Europe lags in venture capital, but data shows speedy growth

11 Oct 2023

The Brandenburg Gate in Berlin, Germany. Image: © Noppasinw/

Only two European cities, London and Berlin, have made it into Pitchbook’s latest rankings of the top 20 most developed VC ecosystems in the world.

Europe’s venture capital ecosystem is lagging behind competing regions as new Pitchbook data shows the US and Asia account for 85pc of the top 20 VC ecosystems in the world.

Unsurprisingly, San Francisco holds its position as being home to the world’s most developed VC ecosystem by quite a distance. Deal value in San Francisco as of 30 June 2023 stands at $365bn and the number of deals stands at more than 19,000.

In comparison, New York, at second place, has a deal value of less than half that of the frontrunner, coming in at $153bn with nearly 13,000 deals. The values are based on Pitchbook data collected between 2017 and the second quarter of this year.

Beijing, Shanghai and Los Angeles finish the top five list, while London is the only European city to make it to the top 10 list at rank seven.

Only one city from an EU member state, Berlin, features in the top 20 most developed VC ecosystems – indicating that the bloc has some catching up to do with the US and Asia. Tel Aviv, included in Europe for Pitchbook’s reporting, came in at rank 20.

Of the top 50 cities ranked in the Pitchbook report, 20 are from North America alone, while 16 are from Asia. Only 12 are from Europe, while South America and the Middle East have one featured city each.

“The purpose of the framework is to help founders, operators, and investors identify locations that could be beneficial to expand or invest in to generate outlier returns in the long run,” Pitchbook wrote in its report.

Despite Europe’s unimpressive performance, the data suggests there is hope for the continent to salvage its shortcomings. In a separate ranking of VC ecosystems with the highest growth rates, Pitchbook data shows Europe is swiftly on the rise.

Berlin was ranked third in the list of fastest-growing VC ecosystems, with Madrid, Milan, Tallinn and Vienna filling up the last four spots in the top 10. Overall, 65pc of the 20 highest growth VC ecosystems are in Europe or the US.

“Our 20 leading Growth Scores exhibited a fairer split across continents, with Europe increasing its share of constituents,” Pitchbook added in its report.

“The next best European city after Berlin was Madrid in seventh place. Milan, Tallinn and Vienna also featured, illustrating the diversity of European countries producing high-growth VC areas.”

A recent StartupBlink report showed that Dublin was number 11 in its ranking of European cities that have the best start-up ecosystems. The city dropped two positions from a previous ranking, taken over by Helsinki and Madrid, and placed 51st in the world.

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Updated, 3pm, 11 October 2023: This article was updated to reflect the correction of an error in the original Pitchbook report that had the funding value figures in ‘millions’ instead of ‘billions’.

Vish Gain is a journalist with Silicon Republic