THE GROWTH OF THE VENTURE CAPITAL ECOSYSTEM IN EUROPE SLOWS DOWN
-
61 new European investors founded in 2021 – only half the number of new investors compared to 2020
-
The UK is Europe’s top country when it comes to the number of investors (191) and assets under management (€468 billion)
-
London remains Europe’s venture capital epicenter. The British capital alone counts 316 investor offices
-
However, the growth of the venture capital ecosystem in the UK slowed down by two thirds in 2021
-
British investors are invested in 88 out of 130 European Unicorns and have the most successful portfolio compared to the rest of Europe
-
British investors particularly focused on early-stage investments in HealthTech & Life Science last year
After a record-breaking 2021 with staggering valuations and a total of 84 new European tech unicorns, the number of new venture capital investors in Europe has simultaneously decreased by almost half. With 61 new investors in 2021, including ten headquartered in the United Kingdom, the total number of European investors thus rose to 817 at the end of the previous year. A study by international tech M&A advisor i5invest, venture builder i5growth, and the Entrepreneurship Center of the Vienna University of Economics and Business shows that British investors have in excess of €468 billion in assets under management and a particular focus on investments in HealthTech & Life Science.
Despite Brexit, the UK continues to lead the ranking of countries with the most local investors in Europe (351), followed by Germany in 2nd place (199), France in 3rd place (128), and the Netherlands in 4th place (70). While the DACH region grew the fastest in terms of new investors in 2020, Scandinavia counted among the most newcomers last year. “Most central European countries have relatively constant growth figures. Scandinavia however was able to increase while we observed only about one-third of newly founded investors in the UK in 2021 compared to the year before”, emphasizes Herwig Springer, CEO of i5invest, indicating a possible change in trend.
The portfolios of British investors are the most successful out of any in a European comparison. Of a total of 130 European startups valued at more than one billion dollars, the so-called unicorns, 68% have at least one British venture capitalist on board. For companies that investors believe have the potential to reach this billion valuation threshold in the next 24 months, the so-called soonicorns, this figure is as high as 60%.
Out of the 191 investors primarily based in the UK, 67% have an early-stage investment focus, at least among other stages. This trend appears to be unbroken – nine out of the ten new investors founded in 2021 invest exclusively in early-stage startups. “European scale-ups in later stages are largely dependent on money from the UK where by far most of the European growth capital is concentrated. However, the bigger the funding round, the more likely we see a US investor in the lead. There is definitely potential for more growth capital across Europe”, says Simona Huebl, CEO of i5growth.
Europe’s most active and most powerful investors
Based on assets under management in 2022, Novo Holdings (Denmark), Balderton Capital (UK), Atomico (UK), Target Global (Germany), and Verdane (Norway) are the most powerful European venture capital investors. CVC Capital Partners (Luxembourg), Partners Group (Switzerland), Ardian (France), Intermediate Capital Group (UK), and Schroder Adveq Management (Switzerland) lead the private equity ranking. The total assets under the management of all investors included in the European Capital Report 2022 amount to more than €3,286 billion.
The most active European venture capital investors based on the number of investments made in 2021 are Global Founders Capital with 233 investments (Germany), followed by Seedcamp (UK), BGF (UK), Entrepreneur First (UK), and SFC Capital (UK).
In the ranking of the largest venture capital investors from the UK in 2022 based on the respective assets under management, Balderton Capital leads ahead of Atomico, BGF, Octopus Investments, and Octopus Ventures. If one ranks all investors in the UK according to the number of investments made in the previous year, Seedcamp leads with 116 investments, followed by BGF (113), Entrepreneur First (111), HG Capital (108), and SFC Capital (103).
Corporate venture capital
One trend that is only slowly gaining momentum across Europe is for large companies to set up venture capital arms as part of their innovation strategy. The UK’s most prominent example is Unilever Ventures. “What stands out is that some of the largest German corporations, including BMW, SAP, and Siemens, have located their venture capital vehicles in Silicon Valley,” says Dr. Stephan Jung of the Entrepreneurship Center at the Vienna University of Economics and Business.
There were only five new corporate venture capital investors in Europe overall last year, bringing the total number to 62. In terms of fund volumes under management, Novo Holdings from Denmark takes first place, followed by Deutsche Telekom’s venture capital arm – DTCP, Novartis Venture Fund from Switzerland, and Rabo Corporate Investments from the Netherlands.
