of tech jobs that are hard to fill, meaning they have been left unfilled on their platform for more than 60 days. Their data shows that filling tech jobs is particularly challenging in the Netherlands, where the greatest share (56%) of tech jobs are deemed to be hard to fill. By contrast, the equivalent share in the UK is just 37%. Year-on-year changes within countries are also interesting to observe. On the basis of this metric, competition for talent has increased in many countries (the Netherlands, Ireland, Italy, Sweden, US, Denmark and the UK) in 2021 compared to 2020, while decreasing in many others (Portugal, Belgium, Germany, Spain and France).
Share of tech jobs that are hard to fill by country per year
- Oct 2019
- Oct 2020
- Oct 2021
- Notes
- Tech jobs' included in the search for example: software engineer, programmer, application developer, UI/UX/graphic designer, web developer, frontend developer, backend developer, data scientist, business intelligence, IT support.
French talent is drawn to tech
Growth in overall demand for tech jobs can be gauged by the change in relative search volume for tech jobs across different countries. Jobseekers in France in particular have become much more interested in tech since before the pandemic, and maintained a high level of interest throughout the last year as well. This could explain in part why the number of hard-to-fill jobs in the country has decreased over time.
Change in share of tech jobs searches per million by country, 2019 to 2021 versus 2020 to 2021
- Notes
- Tech jobs' included in the search for example: software engineer, programmer, application developer, UI/UX/graphic designer, web developer, frontend developer, backend developer, data scientist, business intelligence, IT support.
The pandemic has obviously had an effect on how we all find and hire talent. While it has led to decentralisation, at Infobip, it certainly has not impacted 
the talent pipeline. In fact, we’re seeing candidates thinking more broadly, surfacing new possibilities for collaboration and exchange.
It is also obvious that being able to communicate and interact directly, with all participants in the same room, in front of the same whiteboard, simply does not have a viable alternative currently. There are differences per sector, but the flow of ideas, energy, creativity that can happen in person is much better than doing the same over the video link - and highly skilled workers are very aware of this! Decentralisation is happening , but workers will not just live anywhere - people do need to see each other from time to time.
Founders say it's getting harder to acquire new talent
We also surveyed founders directly to understand their experience with the acquisition of new talent, and how they have changed over the past 12 months. The overall sentiment is clearly in support of the argument that the war for talent is heating up. In several countries, more than 50% of founders perceive that is has gotten harder to acquire new talent in the past year. In others, where the share is lower, it still significantly outweighs the share of founders that respond with a more positive sentiment toward the change in the market. Indeed's data also shows that the overall year-on-year jump in the share of hard-to-fill jobs was highest in the UK.
Series A founders are finding it hardest to acquire new talent
Across all stages, founders shared that they are finding it harder to hire talent compared to 12 months ago. however, the challenge was most frequently highlighted by founders of Seed and Series A stage companies. There has been a significant increase in companies entering the scale-up stage this year, and as they try to keep up with growth and hiring, it is putting further pressure on companies downstream, especially as they may be able to compete more aggressively on compensation packages.
Lack of software engineering talent continues to be a bottleneck
Founders are finding it hardest to hire software developer talent. 50% of founder respondents highlight this as a problematic position to fill. Hiring commercial talent also presents a challenge for many, with 24% of founders indicating difficulty in bringing people into sales roles. Interestingly, these trends are mirrored in the responses of founders across all geographies, company types and stages.
Founders double down on purpose and remote roles to attract talent
In the context of an increasingly competitive talent market, we thought it would be interesting to ask founders what they've been doing differently in order to attract talent. The most frequently-cited response is to increase the number of fully remote roles in their country, presumably to tap into new talent pools in other geographies. This is followed by placing more emphasis on the company's mission and purpose. Purpose and mission is also echoed by employees as a key component of their decision to take a role, so there is a real alignment in the actions of both founders and talent on this issue. A topic further explored in the chapter: Empowering a new generation. A focus on diversity does not feature high on the list of priorities cited by founders, especially not in terms of placing more emphasis on hiring ethnically diverse talent. 💡 An additional insight gained by slicing the data by founder types is that experienced repeat founders are more likely to 'throw money at the problem': They show an increased likelihood to have turned to increasing salary ranges and hiring search firms in order to attract talent, compared to less experienced repeat or first-time founders.
The future is remote
It's clear that remote work is crucial to the future of work, and becoming an increasingly prevalent feature of the labour market. Indeed's data can be used to track the share of job listings including terms related to remote work, such as 'work from home'. Their analysis shows that the share of jobs that reference such terms has increased significantly across many countries. In this chart, the increase in Spain is particularly noteworthy, where the number of remote jobs is up nearly 4x since January 2020.
We can operate very efficiently with 30% of the workforce being completely remote and the other 70% distributed in the different hubs.
We see that remote work "works". We cannot deny that it has become impossible to attract the best talents if we don't accept remote work. However, we are still big believers of having physical hubs to foster culture. As a result, we can operate very efficiently with 30% of the workforce being completely remote and the other 70% distributed in the different hubs. There is a certain type of magic happening when people interact with each other on a regular basis in person. This way, team members who work completely remote can still feel a strong culture deviating from these hubs.
People no longer need to emigrate to work in the best teams and companies in the world. These experiences will help foster native entrepreneurship and ecosystems, increase opportunity, bring social mobility and distribute prosperity from tech to a much broader set of humanity.
Engineers from all over the world have been collaborating globally on open projects for decades; the creator of Linux is Finnish, Mysql is Swedish, the original Apache group had Indian/Italian/German/British engineers, video-player VLC is French and popular 3D-software Blender is Dutch. Traditional companies and startups have been reluctant to build global teams due to cultural inertia, access to talent and collaboration constraints. With remote work being normalised, these previously perceived immutable constraints are starting to wear away. This enables dissemination of talent, learnings and approaches across tech-ecosystems instead of concentrating them.