SEATTLE, Oct. 18, 2018 /PRNewswire/ -- In the third
quarter of 2018, investment into European venture capital-backed
companies reached €4.5 billion, pushing 2018's total venture
capital (VC) deal value to €14.8 billion. At this pace, 2018 could
hold the mark for most venture capital invested in Europe in a single year, according to
PitchBook's 3Q 2018 European Venture Report. Fierce competition
among investors and larger fund sizes have put upward pressure on
deal sizes and valuations in 2018. Particularly, capital invested
into the early stage companies in 3Q was the highest of any stage
(€2.3 billion across 295 deals) as companies found more support
from investors at that stage of the lifecycle. Landmark early stage
deals include, About You (€256 million), Dfinity (€102 million) and
SEBA Crypto (€103.3 million). Additionally, VC exit activity has
remained a bright spot in 2018 as exits over €100 million account
for a larger proportion of exit value. Favorable market conditions
also drove several billion-euro businesses to list on the public
markets – IPOs have made up 66% of exit value so far in 2018.
Venture fundraising also remained strong in the third quarter, amid
sliding fund counts. European fund managers continued to raise
fewer, larger funds as evidenced by a 50% rise in median fund size
from 2017.
To download the full report and data packs, please click
here.
"While European VC deal activity was slightly tempered in 3Q,
the impressive ascent in capital invested in the first part of the
year has set up 2018 to be a landmark year for the European venture
capital industry," said Cameron
Stanfill, analyst at PitchBook. "Investors are increasingly
raising larger funds, making it more efficient to allocate larger
amounts of capital to more mature companies in the early and late
stages. However, a shortage of late stage investment targets led to
a subdued third quarter, in stark contrast to the US VC ecosystem
where outsized deals in the late stage are commonplace. From our
perspective, the major difference is a current lack of widespread
VC support or ability to execute €100+ million deals. As
Europe's venture ecosystem
continues to mature, so will its ability to complete deals in the
late stage and further drive up capital invested."
Investment Activity
- In the third quarter, venture investors deployed €4.5 billion
across 584 deals. Despite a slightly slower pace of investment
compared to 2Q 2018, investment activity is on pace to exceed €19
billion, a new record for total capital deployed in
Europe.
- The growing prevalence of larger fund sizes coupled with
increased competition have caused deal sizes to balloon across all
stages, with notable jumps over 2017's value at the early (85.4%)
and late (64.2%) stages.
- Companies based in the UK and Ireland continued to attract the most venture
investment, making up 39% of total European VC deal count and
representing the fourth straight year capital invested in the
region exceeds €5 billion.
Exits
- The third quarter saw €7.2 billion exited across 67 deals,
pushing year-to-date exit value to €20 billion, already the highest
total since 2014. If this pace holds, 2018 could see the highest
exit value achieved in a single year.
- Rising valuations have allowed exits of more than €100 million
to account for anywhere between 75% and 92% of total exit value
over the last six years, with 2018 representing the most extreme
data point of 92%.
- VC-backed IPOs accounted for more than two-thirds of exit value
in 2018, an increase of €5.2 billion over the annual 2017 figure.
The two largest exits of 3Q 2018 were both IPOs of London-based companies valued at more than €1
billion, including Farfetch and Funding Circle.
Fundraising
- Down slightly from 2Q 2018, VC investors secured €2 billion in
capital commitments across 13 vehicles, bringing 2018's fundraising
total to €6.5 billion raised across 49 vehicles. At this pace, 2018
fundraising activity is expected to surpass 2017 figures (€8.2
billion raised across 76 funds).
- Similar to trends observed in the US, European fund managers
increasingly raised fewer, larger funds to keep pace with
ever-growing deal sizes. Median fund size rose from €79.7 million
in 2017 to €123.2 million in 2018. Funds closed in the €100 million
to €500 million range now make up 58.1% of funds closed by count,
up from 13.2% just six years ago.
- 2018 fundraising has been concentrated among UK and Ireland VCs
with €2.4 billion raised across 16 funds, the most commitments to
date. However, German VC investors secured the largest amount of
capital in 3Q 2018 (€700 million), driven in large part by
Munich-based Digital+ Partners
debut VC fund (€350 million).
Additional coverage in this report includes:
- Overview
- Corporate VC
- Regional spotlight: UK and Ireland
- Exits
- Fundraising
Download the full report here.
About PitchBook
PitchBook is a financial data and
software company that provides transparency into the capital
markets to help professionals discover and execute opportunities
with confidence and efficiency. PitchBook collects and analyzes
detailed data on the entire venture capital, private equity and
M&A landscape—including public and private companies,
investors, funds, investments, exits and people. The company's data
and analysis are available through the PitchBook Platform, industry
news and in-depth reports. Founded in 2007, PitchBook has offices
in Seattle, San Francisco, New
York and London and serves
more than 18,500 professionals around the world. In 2016,
Morningstar acquired PitchBook, which now operates as an
independent subsidiary.
Press Contacts
Bailey Fox
PR Manager
pr@pitchbook.com
+1 206.823.3022
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