European investment hit record high in 2020, despite Covid-19

26 Jan 2021376 Views

Image: © Nattakorn/Stock.adobe.com

Several start-ups raised more than €500m in funding, making 2020 a record-breaking year for investment value in Europe.

Despite the economic fallout from the Covid-19 pandemic, venture capital (VC) deals in Europe remained incredibly strong last year.

According to Pitchbook’s European Venture Report for 2020, the overall VC deal value reached a new annual record of €42.8bn in 2020, a year-on-year increase of almost 15pc compared to 2019.

The European investment scene has accelerated rapidly in recent years, with deals of €25m or more largely propelling the growth over the last decade. Last year, these larger deals represented almost 62pc of total deals, which amounted to €26.5bn in capital investments.

Germany-based biotech company, CureVac, closed the largest deal in 2020, securing a €560m in late-stage funding.

Revolut raised $500m at the beginning of the year, followed by a further $80m in July. Meanwhile, it’s Berlin-based competitor N26 closed a total of $570m in Series D funding in the first half of the year.

In September, fintech start-up Klarna raised a whopping $650m in funding, making it Europe’s biggest fintech unicorn.

Support Silicon Republic

Unsurprisingly, a number of health-focused sectors benefited from the pandemic in terms of investment. While CureVac secured the largest deal, investment in biotech and pharma start-ups as a whole jumped by more than 40pc year-on-year.

Companies also profited from the global move to remote working and virtual events. For example, London-based events platform Hopin experienced explosive growth in 2020, completing three funding rounds. At time of its Series B funding round of $125m in November, the company hit a valuation of €1.8bn.

According to the report, US investor participation in European VC deals was also strong, with the total value of deals with US investors growing by almost 20pc year-on-year.

Brexit

The UK and Ireland remained the highest deal value provider and reached a record €14.3bn in 2020, representing a third of the total in Europe.

Based on the strength of deals in 2020, the report’s authors predict that Brexit will not stifle VC deal value in the UK

“Since the referendum in June 2016, Brexit uncertainty has not dampened VC deal value. Capital has flooded into specialist sectors, such as fintech, as ample opportunities ripe for investment have emerged in Europe’s most developed ecosystem, and we do not foresee a collapse in 2021.”

However, the report also noted that regulatory changes are likely to affect how the UK interacts with the EU going forward, which could in turn affect how businesses and investors in the region act.

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com