European VC Fundraising and Deal Value Reached Record Highs in 2019

SEATTLE, Jan. 30, 2020 -- PitchBook, the premier data provider for the private and public equity markets, today released its Q4 2019 European Venture Report, revealing venture capital (VC) deal value reached record highs with €32.4 billion total invested across 5,017 deals compared to €24.3 across 5,929 deals in 2018. All European regions set new deal value records in 2019, indicating a well-balanced and diverse ecosystem. Germany-based companies had a particularly notable year, claiming both the largest round and largest exit in 2019, while software was the most successful sector, pulling in the most capital and representing 43.0% of all exits. Total capital raised across European funds also crept up to a new record, posting €11.2 billion across 77 closed vehicles. The record values in both dealmaking and fundraising despite lower counts were helped by rising median round and fund sizes. Capital flooded in from nontraditional and international investors, with both US VC investor and CVC participation growing by more than 50% year-over-year. After a record-breaking 2018 and largely lackluster start to 2019, exits recovered in Q4 2019 to post a respectable annual exit total in line with previous trends. The sharp drop indicates 2018 was an anomaly given multiple outsized exits by companies like Spotify, Adyen and Farfetch.

"VC dealmaking in Europe appears in excellent shape heading into the new decade with new milestones likely to be set in 2020," said Nalin Patel, EMEA Private Capital Analyst at PitchBook. "Maturation was a key theme throughout 2019 as startups attracted larger rounds across the board, pushing up the median round size and pre-money valuation. The increased capital helped Europe set new records for fundraising, deal value and international and nontraditional investor participation. Although exit numbers and values were muted after US-based WeWork's canceled IPO and continued geopolitical uncertainty, we expect numerous unicorns in the ecosystem to boost exit value in the future as they look to exit."

Investment Activity

• Deal value hit a new annual record in 2019 despite lower deal count, with €32.4 billion invested across 5,017 deals compared to €24.3 across 5,929 deals in 2018.
• Median round sizes bulged with more capital available from a wider array of sources, especially nontraditional investors. Deals over €25 million comprised 59.4% of total value and 7.0% of total count, the highest annual proportions on record.
• Deal value with US VC investor participation hit a new high in 2019 at €16.6 billion, representing a 54.9% year-over-year jump and accounting for 51.1% of total European VC deal value.
• The total value of deals with CVC participation grew for the eighth consecutive year, reaching a new annual record at €14.7 billion, a substantial 52.6% year-over-year increase. Of that total, software deals accounted for 38.2%. Rounds above €25 million attracted the most interest from CVCs, with half of all €25 million and above VC deals containing a portion of CVC.

Exits

• Exit value saw respectable levels in 2019 – reaching €14.7 billion across 472 liquidity events – and was in line with annual figures prior to 2018's record year (€52.9 billion across 502). Intel's €1.8 billion acquisition of Habana Labs was the only other exit in 2019 aside from BioNTech that closed above €1 billion.
• Segmenting activity out by geography, the DACH region recorded its highest annual VC exit value with €4.8 billion across 69 exits, while the UK conversely logged its quietest year since 2013 with only €2.3 billion in exit value.
• The software sector provided 43.0% of all exits in 2019 as an expanding range of sectors move toward software platforms for innovation. Emerging sectors like biotech and adtech also helped elevate exit flow.
• Two unicorns provided 32.4% of total exit value in 2019, causing optimism within the European VC ecosystem for what's to come in 2020 as there are currently 30 current unicorns and many more fast approaching the milestone.

Fundraising

• Total capital raised across European funds hit a new record in 2019, posting €11.2 billion across 77 closed vehicles (the previous record was in 2015 with €11.1 billion raised across 105 vehicles).
• The median fund size hit a new peak of €105.0 million and the median time to close a fund dropped to nadir of 9.7 months. Both measures indicate LP appetite for venture allocations remains fervent heading into the new year.
• UK & Ireland and Nordic regions had strong fundraising campaigns, setting regional annual records with €4.6 billion raised across 31 vehicles and €1.4 billion raised across six funds respectively. In the UK, both Northzone Ventures and Balderton Capital closed substantial funds in 2019, with Northzone IX closing at €450.8 million and Balderton Capital VII closing at €360.4 million. The largest vehicle to close in the Nordic region was the €660.0 million Stockholm-based EQT Ventures II.

Additional coverage in this report includes:

• Introduction
• Overview
• Corporate VC
• Spotlight: Germany
• Exits
• Fundraising

Download the full report here.

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