Ten things Europe’s VC managers are talking about
Newer sectors are getting Europe’s venture capital (VC) managers’ tongues wagging, and German start-up businesses are investors’ first choice outside of their own HQs.
According to the largest-ever survey carried out on European venture capital firms (774 responses from 538 firms), the European Investment Fund (EIF) has found the importance of artificial intelligence (AI), digital health, deeptech, fintech, blockchain, cybersecurity and life sciences (to name a few) is expected to rise alongside traditional VC target sectors. However, the exit environment, fundraising and high investee company valuations are still perceived as the three biggest challenges to the European VC business.
Read on to see what is really preoccupying Europe’s VC investors over the next months, or download the EIF’s VC Survey 2019 for more detail.
- Three quarters of VC managers are targeting AI and machine learning
Which areas are taking lead positions among venture capital firms? When asked about their portfolio composition, 76% of respondents said AI and machine learning companies featured in their portfolio, followed by digital health, Fintech, deep technology and E-commerce.
2. Germany is growing in popularity…
Venture capital managers favour investments in Germany as the most promising country for VC investments, shortly followed by the UK and France.
3. …But in life sciences Netherlands, Switzerland and Belgium are also featuring prominently:
In certain sectors, certain countries dominate. Although Belgium is not in the top cohort of overall most promising countries for VC investments in the next 12 months, it sits high in life sciences, along with the Netherlands and Switzerland.
4. …While France benefits from a better fundraising environment
France is perceived to have the best availability of funding to finance portfolio companies’ prospects in Europe, while Central and Eastern Europe (CESEE) is thought to be the worst among respondents.
The UK and Ireland, although a popular VC investment target, is third from the bottom amongst respondents when it comes to perceived availability of funding.
5. Over half of Europe’s venture capital firms were founded in the last decade
Europe’s venture capital scene is still relatively young, with 60% of the respondents stating that the VC firm they work for was founded in the last decade.
6. And most venture capital funds are still only under EUR 100m in size
Although the total value of assets under management (AUM) of the surveyed VC firms in Europe reaches more than EUR 100bn, the average AUM is just EUR 204m, and more than half of the VC firms are smaller than EUR 100m in size.
7. Venture capital managers believe that the availability of funding is worse in clean-tech than in other sectors:
8. Over half of fund managers expect to raise an early-stage fund in the next five years:
9. Exit environment and fundraising remain biggest challenges
As in 2018, the exit environment and fundraising remain the biggest challenges for VC business.
However creeping up the scale are also high investee company valuations (third place this year, sixth place in 2018), and competition from other investors (sixth place this year, up from 11th place last year).
10. And the words on everyone’s lips are…
Interested in reading more?
We’re only scratching the surface in this blog. To read the full and comprehensive results, please download the EIF VC Survey 2019.