Despite a challenging economic environment, the European venture capital landscape displayed resilience in the second quarter of the year. Deal values were maintained while the number of deals experienced a slight downturn, said figures released by the data firm Pitchbook.

Deal activity

European VC deal activity in Q2 remained robust, with deal values showing an uptick despite a reduction in the number of deals, noted Navina Rajan, Pitchbook’s EMEA private capital senior analyst, in a report published on Wednesday 3 July.

Rajan added that the first half of 2024 saw a minor decline compared to the pace set in 2023, reflecting the mixed nature of the current dealmaking environment. “Deals continue to close despite volatile macroeconomic indicators and uncertainty around geopolitics across the continent,” remarked Rajan.

Exit activity

VC exit activity in Europe has been particularly sluggish. Q2 saw a further drop from the already depressed levels of Q1 2024. If this trend continues, Rajan warned, the total exit value for 2024 could hit a decade-low.

Despite some rallies in public equities, the lack of exits can be attributed to several unfavourable factors. For instance, many VC-backed companies that have gone public in recent years have exhibited weak growth, discouraging new exits, stated Rajan. Additionally, market participants are facing challenges in determining realistic valuations amid ongoing market ambiguities, leading investors to await a rebound that has yet to materialise.

Fundraising

The fundraising scene in European VC was solid in the first half of 2024, although slightly behind the levels seen in 2023.

Since 2021, fundraising has decelerated due to tougher conditions for both general partners (GPs) and limited partners (LPs), noted Rajan. The inherent lumpiness in VC fundraising is often buoyed by large fund families managed by established firms. In H1 2024, significant contributions came from major funds closed by Accel and Creandum, which helped to bolster overall figures in Europe.