Welcome back to my European SaaS Musings! In this article, I’ll cover some of the need-to-know’s in the European SaaS world, try to wrap up on an eventful 2024 as well as look ahead to what promises to be an exciting 2025 (it’s certainly started on a wild path)!
In this edition, expect:
- Analysis of the momentum in the early-growth stage SaaS market in Europe
- The most interesting, notable and exciting VC rounds in European SaaS
- Opinionated commentary and data on the public markets and macroeconomics
- A list of top recommended reading
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The Early Growth European SaaS Market
I spend most of my time in a specific sub-category of the SaaS market, which we at Oxx call the ‘scale-up’ stage, and is often also referred to as ‘late venture’ or ‘early growth’. In plain terms, the fundraising parameters for this market are companies raising between $5-30m in Series A-C rounds.
Within this market, 2024 saw a pretty consistent quarter-on-quarter recovery in total transaction value, with Q4 2024 totalling $2bn of capital invested (~140 rounds at an average of ~$14m).Interestingly, after 5 quarters of strong recovery since Q3 2023, this total amount was only 20% lower than the all-time highs of 2021-2022, and brings the market to above the average level of the last 5 years.
Source: Dealroom, Oxx Analysis
If we now look at the volume of transactions, we can see the component trends very clearly: Series A’s and Series B’s have been on solid growth paths since the middle of 2023, whilst we’ve also seen growth in ‘Other’ rounds throughout 2024.
‘Other’ aggregates non-traditionally named milestone rounds, so partly comprises traditional late venture/early growth rounds, and also in-between or bridge type rounds. As an example – Oxx led a €6m financing round in a business called Kodiak Hub in November, which was simply described as a venture round.
Source: Dealroom, Oxx Analysis
Looking forward, I predict that we will see some steady growth in total transaction value (above $2bn/quarter), due to a strong early-stage Series A market, an improving Series B market (there is still a significant proportion of the companies that raised A’s in 2021-2023 that haven’t yet been ‘Series B-Ready’; but I don’t expect much of a further increase in Other rounds from current levels.
Looking into the details of these rounds that were completed in 2024, there were a lot of hugely exciting businesses that raised funding rounds. I’ve whittled down to my top ~20 rounds of the year (anything below $50m in new funding to capture a few slightly larger raises) into the below table.
| Company | Country | Round | Amount | Sector | Select Investors | Month |
|---|---|---|---|---|---|---|
| Kittl | Germany | Series B | $36m | Graphic design | IVP, Left Lane | Jan |
| Vertice | UK | Series B | €23m | SaaS Purchasing | BVP, 83North | Jan |
| Pennylane | France | Series C | €40m | Accounting | Sequoia, DST Global | Feb |
| Tines | Ireland | Series B | $50m | Secure workflow builder | Accel, Felicis | Apr |
| PolyAI | UK | Series C | $50m | Conversational AI | Hedosophia, Point72, Khosla | May |
| SOCRadar | Turkey | Series B | $25m | Threat intelligence | Oxx, Peakspan | May |
| TechWolf | Belgium | Series B | €40m | Workforce planning | Felix, Notion | Jun |
| Tinybird | Spain | Series B | $30m | Data infrastructure | Balderton, CRV | Jun |
| Gorilla | Belgium | Series B | €23m | Energy applications | Headline, Beringea | Jun |
| Checkly | Germany | Series B | $20m | API monitoring | Accel, Balderton, CRV | Jul |
| Leya | Sweden | Series A | $25m | Legaltech | Benchmark, Redpoint | Jul |
| HERO Software | Germany | Series B | €40m | Vertical SaaS | Eight Roads | Jul |
| Attio | UK | Series A | $33m | CRM | Balderton, Redpoint, Point Nine | Aug |
| Encord | UK | Series B | $30m | Data management | Next47, CRV, Crane | Aug |
| 11x | UK | Series B | $50m | Agentic AI | a16z, Benchmark | Sep |
| Granola | UK | Series A | $20m | AI notetaking | Lightspeed, Spark, Firstminute | Oct |
| Stoik | France | Series B | €25m | Cyberinsurance | a16z, Alven, Anthemis | Oct |
| Conduktor | UK | Series B | $30m | Data streaming | Accel, M12 | Nov |
| Kodiak Hub | Sweden | Early VC | SEK70m | Supplier relationship management | Oxx | Nov |
Source: Dealroom, Oxx Analysis
A couple of interesting themes to pull out:
- Lot of data-tooling represented (eg Tinybird, Encord, Conduktor), not surprising given high demands on engineers and developers partly due to the massive ongoing enterprise AI adoption pull
- Vertical SaaS companies raising to challenge /dominate sub-markets (eg Pennylane, Leya, HERO, Stoik)
- Some interesting new approaches to take on sleepier incumbents in more established and traditional markets (eg TechWolf, Attio, SOCRadar, Granola)
- And great novel products with super adoption (eg Tines, 11x, Kittl, Kodiak Hub)
Where do I think the market is going from here:
- More ‘niche’ vertical SaaS tools for under-digitised sectors
- Magic-feeling ‘agentic-AI’ products which have a real wow-factor
- Developer and data centric tooling with a security focus
- And a pretty mixed array of themes that have strong underlying demand momentum and an associated increase in investor interest – defence, tax/compliance, supply chain, fin-ops, legal/IP tech etc.
What’s going on in the public markets?
The BVP Nasdaq Emerging Cloud Index ended 2024 slightly up over the year, having seen a steady drop through to the summer, and a re-acceleration through the end of the year, with strong gains in November and December. January and February have seen some volatility, and over the last 12 months, the index is overall up about 10%.
Source: Google Finance, BVP Cloud Index; NASDAQ
Part of the recent volatility in the market was driven by the storm of coverage around Deepseek, which purported to have released a highly performant LLM for a fraction of the build/training cost of the major providers. No matter the veracity of the true cost, it was a brilliant breakthrough from a creative and resource constrained team, and for me, pointed to a few immediate takeaways:
1) Most SaaS companies will want to have a high degree of flexibility on which LLM to connect to (and customers will increasingly demand their vendors solve this problem for them)
2) (Faster than expected) downward pressure on infrastructure costs for compute/inference is a huge boost to application layer businesses, particularly in sectors where the cost of compute may have been somewhat prohibitive in the past for certain use cases (fields as remote as education, healthcare, manufacturing etc)
3) Pricing models are about to see a whole lot more experimentation. Input costs are changing quite dramatically for SaaS companies, and I expect there will be a lot of folks spending more time trialling outcome or consumption based pricing, as more traditional seat or account based pricing loses some favour
Macro
All eyes have been on the US around the (re-)inauguration and what might come from the ongoing and promised barrage of executive orders. Trade-tariffs, de-regulation, green and immigration policies, DE&I backlash, not to mention the role on the international stage (middle-east, Ukraine, China, Greenland, Canada)… Given the far-reaching level of chaos, I’ll just focus on trying to untangle the inflationary/rate impact in the near term.
It seems to me that many of Trump’s core policies are inherently inflationary. Tariffs raising import prices, restrictions on immigration curtailing the supply of labour, expansionary domestic fiscal policy (probably net – I’m assuming the forthcoming tax breaks and other stimulus outweigh tariff income & DOGE savings), and resulting astronomical planned government borrowing (even more so if he is actually being serious on pursuing expansionist ambitions)…
As a result of this clear direction of travel towards accumulating more fiscal deficit and accelerating government debt, it’s unsurprising he continues his brazen efforts to influence the Fed:
“I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world” – Trump at the World Economic Forum in Davos.
The consensus view from the financial markets appears to still be expecting further rate cuts in 2025 from the Fed, but potentially fewer than might have been hoped for:
“We expect a stagflationary policy mix from the new Trump administration… tilted to fewer cuts depending on the exact timing of Trump’s policy implementation”. Bradley Saunders, the North America Economist for Capital Economics.
What was particularly interesting was how the private sector reacted to some of the Fed cuts late last year – according to Bankrate, “most consumer borrowing costs remain the highest in over a decade, and the 30 year fixed mortgage actually ended up increasing, despite the Fed’s cuts.” This is unusual, and points to consensus expectations that the future direction of US government policy will be long-term inflationary with higher associated rates. My personal view is the risks are weighted to the upside on US rates: i.e. we might expect them to have to remain higher for longer due to unexpectedly hot inflation prints (and I don’t think it’s impossible that the Fed will have to hike rather than cut, particularly due to the near-term risk of a global trade war).
But I think the opposite may be true in the UK. I think it’s likely that the inflationary pressure is receding strongly and the Bank of England is more likely to actually be able to enact multiple cuts during 2025, partly because the growth headwinds are stronger, but mostly that the lack of significant government/economic policy means there’s no external influences actively stoking the fire. And just to remind everyone how accurate the market is at forecasting all this, I’ll leave one of my favourite charts below, covering the difference in consensus rate forecast vs actual rate outcomes.
The way to read it – the colourful thin lines represent the market forecast of future rates at different points in time, whilst the solid thick blue line shows actual rates. You can see that for most times in history, the markets are wildly wrong about the near-term path of interest rates.
Source: MAN Group
Thanks for reading!
There are a couple of really good long-form research pieces published in the last few months that I strongly recommend reading:
I hope you enjoyed reading this update. If you have any feedback, please do reach out (pej@oxx.vc); all comments or recommendations are welcome.
If you’ve enjoyed reading this, stay tuned for some lighter snapshots which will be published throughout the year. If you want to receive the next pieces in your inbox, subscribe to the Oxx newsletter by filling in the subscription form in the footer.
