45% of investments made are failures or have low returns — new European VC report

Nearly half, 45%, of investments made by the European venture capitalists turn out to be failures or reach less than 2x of invested capital. This concludes a group of researchers from European business schools and universities in a new report on practices of European venture capitalists. The report also shows that only 9% of European VC deals make the coveted 10x return on investment, as Sifted reported.

  • The report is based on responses from 885 European VCs, who have an average fund size of €100 million.
  • The VCs receive on average 851 investment proposals per year, with the closure rate of only 6%.
  • 45% of investments fail, or don’t achieve more than a 2x return on investment. 25% of the investments make a return between 2-5x. And just 9% of deals return 10x or above on invested capital.
  • Italy, Norway, Portugal, Poland, and most other eastern European markets have a higher chance to get a 10x return on investment, which is 13%. The highest average internal rate of return was for VCs in the lowest-maturity European markets.
  • The report also shows that 83% of VCs help their portfolio companies raise follow-on financing. With 96% of VCs thinking the management team is a key factor in a startup’s success.