EIF VC Survey 2023: Market sentiment, scale-up financing and human capital (Invest Europe)

Summary

• Pessimistic perception of the current fundraising environment was shared by 70% of VC respondents in 2023.p.9
• A record 77% of VCs reported a decrease in entry prices for investee companies over the past 12 months.p.18
• The exit environment worsened in 2023 according to 72% of surveyed venture capital fund managers.p.27
• Securing equity financing is cited as the top challenge for portfolio companies by 57% of respondents.p.29
• Over 80% of VC fund managers agree that stronger activity by global investors is needed for companies to scale up in Europe.p.41
• 43% of VCs expect that at least 1% of their active portfolio companies might file for insolvency in 2023.p.22

Key insights

1. While current market sentiment indicators deteriorated in 2023, expectations for the next 12 months have improved across most reported categories.p.9
2. Only 13% of respondents reported that finding co-investors to syndicate is currently easy, reaching a record low.p.13
3. Insolvencies rose to 26% of total exits in 2023, while trade sales fell from 50% in 2022 to 38%.p.25
4. Among portfolio companies exiting via IPO or sale of listed stocks, 66% had their primary listing outside the EU.p.26
5. Insufficient liquidity in the IPO market was identified by 61% of VCs as the main challenge regarding the exit environment.p.32
6. 79% of VC fund managers fear a prolonged increase in interest rates could mitigate investor appetite to invest in VC funds.p.35
7. Germany, the UK, and France were ranked by VCs as the most promising European countries for VC investments over the next 12 months.p.36
8. Artificial Intelligence, Healthcare & Biotech, and Energy / Climate are perceived as the sectors with the greatest investment potential.p.38
9. Gender diversity remains low at the partner level, with 44% of VC firms reporting no female partners in their investment team.p.59