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European VCs are on track for a third consecutive year of raising more than $8 billion and have raised more than $40 billion since 2013. Larger funds (>€100 million) account for a growing share of total funds raised in the region.

VC funds raised ($B) and # of VC funds closed per year by fund size (€M)

Legend

  • <€25M
  • €25-50M
  • €50-100M
  • €100-250M
  • €250M+
Note:
Total funds raised are displayed in USD, but the grouping of funds by fund size is based on EUR. Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 preliminary.

First-time VC funds have raised $10 billion across more than 250 funds since 2013, but follow-on funds, unsurprisingly, account for the overwhelming majority (>75%) of total funds raised by VCs in Europe. The data for the first half of 2018 shows a decline in total funds raised by First-Time VC funds compared to the comparative totals for 2017 and 2016.

Funds raised ($B) and number of funds closed per year by fund type

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  • First-Time VC Fund
  • First-Time VC Fund of Established Firm
  • Follow-on VC Fund
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data preliminary and subject to change.

The European investor base continues to be bolstered by the launch of new first-time funds, often founded by investors with strong existing track records, such as Stride.VC and Five Seasons Ventures.

Selected first-time fund launches in Europe since Q4 2017

The rise of a new generation of funds is positive for founders, but is also delivering returns to investors. The European Investment Fund's data shows that emerging managers, defined as managers from Fund I through Fund III, account for a significant proportion of the best-performing funds in their portfolio.

Distribution of top-performing EIF-backed VC fund managers split by emerging versus established funds

Legend

  • IRR, Emerging
  • TVPI, Emerging
  • IRR, Established
  • TVPI, Established
Note:
Data relates to EIF-backed European ICT funds only. Emerging funds are defined as any fund between Fund I and III. Data as of 31 March 2018.

The level of VC funds raised on a per capita basis per country varies widely across Europe and serves to highlight those places that are tracking beneath the European average. VCs in Spain and Italy, most notably, have raised significantly less in total funds since 2013 compared to the European average.

VC funds raised per capita by country of GP by year

Legend

  • Funds raised per capita (2013-1H 2018)
  • European average
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. Table excludes Luxembourg, which has raised $1,074 per capita since 2013. H12018 data preliminary and subject to change.

As the European VC ecosystem has matured, there has been a clear trend of increasing fund sizes to better capitalise European fund managers and enable them to write larger initial cheques, to follow on more meaningfully and also to build more diversified portfolios. This trend continued in 2018 and has seen the median VC fund size increase to $100 million, doubling from $51 million in 2017 and up more than 3x from $29 million in 2013.

Median and mean fund size ($M) at final closing by year

Legend

  • All VC Funds - Mean
  • All VC Funds - Median
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data is preliminary and subject to change.

The small size of European VC funds has generally been viewed as a hurdle for the European ecosystem due to the perceived inability of European VCs to support companies by writing meaningful growth cheques. This challenge of sub-scale funds has started to change in the region's largest countries, but it's clear fund sizes remain small in many sub-regions across Europe.

Median and mean fund size at final closing by year by sub-region

Legend

  • Median
  • Mean
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018.

The scale of European VC fundraising is put into perspective when compared against the volume of capital that flows to the region's Buyout funds. Even taking into account the record levels of funds raised by European VCs since 2016, those sums are dwarfed by the amounts committed to European Buyout funds.

Funds raised by fund type per year

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  • Buyout Funds
  • VC Funds
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 Sep 2018. H1 2018 data is preliminary and subject to change.

Venture capital fund managers now span the European continent.

Venture capital fund managers now span the European continent. This means investors can access best-in-class funds from the Nordics to Central and Eastern Europe, and back dynamic businesses which are becoming the next wave of European and world leaders.

Nenad Marovac

Invest Europe

Steady growth in fundraising will be more sustainable for investors and fund managers alike.

Invest Europe has worked long and hard to tackle the issue of scale in European venture capital. The pan-European fund of funds programme, seeded with €410 million of EU money, will give larger investors a new way into VC. But we should not expect the response to be immediate - steady growth in fundraising will be more sustainable for investors and fund managers alike.

Michael Collins

Invest Europe

Beyond government agencies, corporate investors and private individuals/family offices are the largest investors in European VC funds. Pension funds, meanwhile, have only invested $1.7 billion into European VCs in the five years since 2013.

Share of funds committed to VC funds by LP type (2013-2017)

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  • % of total funds raised
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018.

European tech growth and success has not gone unnoticed by family offices and high net-worth individuals (HNWs). Over the last five years, they have collectively invested over $5 billion in European venture capital funds. Only government agencies have invested more in European VC in that same period.

Top 3 LP types in European VC by % of total funds committed (2013-2017)

Legend

  • VC funds ($B)
Note:
Taken from the European Data Collective, developed by Invest Europe. EDC data converted at EUR:USD of 1.1605, the rate on 30 September 2018.

Private investors, and especially multi-generational families with millennial family members, are increasingly looking to make impactful investments in tomorrow’s new enterprises and in ideas that could re-shape the future.

We are seeing an increased appetite for investment in European technology companies coming from HNW families and family offices. Private investors, and especially multi-generational families with millennial family members, are increasingly looking to make impactful investments in tomorrow’s new enterprises and in ideas that could re-shape the future. The potential for very high financial returns isn’t always the major criteria driving allocations. The attractiveness of taking part in the fascinating world of today’s tech entrepreneurs and contributing to resolve global challenges plays a crucial role in investment decisions.

Pierre Stadler

Pictet Alternative Advisors