[Edaily Marketin YunJi Kim Reporter] Startups across various sectors in Europe that utilize artificial intelligence (AI) are rapidly acquiring smaller companies in their respective industries. In European markets—such as tax, legal, and property management—where the business landscape is highly fragmented, these startups are acquiring competitors to secure customers, professional talent, and a business foundation all at once, and then integrating AI into these operations. Startups, which were once the targets of acquisitions by large corporations or private equity firms, are now stepping up as the acquirers themselves, accelerating their growth.

According to industry sources on the 11th, startups pursuing a “roll-up” strategy—involving the successive acquisition of traditional service providers in Europe—are drawing attention from investors. A roll-up is a strategy that involves acquiring multiple small businesses one after another and consolidating them into a single platform or corporate group. It is gaining attention as a new growth model because it allows companies to scale their operations more quickly than by selling software to existing firms and gradually increasing their customer base.

The structural characteristics of the European services market are cited as the reason why this approach to scaling up has recently established itself as a trend. Sectors such as tax, legal, and property management are not only crowded with small-scale operators but also often lag behind in digital transformation. Acquiring existing firms allows startups to secure an established customer base and revenue stream, while also providing significant scope to transform business operations through the application of AI. The growing demand for business succession due to an aging founder population also creates a favorable environment for identifying acquisition targets. In fact, some global investment firms view Europe as a particularly favorable market for AI rollups due to these characteristics and are investing in related companies.

A prime example of a company that recently secured funding from investors is the German AI tax startup LimeTax. LimeTax recently raised a total of 36 million euros (approximately 56.2 billion won). Of this amount, 6 million euros came from a pre-seed equity investment led by Motive Partners and others, while the remaining 30 million euros was secured through acquisition financing provided by a consortium of German banks. LimeTax, which acquired four tax firms within just eight months of its founding, plans to use this funding for additional acquisitions.

LimeTax is not the only company expanding through this approach. The UK-based rental management platform Dwellly is one of the most active companies in acquiring small rental management firms and consolidating them into a single platform. It connects the landlord and tenant information and operational data held by existing rental management firms to its proprietary AI operating system, automating repetitive tasks such as rent collection, tenant screening, and maintenance requests. Since its founding in 2023, the company has acquired 16 independent property management firms, growing to become one of the top 10 property management firms in the UK.

Avio, a German company targeting the short-term vacation rental market, secured a $36 million Series A investment last October led by Eurasio, Europe’s largest investment firm, and has since acquired more than 30 operators. Avio is a management company that operates lodging facilities and vacation homes on behalf of owners. After acquiring small-scale local operators, it integrates booking, pricing, customer service, on-site operations, and accounting into a single AI-based system. Recently, the company has been aggressively expanding, with the cumulative number of acquired companies surpassing 50. The number of properties under its management has also grown to over 2,000.

Similar trends are emerging in the legal services market. Last September, the UK-based AI legal platform LawHive acquired Woodstock Legal Services, a law firm with more than 60 attorneys. Following the acquisition, LawHive applied its proprietary AI to legal document drafting, case law research, and case management; according to the company, Woodstock’s revenue has tripled since the merger.

The investment industry anticipates that both the number of startups adopting roll-up strategies in Europe and the investment firms funding them will increase. This is because there are many service markets fragmented into small players, and the aging of founders is driving greater demand for succession planning, making it easier to secure acquisition targets. Global market research firm PitchBook analyzed, “There is growing expectation that AI can be used to boost the productivity of acquired companies,” adding, “This is the backdrop for the outlook that roll-ups could establish themselves as a new growth strategy and investment theme for European startups.”