Europe Venture Capital Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe Venture Capital Market is segmented by Investments in Country (UK, Germany, Finland, Spain, and Others), by the Size of Deal (Angel/Seed Investing, Early-Stage Investing, and Late-Stage Investing), and by the Industry of Investment (Fintech, Pharma & BioTech, Consumer Goods, Industrial/Energy, IT Hardware & Services, and Other Industries)

Market Snapshot

Europe Venture Capital Market Size
Study Period: 2018-2027
Base Year: 2021
CAGR: >3 %
Europe Venture Capital Market Major Players

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Market Overview

The record amount of venture capital investment in Europe this year suggests that the appetite for the region's startups remains strong despite the global pandemic. Including investment in Israel, VCs invested $46 billion in the continent as of December. The reason being that many startups have flourished at a time when remote digital services from food delivery to ecommerce are in more demand than ever. Identifying and nurturing start-ups today is essential for continued innovation in Europe, as well as laying the groundwork for a better tomorrow.

2020 was a challenging year for people, companies and countries across Europe. European venture capital did not escape the effects of COVID-19 but responded with characteristic strength. The industry secured another year of investment growth as funding for European start-ups and scale-ups rose for the eighth year running to Euro 12 billion. Moreover, as this report clearly illustrates, investment flowed across the continent – from London, Paris and Berlin to Catalonia, Copenhagen and Dublin. Europe is packed with entrepreneurial talent and populated throughout with hubs that are driving start-up excellence.

European VCs have raised more in 2021 to date than in any previous year. European VCs have raised Euro 14 billion in new funds in 2021, compared to Euro 12.6 billion in full year 2020, a previous record. Despite economies falling into recessions, unemployment rising drastically across numerous different sectors and multiple stimulus measures being announced by pretty much all of the European nations, venture deal value and activity hasn’t really reflected impacts of COVID-19.

Scope of the Report

Venture capital is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.

A complete background analysis of the Europe venture capital market, which includes an assessment of the parental market, emerging trends by segments, and regional markets. Significant changes in market dynamics and market overview are also covered in the report.

The Europe Venture Capital Market is segmented by investments in country (UK, Germany, Finland, Spain, and Others), by the size of the deal (angel/seed investing, early-stage investing, and late-stage investing), and by the industry of investment (fintech, pharma & BioTech, consumer goods, industrial/energy, IT hardware & services, and other industries).

Investments - By Country
UK
Germany
Finland
Spain
Others
Deal Size - By Stage of Investment
Angel/Seed Investing
Early-stage Investing
Later-stage Investing
By Industry of Investment
Fintech
Pharma and Biotech
Consumer Goods
Industrial/Energy
IT Hardware and Services
Other Industries of Investment

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Key Market Trends

United States' role in VC rounds in Europe

American interest in European companies isn’t new. The pandemic doesn’t seem to have had an impact on US investors’ interest in VC deals in Europe. Deals involving US investors reached a value of Euro 16.1 billion through Q3, putting 2021 on track to surpass the record Euro 19.1 billion set in 2020. American investment in European VC rounds has increased significantly over the last decade. Company valuations tend to be lower in Europe compared to the US and American VCs are likely also attracted by the potential for European companies to then enter and scale in the lucrative US market.

Capital is flooding into the ecosystem from more and more sources, including from non-traditional investors via sovereign wealth funds, pension funds, as well as high-net worth individuals. Data suggests the overall percentage of deals with U.S. participation in Europe is rapidly increasing and reached record levels in 2021. At the same time, the percentage of deals with investors from Asia is on the rise too, despite more stringent regulatory barriers.

More money is flowing into European tech than ever, and it’s increasingly coming from venture capital’s elite U.S firms. European startups are likely to receive a record USD 34.3 billion in investments in 2021. The trend shows that American investors will account for nearly a third, of the total amount invested in European VC. For the U.S. investors, there’s a clear financial incentive to “swoop in”. On average over the past year, one dollar’s worth of equity in a European startup in a Series A funding round would have cost USD 1.60 in the U.S. for a comparable share.

Europe Venture Capital Market Trends

Fintech Dominance in VC rounds in Europe

Europe’s fintech startups have continued raising vast amounts of capital over the lockdown period, attracting around Euro 2.86 billion in investment between March and mid-August. Consumer fintechs are carrying the sector in terms of funds raised. This segment actually had a record quarter in Q2 thanks to a number of mega-rounds. Analysts are particularly bullish on this sub-sector, expecting the market to grow incrementally thanks to increased digital adoption. UK FinTech startups attracted more capital and completed more deals than the rest of the top 10 European countries combined.

Europe’s high pre-existing level of financial development can partly account for the relatively smaller reach of fintech payment and lending activities compared to some other regions. But fintech activity is growing rapidly. Digital payment schemes are expanding within countries. Automated lending models are developing but remain limited mainly to unsecured consumer lending. While start-ups are pursuing platform-based approaches under minimal regulation, there is a clear trend for fintech companies to acquire balance sheets and, relatedly, banking licenses as they expand.

Wealthtech saw a record year for global investment in 2020. the start of 2021 saw a 45% funding drop in Europe. Despite users flocking to trading apps. The payments sector is on track to exceed last year’s record investment. It’s also worth noting that this area is proving particularly popular with incumbents and their venture arms. One sub-sector worth keeping an eye on is insurtech. Despite not receiving much attention, insurtechs made up nearly 20% of all fintech rounds in Europe in Q1 2021.

Europe Venture Capital Market Forecast

Competitive Landscape

Europe Venture Capital market is highly competitive, with the presence of both international and domestic players. The market studied presents opportunities for growth during the forecast period, which is expected to further drive the market competition. With multiple players holding significant shares, the market studied is competitive.

Recent Development

  • February 2022: France's Prime Minister, Bruno Le Maire, announced the plans of creating a new fund to boost the technological sector in Europe. The target of the fund is to establish 10 technological companies having a net worth of more than Euro 100 billion by the end of 2030. Moreover, the fund will be publicly funded to finance new technological startups emerging in Europe.
  • Oct 2021: Sequoia Capital is debuting a big shift in strategy as they look to boost their returns amid increased competition in the market for startup financing. The storied venture capital firm announced that they’re breaking with tradition, abandoning the traditional fund structure and their artificial timelines for returning LP capital. The firm’s future investments will soon all flow through a “singular, permanent structure” called The Sequoia Fund.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

      1. 4.1.1 Venture Capital 1010 Insights on Typical VC Fund Structure and How It Works

      2. 4.1.2 A Brief on Types of Venture Capital Financing

      3. 4.1.3 Regulatory Landscape of the Industry

    2. 4.2 Insights on Fund Raising of Venture Capital Firms in Europe

      1. 4.2.1 Insights on University Endowment Funds Investing in Venture Capital Funds

      2. 4.2.2 Insights on Venture Fund of Funds

    3. 4.3 Insights on VC Financing and Vertical Analysis in Europe

      1. 4.3.1 Deal Size of VC Financing by Series

      2. 4.3.2 Insights of Major Deals Across Industries and Top 10 - 20 Leading VCs Across Sectors

      3. 4.3.3 Key Trends in the Investment Patterns of VC Firms in the Recent

      4. 4.3.4 VC Funding on the Rise in Biotech/Pharma Sectors

      5. 4.3.5 Market Outlook on Current and Future Spending of VC Firms

      6. 4.3.6 Insights on Blockchain-related VC Financing

      7. 4.3.7 A Brief on Rising ESG Investing by VC firms

      8. 4.3.8 How Brexit Shaped the VC Investment aross Europe

    4. 4.4 Insights on the Exit Landscape of VC Funding in Europe

    5. 4.5 Regulatory Landscape Governing the Venture Fund of Funds in Various Economies

    6. 4.6 Impact of COVID-19 on the Market

  5. 5. MARKET SEGMENTATION AND OUTLOOK

    1. 5.1 Investments - By Country

      1. 5.1.1 UK

      2. 5.1.2 Germany

      3. 5.1.3 Finland

      4. 5.1.4 Spain

      5. 5.1.5 Others

    2. 5.2 Deal Size - By Stage of Investment

      1. 5.2.1 Angel/Seed Investing

      2. 5.2.2 Early-stage Investing

      3. 5.2.3 Later-stage Investing

    3. 5.3 By Industry of Investment

      1. 5.3.1 Fintech

      2. 5.3.2 Pharma and Biotech

      3. 5.3.3 Consumer Goods

      4. 5.3.4 Industrial/Energy

      5. 5.3.5 IT Hardware and Services

      6. 5.3.6 Other Industries of Investment

  6. 6. COMPETITIVE LANDSCAPE?

    1. 6.1 Overview (Market Concentration and Major Players)

    2. 6.2 Company Profiles of VC firms

      1. 6.2.1 360 Capital

      2. 6.2.2 AAC Capital

      3. 6.2.3 Accel Partners

      4. 6.2.4 Active Venture

      5. 6.2.5 Acton Capital

      6. 6.2.6 Adara Ventures

      7. 6.2.7 Atlantic Labs

      8. 6.2.8 Atomico invests

      9. 6.2.9 Axon Partners Group

      10. 6.2.10 BGF invests

      11. 6.2.11 Bonsai Venture Capita*

  7. 7. RECOMMENDATIONS (STRATEGY, SELECTION CRITERIA, EMERGING MANAGERS, AND MARKETS TO LOOK OUT FOR FROM FUND OF FUNDS PERSPECTIVE)

  8. 8. DISCLAIMER AND ABOUT US

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Frequently Asked Questions

The Europe Venture Capital Market market is studied from 2018 - 2027.

The Europe Venture Capital Market is growing at a CAGR of >3% over the next 5 years.

360 Capital, AAC Capital, Accel Partners, Active Venture, Acton Capital are the major companies operating in Europe Venture Capital Market.

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