Europe has ‘record-breaking’ first quarter for VC deals

27 Apr 2021

Image: © photoschmidt/Stock.adobe.com

Figures from Pitchbook show that investor cash has continued to flow heavily in Europe despite the pandemic, with the UK remaining the top destination.

European venture capital funding had a “record-breaking” first quarter in 2021, shaking off pandemic jitters, according to a new report.

Pitchbook, which tracks venture capital funding deals, said that there was a record €17.6bn invested in the first three months of the year across more than 1,900 deals. It expects 2021 to ultimately be a record year if this trend continues.

A number of bumper later-stage deals buoyed the numbers for the quarter, especially in sectors like fintech. Sweden’s Klarna raised $1bn, while Starling Bank and Checkout also raised large investments.

The quarter also saw hefty sums of money invested in newcomers like digital events start-up Hopin, which despite being just over a year old has achieved a $5.65bn valuation.

Pitchbook’s report said that “rounds of this magnitude may raise questions about the sustainability of such growth (and) overheated private market valuations”.

Even with Brexit and the economic hurt of Covid-19, the UK remains a top destination for venture capital money with several start-ups at various stages raising significant amounts of funding.

Support Silicon Republic

“The UK continues carving out its new role outside the EU while simultaneously remaining among the most competitive and attractive economies in the world,” the report said.

“In the long run, prominent UK-based startups could play a key role in retaining talent and attracting new overseas investment.”

The report acknowledged that deal flow has remained strong over the last year despite travel restrictions, with funding deals being closed over Zoom calls rather than face to face.

However the vast majority of the deal-making in the quarter was around later-stage companies with a reduction in early-stage and seed investments – mirroring a trend seen in Ireland.

The quarter also a saw notable uptick in exits, with Pitchbook tracking around €21bn worth of exits. It said that the soaring popularity of SPACs globally played a role in this as more later-stage start-ups went public through this method.

Two significant exits through mergers with blank-cheque companies include online car marketplace Cazoo and electric vehicle maker Arrival, both from the UK.

Jonathan Keane is a freelance business and technology journalist based in Dublin

editorial@siliconrepublic.com