From mega-rounds to early-stage deals, Europe had a strong start to the year
venture capital financing in Europe (including the UK) rose in the first quarter of 2022, data from CB Insights and Crunchbase show. In other words, the region escaped the quarter-on-quarter global slowdown in startup investment.
But Europe is not the only place where venture capital funding did not decline. 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 more curious; after all, it is the closest thing to Russia and its war against Ukraine.
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It is also worth noting that Europe accounts for a much larger portion of global funding than Africa. As we reported, African startups only accounted for a 2% share of deals last quarter, while their European counterparts typically account for a fifth of global activity, both in terms of funding and deal volume. The first quarter of 2022 was no different in that regard.
Perhaps the quarterly figures simply reflect activity that peaked in January, or even 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. Just yesterday, we heard rumors that Spotify competitor Deezer might go public through a SPAC. Advised against 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 Q1 resilience.
European startups attracted $26.8 billion in funding during the first quarter of 2022, according to CB Insights’ State of Venture report. That’s a 20% quarter-on-quarter increase and 33% more than the same quarter in 2021.
Based on the same data set, here is how dollar and transaction volume evolved in some key countries between Q4 2021 and Q1 2022:
- UK: $9.2 billion across 538 deals, up 33% and 9% from Q4 2021, respectively
- France: $4.8 billion in 264 deals, up 85% and 6% more
- Germany: $2.9 billion in 216 deals, up 52% and down 1%
- Netherlands: $891 million across 85 deals, up 6% and down 11%
- Sweden: $775 million across 94 deals, up 5% and down 19%