European VC deal value falls 32.1% to €11.8M in Q1 2023 — Pitchbook report
In Q1 2023, European VC deal value and count fell to €11.8 billion (>32.1%) over 2,758 deals (>19.2%) amid a challenging deal making environment. European VC exit activity also deteriorated for 69.6%, as unfavourable macroeconomic conditions and weaker valuations dampened exit appetite, Pitchbook reported in its European Venture Report of Q1 2023. AIN.Capital shares the key points.
European VC deal activity
- In Q1 2023, VC deal value fell 32.1% quarter-over-quarter (QoQ) to €11.8 billion.
- The deal count also decreased 19.2% QoQ to 2,758 deals in Q1.
- Fintech remains a major driver of VC activity in Europe. The sector managed to secure about €3 billion over 213 deals in Q1 2023.
- The early-stage deal count grew to 34.5% of overall deal count in Q1 2023, showing certain lack of late-stage activity.
- Swaths of layoffs were announced in Q1 2023, with fresh batches of job cuts from major market players.
- Also, following the collapse of three midsized US banks, including Silicon Valley Bank (SVB), the European governments proceeded to stabilize the financial system with robust regulations.
VC deals by region and sector
- The regional European economies remain deeply affected by inflation in Q1 2023.
- The UK together with Ireland, generated €4.0 billion, which is equivalent to one-third of the total Q1 2023.
- The Central and Eastern European share of the deal value and count in Q1 2023 stayed just below 5%.
- European VC exit activity has dropped in Q1 2023, with only €1.6 billion in exit value, showing a 69.6% decline comparing to Q1 2022.
- Although, the number of exits has overall remained roughly the same as in Q4 2022, totalling at 264 exits.
- Exits via M&A were the preferred route for companies, with public listings, previously favourable exit strategy, being only one out of five largest exists in Q1 2023.
- European VC funds collectively raised only €3.4 billion in Q1 2023, putting it on pace for the lowest annual figure since 2015.
- Essentially, Q1 2023 reflects the first substantial decline from the previously established pace of stable fundraising activities.