PitchBook, the premier data provider for the private and public equity markets, today released its Q2 2020 European Venture Report, which found European venture capital (VC) deal value registered the third largest quarterly figure on record, an incredible achievement amid widespread economic uncertainty. Across Europe, investment in sectors brought to the forefront by the coronavirus pandemic such as food delivery, mobility, software and biotech remained particularly strong even as companies were forced to adapt operations or shift to remote workforces. Corporations, seeing opportunity in tech-focused businesses like cybersecurity, helped VC deals with CVC participation in H1 2020 keep pace with the tear away record set in 2019. The UK & Ireland remains the largest VC ecosystem in Europe in terms of deal value, driven by mature startups attracting sizable rounds. After a sluggish start to the year, VC exits recovered commendably in Q2 2020 as sectors such as video conferencing saw surges in demand and focus on healthcare solutions remained top of mind for investors and companies. VC fundraising has defied lockdowns, in part due to France & Benelux posting strong numbers and North America-headquartered GPs continuing to raise Europe-based funds, putting a record annual total within reach if the pace set in H1 2020 continues. We expect specialist funds targeting individual sectors such as pharma and biotech to proliferate going forward.
“Given how the coronavirus wrecked broader macroeconomic indicators, few would have expected 2020 deal value to be on course to match and potentially surpass the annual record set in 2019,” said Nalin Patel, EMEA Private Capital Analyst at PitchBook. “Strong deal value generated across financing stages and regions highlights the resilience and independence of the maturing VC ecosystem in Europe. We believe the level of freshly raised, undeployed funds in the first half of the year bodes well for long-term dealmaking in the region and future capital deployment strategies could be geared towards opportunities emerging from COVID-19.”
To download the report and underlying data, click here.
European VC deal value reached the third highest quarterly figure on record, with €9.5 billion invested across 1,113 deals – a 5.7% quarter-over-quarter increase in deal value despite slightly lower deal counts.
Deals over €25 million comprised 61.2% of overall deal value in H1 2020, building upon the decade-long shift towards larger rounds. The largest deal to close in Q2 was Deliveroo’s delayed €527.6 million round led by Amazon.
The dispersion of deal value across European regions exhibited consistency with a pre-pandemic market, with a distinct concentration from the UK & Ireland, DACH, and France & Beneluxregions. One notable deal outside these regions involved Estonia-based mobility startup Bolt, which closed a €100.0 million round.
VC deals with CVC participation reached €8.2 billion across 572 deals through H1 2020, keeping pace with the record set in 2019. CVC participants were involved in sizable Q2 2020 rounds for Deliveroo, N26, Lilium and BioCatch.
Although Q2 exit value was unexpectedly buoyant at €2.7 billion across 100 liquidity events, exit value in 2020 is still on track to register the lowest figure since 2012. The largest exit in Q2 2020 was the IPO of Switzerland-based biotech company ADC Therapeutics, which exited at a €989.9 million pre-money valuation.
Only 11 Europe-based startups listed on the public market in H1 2020. At the current pace, the European VC ecosystem could notch the lowest number of listings since 2009 by end of year.
Israel-based startups exiting the ecosystem generated €1.2 billion in H1 2020, accounting for 31.8% of overall European exit value. Mobility-as-a-Service (MaaS) startup Moovit was acquired by Intel for €826.9 million, heavily contributing to Israel’s exit value jump.
Pharma & biotech was the only sector to cross €1 billion in exit value through H1 2020, propelled by notable acquisitions such as Ireland-based PrecisionBiotics by Novozymes for €80 million and UK-based Nanna Therapeutics by Astellas Pharma for €78.4 million. We expect investors to continue scouring pharma & biotech startups as COVID-19 has sharpened focus on broader hygiene, healthcare and personal well-being initiatives.
VC fundraising in Europe through the first half of the year totalled a defiant €7.6 billion across 64 fund vehicles, setting the year on pace for a record annual high if momentum persists.
Fundraising in the France & Benelux region has been robust with €1.9 billion raised in H1 2020, accounting for 25.0% of total capital raised across Europe. The largest closed fund in Q2 2020 was France-based Cathay Innovation II at €505.3 million.
The median and average VC fund size has been pacing slightly higher than in 2019, further underlining resolute fundraising conditions amid travel restrictions and lockdowns across Europe. Israel-based S Capital VC closed its S Capital Fund II at €110.0 million, one of the six €100+ million funds to close in Q2.
Additional coverage in this report includes:
Spotlight: UK & Ireland
Download the full report here.
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company’s data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in Seattle, San Francisco, New York and London and serves more than 45,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.