THANK YOU FOR SUBSCRIBING
Funding for European startups in all stages totalled USD 23.7 billion last quarter, a 38 per cent decrease from USD 38 billion a year earlier.
FREMONT, CA: Even with the year-over-year decline, European startup funding in the most recent quarter was USD 10 billion or greater than each quarter in 2020, surpassing the fourth quarter of that year, when funding reached USD 13 billion. The previous quarter stands in stark contrast to Q1 2022, which defied expectations and increased year over year and quarter over quarter.
2022 began with European startup investment defying the worldwide VC trend. European entrepreneurs raised more than USD 30 billion in the first quarter, making it the continent's second-strongest financing quarter since the start of 2021, despite a quarter-over-quarter decline in global and North American VC investment.
Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.
Along with the increase in American venture firms opening offices in Europe, assets allocated to venture funds in Europe have increased. Regarding their entrepreneurial ecosystems, the U.K., Germany, France, Sweden, and the Netherlands all experienced growth in 2016.
However, the global growth equity and alternative investors reduced their support for European startups in Q2 as they generally did globally. In total, European entrepreneurs raised USD 13.7 billion in late-stage and technology growth fundings, which is down 28 per cent quarter over quarter and is half the amount raised for the same quarter a year earlier.
A smaller percentage of late-stage startups received funding, with declines of 26 per cent QoQ and 23 per cent YoY. The second quarter saw a decrease in Europe's average and median deal size for late-stage deals. A massive surge in late-stage funding to some of the most well-funded businesses in Europe was the primary factor behind the 2021 second-quarter peak. The time at late-stage financing of European startups in the second quarter of 2021 was about half as considerable as late-stage fundraising for North American companies. While the second quarter of 2021 seemed unusual for European startups, it demonstrated the growing interest that global growth equity had started to show in these companies.
These investors have cut back significantly for the time being due to the turbulence in the stock market, not just in Europe but also internationally. However, given the expansion of the European ecosystem, they anticipate that those investors will return when the market situation changes.
The second quarter saw a 9 per cent year-over-year decline in early-stage funding for European firms, totalling USD 7.9 billion. Over a quarter, it fell by a bigger percentage, about 19 per cent. However, round sizes continued to hold steady in Q2. They were particularly strong at the Series A level, reflecting the expansion of early-stage funds in Europe and the establishment of U.S.-based funds in the area.
More in News