Venture capital funding in Europe (including the UK) was up in the first quarter of 2022, meaning the region was unaffected by the quarter-on-quarter global slowdown in startup investment.
But Europe is not the only place where venture capital funding did not decline. This was also the case in Africa, unlike the United States, Asia and Latin America. But the situation in Europe is somewhat more curious; because of its proximity to Russia and its war against Ukraine.
It is also worth noting that Europe accounts for a much larger share of global funding than Africa. African startups only accounted for a 2% share of QXNUMX deals, while their European counterparts typically account for a fifth of global activity, both in terms of funding and deal volume.
Perhaps the quarterly figures simply reflect activity that peaked in January, and at the end of 2021, when announcements were delayed for the holidays? It is certainly a possibility. For example, several “French technology” mega-rounds were announced in the first days of the year.
However, there are also more recent signs of optimism that contrast with the general mood in the US and Latin American startup scenes. Rumors were heard that Spotify competitor Deezer could go public through a SPAC. Warned off in the current IPO freeze and unicorn stampede? Maybe not.
According to Billboard, "There may be no better time for the streamer's investors to withdraw their money." And while this also speaks to company-specific circumstances, it shows that exit concerns are still somewhat top of mind, thanks in part to unexpected QXNUMX resilience.
data summary
European startups attracted $26.8 billion in funding during the first quarter of 2022. That's a 20% quarter-on-quarter increase and 33% more than the same quarter in 2021.
According to the same data, the evolution of the volume of transactions and dollars in some key countries between the fourth quarter of 2021 and the first quarter of 2022 are:
- UK: $9200 billion across 538 deals, up 33% and 9% from Q2021 XNUMX, respectively
- France: $4.800 billion in 264 deals, up 85% and 6% more
- Germany: $2900 billion in 216 deals, up 52% and down 1%
- Netherlands: $891 million across 85 deals, up 6% and down 11%
- Sweden: $775 million in 94 deals, up 5% and down 19%
Crunchbase reports a slightly different regional count of 29.8 billion. The trend is the same, though: Based on its data, it reported that "first-quarter venture funding for Europe was up 21 percent year-over-year and 4 percent quarter-over-quarter."
Year-over-year investment peaks in the second quarter of 2021. This correlates with an increase in late-stage funding. These mega rounds are still a reality in 2022: there were 67 rounds of more than $100 million, surpassing the previous record of 59 from the second quarter of 2021 and representing a total of 13.7 billion raised.
Although the 100 million rounds are far from their previous highs: in the first three months of the year, 10 European unicorns raised between 1 billion (Checkout.com) and 289 million (PayFit). Twenty unicorns were consolidated in Europe during that period, more than in any quarter of 2021.
Several of the companies that raised mega-rounds last quarter belong to the fintech space. According to data from Dealroom, European fintechs collectively attracted $6.700 billion in venture capital funding in the first three months of 2022. Still, for the Europe-focused media outlet sifted, “headline grew” because of these giant deals, and furthermore, the overall picture for fintech could be less rosy: the number of such deals decreased quarter over quarter (from 271 to 220).
However, overall deal activity in Europe remained stable. There were 1.863 deals in the first quarter of 2022, about the same level as the fourth quarter figure of 1.874. Projected for a full year, it would amount to 7452 deals, more than 7130's tally of 2021 deals.
growth space
Early-stage activity accounted for the largest share of deals: 67%. Early-stage funding in the first quarter of 2022 was $9.4 billion, up 50 percent year-over-year from the first quarter of 2021. Throughout Europe was raised 2.1 billion in the first quarter in more than 1.000 companies.
That seed funding is up year-over-year and flat or only slightly down quarter-over-quarter is good news for Europe's growth.
Yet it is late-stage activity that explains why Europe is resisting the global slowdown: Europe is a growing venture capital market with a historically less developed late-stage funding market. Europe is also a more established market, outside of the US market, where investors seeking global growth seek new opportunities to invest.
looking for the exit
Despite the mention of Deezer, the climate for IPO exits in Europe is not favorable, at least when it comes to public listings.
But mergers and acquisitions continue. There were 1049 of these in the first quarter, which would equate to 4196 for the year, up from 2021's record tally of 3736 M&As.
However, IPOs have been slim this year – there were only 20 in the first quarter – meaning things would have to change a lot for the 2022 tally to reach 186's 2021. Only on the SPAC front do things look leveled off, with three deals in the first quarter, on pace with the 12 total of 2021.
Europe isn't the only place where IPOs are down: it's a global trend. But it's worth noting, especially as Asia registered 91 IPOs during the same period, more than any other region.
