Europe’s soaring venture capital industry has continued last year’s record-breaking momentum by reaching a new quarterly deal value high of €17.6bn in Q1.
Exit activity also surged to a remarkable €21bn in Q1 according to data from PitchBook – surpassing total exit value from the whole of 2020 in a single quarter.
VC firms have been flocking to make new deals despite widespread market instability over Covid-19, most recently exemplified by rising case numbers in Europe and political unrest over vaccine supplies.
PitchBook said late-stage deal value reached €13bn in Q1 2021, making up about 74% of the quarter’s overall deal value.
The report said, “Initiating a trend that will likely continue throughout 2021, enormous late-stage rounds closed with regularity in Q1 despite lockdowns and rising unemployment.
“In recent years, late-stage VC options developed rapidly in Europe, while outsized rounds tied to the most-developed VC-backed companies increased in frequency.
“If a healthy pipeline of late-stage companies continues emerging, European records will continue being broken.
“In one of the largest VC rounds ever witnessed in Europe, Klarna’s latest financing
round totalled a staggering €1.1bn, which swelled its valuation to €25.6 billion.
“However, rounds of this magnitude may raise questions about the sustainability of such growth, overheated private market valuations, and the blurring between VC, PE, and M&A, among other large investment strategies.”
PitchBook said the boom in exit activity in Q1 was a product of much-anticipated exits for highly valued VC-backed companies.
It said the emergence of SPACs as a mainstream exit route, coupled with frothy market valuations globally, had helped exit outlooks improve over 2020’s lows, adding that the record €50.5bn exited in 2018 could be topped by year-end.
Food delivery platform Deliveroo and used car sales platform Auto1 were the standout IPOs from Q1 2021, both reaching a €6.6bn premoney valuation.
PitchBook said that European VC fundraising had “started Q1 2021 with aplomb”, with €3.4bn raised across 23 funds.
VC capital raisers will do well to reach 2020’s record total of €17.7bn, however, based on that opening quarter.
One of the largest funds to close in Q1 was Cathay Innovation II at €649.5bn, which PitchBook said helped the France & Benelux region raise the most capital in all of Europe in Q1 at €1.9bn.
PitchBook said, “We believe GPs with established global networks able to transcend potential nationalistic policies could be attractive propositions for LP commitments, especially with heightened sensitivity surrounding knowledge sharing, increased scrutiny of data privacy, and ongoing trade issues affecting wider financial markets worldwide.
“Furthermore, regions across the globe are at vastly different pandemic stages in terms of surging cases and lockdowns.
“Therefore, fund managers with existing global experience can act swiftly to mitigate or benefit from pandemic-driven macroeconomic changes in specific markets without the need for travel.”
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Source: https://www.altassets.net/knowledge-bank/by-pe-focus/venture-capital/european-vc-exits-hit-e21bn-in-q1-beating-total-for-all-of-2020-while-new-dealmaking-hits-quarterly-record.html
