US investors are scaling back on European venture investments as they refocus their attention on domestic opportunities.
At the beginning of this year, PitchBook analysts predicted that European VC deals with US participation would represent over one-quarter of 2023 deal count. It would have been the highest level ever. Yet as the numbers stand currently, US presence in European deals is likely to come in lower.
As of May 31, US investors took part in 692 deals worth €10.3 billion ($11.3 billion), according to PitchBook’s 2023 European Private Capital Outlook: H1 Follow-Up. This represents 19% of overall deal count, a drop from or 22% in 2022.
It was anticipated that comparatively lower valuations and portfolio diversification would lead to more deals with US participation. But the intensifying downturn as well as the collapse of Silicon Valley Bank have led to a tighter liquidity market, and VCs are more hesitant to explore deals outside of their comfort zones.
Additionally, both the pound and the euro have strengthened against the dollar since last year, meaning that a European investment is no longer as cheap as it would have been in December.
While US investors appear to be pulling back somewhat, their presence has still been seen in some of Europe’s largest deals this year.
Solar energy startup Enpal‘s €215 million Series D was led by TPG and included Activate Capital, while Access Biotechnology led Hemab Therapeutics’ $135 million Series B.
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