DESPITE most European economies undergoing an economic contraction in 2020, due to the effects of the COVID-19 pandemic, the value of venture capital (VC) funds across the continent is not reflecting the pandemic’s impact.
According to research data by BuyShares, the value of VC funds between 2016 and 2020 surged by 143.78%, hitting US$49 bil in 2020, the highest in a decade.
Out of this, the United Kingdom’s value of VC investment was US$16.18 bil in 2020, the highest across the continent. Germany’s investment was second at US$7.55 bil, at least half compared to the UK’s value. Elsewhere, Spain accounted for the least value at US$950 mil.
Proof of resilience amid economic slowdown
Despite most European economies undergoing an economic contraction in 2020, due to the COVID-19 crisis’s effects, the value of VC funds across the continent is not reflecting the pandemic’s impact.
However, during the first quarter of 2020, the sector felt the crisis’s full effect but embarked on a recovery mode the next quarter. Funding was more focused on later-stage deals as investors raised their appetite for scaling businesses that had already been established.
The record value amid the pandemic points to resilience and independence of the maturing VC ecosystem in Europe.
Coincidentally, in the last five years, maturation has been a key theme under the European VC scene.
Startups have 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 non-traditional investor participation.
After finally putting a close to the Brexit uncertainty, the United Kingdom continued to show its dominance in the European venture capital scene.
The region has witnessed a rise in mega-rounds. Initially, the UK was facing uncertainty as major investors did not clearly see the post-Brexit era.
With Brexit concluded and vaccines being rolled out, there are projections of strong investment levels. More specifically, businesses that have demonstrated robust and resilient business models will benefit the most. – Feb 15, 2021
