The VC Factor - Pandemic Edition (Invest Europe)

Summary

• European VC delivered EUR 12bn in new investment volumes in 2020, representing 7% growth over the previous year.p.3
• More than 50% of all VC firms operate in very large cities compared to 34% of all start-ups.p.4
• The three-and-a-half-month period after the announcement of the pandemic experienced a 13.6% drop in the number of new VC investments.p.5
• Exit rates for VC-backed companies fell by 43% during the first half of 2020 amid market uncertainty.p.5
• Initial VC investments provided on average 19.3% larger financing per deal following the start of the pandemic.p.5
• Lockdowns in Europe resulted in an estimated EUR 250m worth of lost VC activity during a three-week period.p.5

Key insights

1. The research dataset encompasses 2,611 VC firms and 32,114 start-ups across Europe from 2007 to 2020.p.8
2. By 2019, the share of total VC investment volumes going to start-ups in very large cities rose to more than 40%.p.10
3. Luxembourg was the largest net contributor region in Europe, with VC disbursements 5.6 times higher than received investments.p.15
4. The active number of investing VC firms experienced a noticeable decline in mid-April 2020.p.20
5. Average initial VC deal volumes increased after mid-April 2020, whereas follow-on funding amounts showed no such rise.p.21
6. VC investments in healthcare companies surged by 77% in total volume following the onset of the pandemic.p.25
7. VC firms in regions under lockdown signed up to 20% fewer deals than those in unrestricted regions by the ninth week post-lockdown.p.29
8. By the end of 2020, VC firms that underwent strict lockdowns caught up in activity levels with their no-lockdown benchmarks.p.33