Analyses Made Easy
*All graphs and figures are derived directly from the reports themselves.
Despite poor macroeconomic signals, European VC has shown relatively few signs of a radical slowdown. 2020 has seen $38.4b (€29.5b) invested over 4,646 deals so far, which was boosted by the $12.5b (€10.6b) in Q3 2020. That puts it on pace to surpass the $43.9b (€37.2b) deployed in 2019 (see graph). Deals with U.S. investor participation reached $19.1b (€16.1b) so far this year, continuing an upward trajectory for transatlantic investment, which reached a new high of $22.6B (€19.1) over 1,099 deals in 2019.
93.4% of European VC in 2020 through Q3 went to follow-on rounds, marking a continued divergence between late-stage and first-time fundings. As late-stage fundings increased in volume, this discrepancy is set to reach its highest degree in a decade if the current pace is kept (see graph left). Meanwhile, software lost some ground as the most popular area for investment, though it still maintained its status as the largest single segment with almost $11.8b (€10b) raised so far in 2020 (see graph right). The analysts expect further growth of investor interest for pharma and biotech startups, particularly as the race for a COVID-19 vaccine persists.
Exits in 2020 so far have a total reported value of $11b (€9.3) over 472 deals. That the total deal value is expected to reach $11.8b (€10b) for the eighth year in a row was all but certain until the recovery in Q3 2020. While France and the Benelux (Belgium, Netherlands, Luxembourg) countries have seen a dampening of exit activity, the DACH region (Germany, Austria, Switzerland) saw strong numbers (see graph left), driven in no small part by the CureVac IPO, the largest Q3 2020 exit. While the overall exit landscape looks healthy, the value brought in by M&A appears relatively low (see graph right).
The median M&A deal size remained fairly stable so far in 2020 at $23.9m (€20.2m), while the average deal continued its climb to $415.4m (€351.7m) (see graph left). Most notably, cross-border M&A deals activity fell sharply in Q3 2020: 550 deals were closed, worth a combined $81.7b (€81.7b), a YoY decrease of 41.9% and 52.2%, respectively. This is a new quarterly low for the decade. IT firms grew as a percentage of total deals in Q3 2020, reaching their highest share to-date at almost 25% (see graph right). This is due to their perceived low risk, according to the analysts.
Finally, new fundraising activity remained strong with $13.1b raised so far in 2020, well above the pace set by 2019. Funds with less than $59m (€50m) continued to fall as a percentage of all funds (see graph left). First-time funds pulled in $1.8b (€1.5b) over 21 new vehicles (see graph right). This is already well above 2019’s figures, though not on pace to beat 2016’s record-setting $3.3b (€2.8b) raised over 30 new funds.
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