* European tech investments seen hitting $13.6 bln this year
* Atomico says access to late-stage capital a problem
* New hives of activity popping up outside main tech hubs
* Europe has more developers than United States
By Mia Shanley and Eric Auchard
HELSINKI/FRANKFURT, Nov 30 Europe's tech sector
is on track for a record level of investments this year but poor
access to late-stage capital is keeping it from creating
independent tech "gorillas", one of the region's most active
Europe is expected to hit $13.6 billion in tech investments
in 2016, up from $12.6 billion in 2015 and almost five times
levels five years ago, venture capital firm Atomico said in a
report released at Slush, one of the region's biggest tech
New hives of activity are popping up outside the main tech
hubs in places like Munich, Zurich, Copenhagen and Lisbon with
money flowing into industries ranging from music and fintech to
fashion and food.
Long the laggard in terms of risk-taking, access to capital
and creation of globally successful companies relative to
Silicon Valley, Europe's rising tech scene is starting to stand
out in some unexpected ways.
Five of the world's top ten technical universities are
located in the region and Europe also appears to have an edge
over the United States in software development.
StackOverflow Insights, which tracks programmer trends,
reckons there are 4.7 million professional tech developers in
Europe versus 4.1 million in the United States.
Just this month, Facebook and Google
announced major expansions of their teams in Europe, citing
"We haven't had the gorillas in terms of size, but it's
getting there," said Mattias Ljungman, who created Atomico with
Skype co-founder Niklas Zennstrom. "Slowly but surely it's
building up," he told Reuters.
Instead of staying independent and going public, many
European tech firms tend to sell early to buyers in the United
States or China.
China's Tencent Holdings Ltd bought 'Clash of
Clans' maker Supercell in a deal valued at $8.6 billion. Chinese
online travel firm Ctrip.com recently agreed to buy UK-based
Skyscanner Holdings Ltd for 1.4 billion pounds.
Moreover, Japan's Softbank snatched up British chip
technology company ARM for $32 billion while U.S. based
chipmaker Qualcomm snatched NXP of the Netherlands, Europe's
largest chipmaker, for $38 billion.
Ljungman said Europe needed to boost later-stage access to
capital to ensure more companies stay put, get bigger and keep
control of their own destinies.
"The mindset is raise early-stage funding here and then get
the bigger tickets in other parts of the world. There needs to
be more regional capital - I think that will be super helpful,"
Atomico estimates Europe needs to close a $25.1 billion
funding gap with the United States. Allocating just 0.6 percent
of European pension funds which manage some $4.1 trillion to the
tech sector would close that gap, it said.
Top U.S. funds are already getting more active in Europe
while more companies and private equity firms are starting to
see opportunities, Ljungman said.
Investors expect Swedish music streaming service Spotify,
which has held its own against rivals like tech giant Apple
Music, could go public next year.
Ljungman remains hopeful that tech gorillas will emerge in
"I don't think we should be surprised if over the next 10
years we should be looking at outcomes that are tens of billions
and making their way up to hundreds of billions," he said.
(Additional reporting by Jussi Rosendahl and Tuomas
ForsellEditing by Ruth Pitchford)