Pitchbook’s 2023 annual European venture report, published by the data and research firm on 17 January 2024, found that venture capital deal value stood at €57.1bn in 2023, which is 45.6% lower year over year (YOY). This drop, however, came as “little surprise” as the market saw a correction after “highly inflated activity” in the post-covid years of 2022 and 2021. When excluding those two years of “hype,” deal value in 2023 is still higher than the years before.
However, “deal activity resilience in Luxembourg in 2023 lagged Europe, where deal value declined 80.2% YOY in 2023 compared to broader Europe’s decline of 45.6%,” commented Navina Rajan, senior EMEA private capital analyst at PitchBook. “As a whole whilst we’d expect more volatility in trends in the region versus broader Europe, due to thinner deal volumes, there have been areas which have proved more resilient YOY. Within the ecosystem, we’ve seen the pre-seed/seed stage show the most signs of resilience, in fact increasing YOY, and by sector, software also showed the most resilience, with value only declining -8.6%.”
Here are a few takeaways from the report.
€164m of deal activity
In 2023, Luxembourg venture capital deal value came to €164m. This is a drop of 80.2% compared to 2022, when deal value stood at €830m, and an even more dramatic decline when compared to 2021, when it came to €1.21bn. Deal value in 2023 did, however, remain higher than in 2020 (€71m), 2019 (€150m), 2018 (€77m) and 2017 (€55m).
Neighbouring countries--namely, Germany and France--and the United Kingdom (which the Pitchbook report noted remains a “dominant region,” together with Ireland) also saw a drop in venture capital deal value in 2023 when compared to 2022. France and Benelux as a region in fact showed the smallest decline in VC deal value (down 36.5% versus 2022).
Europe overall saw €57.1bn in venture capital deal value in 2023, found the Pitchbook report, down from €105.1bn in 2022 and €109.8bn in 2021.
Deal count: 27
With six deals in the fourth quarter of 2023, Luxembourg saw a total of 27 venture capital deals last year. This is lower than the number of deals in 2022 (36), in 2021 (51), in 2020 (31), in 2019 (33) and in 2018 (31).
Around half (15) of the deals in 2023 were for €10m or less.
The pre-seed/seed stage showed the most resilience in Luxembourg VC deals, noted Pitchbook analyst Rajan. There were 10 of these deals in 2023, compared to eight in 2022.
Resilience in the software sector for Luxembourg
In Europe, biotech and pharma were seen as “the winner of sector trends” and showed the most resilience in 2023, said Pitchbook’s report, while media and software lagged the most.
The cleantech sector also saw major deals in Europe last year. 2023’s largest deal was in Sweden, where H2 Green Steel received a €1.5bn investment to build a green plant; the second-largest deal took place in France, where low-carbon battery producer Verkor received €1.45bn.
When looking at Luxembourg specifically, however, the software sector showed the most resilience, said Pitchbook’s Rajan. There were 17 VC deals in the software sector in 2023 (for a deal value of €70m), five in commercial products and services (deal value of €47m), one in the energy sector, one in consumer goods and services (€43m) and three in other sectors (€4m).
Find Pitchbook’s full 2023 annual venture report here.
