European VC deals continue to sink amid economic downturn

European VC deal activity continued to decline in the second quarter of 2023, the latest report by Pitchbook has found. Unsurprisingly, the ecosystem has been heavily impacted by inflation, limited capital availability, slow economic growth, and high interest rates.

While the deal value jumped from €13.3bn in Q1 to €18.3bn in Q2, VC deal counts fell quarter-on-quarter from 2,625 to 1,824. Nearly 40% of those deals were made by early stage VCs, followed by later stage funds at 31.2%, and angel and seed investors at 28.1%.

Based on this data, Pitchbook estimates a €31.5bn value across 4,449 deals for the first half of the year. This means that an extra €72.6bn in value would be needed in H2 to reach 2022’s annual levels.

Fundraising also slowed down in H1 2023, with only €8.9bn raised so far, which is attributed to the tougher fundraising conditions over the past year. Meanwhile, amid valuation uncertainty and market volatility, investors and startups are delaying exit plans.

According to the report, exit activity by VC-backed companies significantly halted in Q2 2023 with 169 exit counts, down from 226 in Q1 and 303 YoY. Overall, the first half of the year has seen rare large exits and public listings — which is likely to continue in H2 as well.

Europe isn’t alone in seeing its VC activity take a toll. At $87.4bn in Q2 2023, global VC activity has dropped by $65.5bn YoY, while the number of deals in the second quarter stands at 7,786, down from 10,122. The downward trend is also seen in fundraising and exits.

European VC deal activity continued to decline in the second quarter of 2023, the latest report by Pitchbook has found. Unsurprisingly, the ecosystem has been heavily impacted by inflation, limited capital availability, slow economic growth, and high interest rates.

While the deal value jumped from €13.3bn in Q1 to €18.3bn in Q2, VC deal counts fell quarter-on-quarter from 2,625 to 1,824. Nearly 40% of those deals were made by early stage VCs, followed by later stage funds at 31.2%, and angel and seed investors at 28.1%.

Based on this data, Pitchbook estimates a €31.5bn value across 4,449 deals for the first half of the year. This means that an extra €72.6bn in value would be needed in H2 to reach 2022’s annual levels.

Fundraising also slowed down in H1 2023, with only €8.9bn raised so far, which is attributed to the tougher fundraising conditions over the past year. Meanwhile, amid valuation uncertainty and market volatility, investors and startups are delaying exit plans.

According to the report, exit activity by VC-backed companies significantly halted in Q2 2023 with 169 exit counts, down from 226 in Q1 and 303 YoY. Overall, the first half of the year has seen rare large exits and public listings — which is likely to continue in H2 as well.

Europe isn’t alone in seeing its VC activity take a toll. At $87.4bn in Q2 2023, global VC activity has dropped by $65.5bn YoY, while the number of deals in the second quarter stands at 7,786, down from 10,122. The downward trend is also seen in fundraising and exits.