From mega rounds to early stage deals, Europe had a strong start to the year
VC financing in Europe (including the UK) rose in the first quarter of 2022, data from CB Insights and Crunchbase shows. In other words, the region escaped the global quarter-over-quarter slowdown in startup investment.
But Europe isn’t the only place where VC funding hasn’t fallen. As we noted earlier this week, this was also the case in Africa – as opposed to the US, Asia and Latin America. But the situation in Europe is perhaps even more curious; after all, it is closest to Russia and its war against Ukraine.
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It is also worth noting that Europe accounts for a much larger share of global funding than Africa. As we reported, African startups only accounted for a 2% deal share in the quarter, while their European counterparts typically account for a fifth of global activity, both in terms of funding and deal volume. Q1 2022 was no different in that regard.
Could the quarterly figures simply reflect activity that peaked in January, or even at the very end of 2021, when announcements were delayed by the holidays? It is certainly a possibility. For example, several “French Tech” 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 climate in the US and Latin American startup scenes. Yesterday we heard rumors that Spotify competitor Deezer could go public via a SPAC. Unwise in the current IPO freeze and unicorn rush? Maybe not.
According to Billboard, “there may not be a better time for the streamer’s investors to cash out.” And while this also refers to the specific circumstances of the company, it shows that exit concerns are somewhat behind us – thanks in part to the unexpected resilience of the first quarter.
According to CB Insights’ State of Venture report, European startups raised $26.8 billion in funding in the first quarter of 2022. That is a 20% increase on a quarterly basis and 33% more than in the same quarter of 2021.
According to the same dataset, here’s how deal and dollar volume evolved in some key countries between Q4 2021 and Q1 2022:
- UK: $9.2 billion across 538 deals, up 33% and 9% respectively from Q4 2021
- France: $4.8 billion across 264 deals, up 85% and 6%
- Germany: $2.9 billion across 216 deals, down 52% and 1%
- Netherlands: $891 million across 85 deals, up 6% and down 11%
- Sweden: $775 million across 94 deals, up 5% and down 19%