Summary:
$52 billion in VC investments for European startups in 2024
Market stabilization after pandemic fluctuations
Increased adoption of British VC model documents
70% of equity financings included a top-up
Average deal size grew by 66%
Venture Capital Investment in European Startups
In an impressive milestone, venture capital investment in European startups surpassed $52 billion in 2024, showcasing a steady growth trend following the significant fluctuations of previous years. This surge reflects a long-term growth trajectory and a gradual stabilization after the extreme highs during the pandemic.
Key Insights from the 2024 Report
According to the latest Deal Flow report by global law firm Orrick:
- Political and regulatory turmoil did not hinder the growth of Europe’s talent pool of startups, despite funding shortages persisting from the previous year.
- The European startup market has stabilized, indicating a rebalancing of investment terms compared to the highs and lows experienced during the pandemic.
Adoption of New Standards
- There has been an increase in the adoption of the British Venture Capital Association’s model form documents, aligning more closely with U.S. practices, which is expected to facilitate future deal-making.
- More than 70% of equity financings included a top-up, emphasizing a stronger talent pool and a focus on scaling rather than early exits.
Deal Volume and Size
- Notably, the average size of deals grew by 66%, although there was a slight decline in startup-initiated deals. Nonetheless, company-side deals still dominate the landscape.
- Equity-based deals outperformed debt-based ones, with companies favoring extension rounds over debt rounds, showcasing a preference for Advanced Subscription Agreements (ASAs) and Simple Agreements for Future Equity (SAFE).
Sector Performance
- SaaS and platform-based business models made up 21% of financings, with deep tech rising to 23%, and AI/ML components maintaining a 33% share. Fintech also saw a notable increase, accounting for 16% of European deals.
This report highlights the resilience and adaptability of the European startup ecosystem, signaling a promising future for entrepreneurs across the continent.
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