EIF Venture Capital Survey 2021: Market sentiment (Invest Europe)

Summary

• The 2021 EIF VC Survey captured responses from 479 VC fund managers representing 379 VC firms across Europe.p.51
• ICT is the main investment sector for 35% of respondents as a first choice and 58% overall, followed by Biotech and healthcare at 25% first choice and 49% overall.p.57
• Early stage investments are the primary stage focus for 37% of VCs, while 31% focus primarily on seed stage companies.p.56
• Almost 80% of respondents invested in both new deals and follow-on investments in portfolio companies over the 12 months prior to the survey.p.21
• More than half of strategic trade sales (55%) and 70% of IPO listings took place outside the EU in 2021.p.27
• Two thirds of respondents' VC firms manage assets under management (AUM) between €50m and €499m.p.58

Key insights

1. European VC fund managers' sentiment regarding their current state of business recovered fully to pre-crisis levels in 2021.p.14
2. The perception of the fundraising environment reached an all-time high in 2021 after a sharp decline in 2020.p.15
3. Entry prices of portfolio companies rebounded significantly, with 76% of VC fund managers reporting increased entry prices over past months.p.20
4. Portfolio company valuations rebounded after the 2020 slump, with 81% of respondents reporting increased valuations.p.25
5. The proportion of exits taking the IPO route reached a record high of 18% in 2021, up from 10% in early 2020.p.26
6. Fifty percent of responding VCs have considered using a Special Purpose Acquisition Company (SPAC) as an exit route.p.30
7. Recruiting high quality professionals returned as the most critical challenge for portfolio companies, cited by 69% of VCs.p.35
8. High investee company valuations emerged as the single biggest challenge currently seen in the VC business.p.37
9. The underdeveloped IPO market in Europe was identified by 61% of VCs as the key factor explaining the scale-up gap compared to the US.p.39