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What the numbers say: VCs deployed €11.8B ($12.9B) into European startups in Q1 2023, down 57% YoY and 32% QoQ, per Pitchbook. Investors are exercising caution while deploying funding due to the heightened inflation and monetary policy tightening. Non-traditional VC investors, such as corporate VCs, PEs, and sovereign wealth funds, have slowed their funding deployment, especially into late-stage startups.
Where to see the impact: In Q1 2023, European VC firms raised €3.4B ($3.7B) funds from limited partners, less than half the €7.4B ($8.1B) funds secured in the same period in 2022. Since 2019, European VCs have consistently raised more than €20B ($29.4B) annually. However, at the current rate, funding may barely surpass 2015's total of €11.5B ($12.6B) by this year's end. VCs recorded €1.6B ($1.75B) in exit value in the quarter, 70% lower than the preceding quarter. M&A's accounted for 56.3% of all European VC-backed exits in the quarter. What's next: Pitchbook analyst Nalin Patel expects M&A deals to increase in Europe, especially involving startups in the fintech and instant delivery sector. Debt funding rounds are expected to increase. Several startups pursuing IPO listings are expected to remain low due to a lack of investor demand and volatility in public markets. |
