Elaia’s 2022 year in review — A record year with changes in atmosphere

Published in
8 min readJan 12, 2023


By Xavier Lazarus with help from Marc Rougier, Saish Rane, Delphine Villuendas & Louisa Mesnard

There is a stark difference in the VC world between the end of 2021, the beginning of 2022 and now; going from 5 unicorn announcements in January to a funding winter in the span of a few months — a complete 180° turn that was marked by public markets shriveling with the meteoric rise in interest rates driven by the Fed, thus stopping any and all prospective IPOs in their tracks.

Many geographies across Europe saw overall fundraising fall with Germany and the UK losing up to a third to a half of funding amounts whereas France, in contrast, had an increase in funding, growing by 30% to reach €13bn raised by startups in 2022.

Nevertheless, it seems that early stage investing continued at a good pace across Europe, even if the correction has already started.

Additionally, it doesn’t mean that there was little to no VC funding at all, it’s quite the contrary as many top VC firms raised funds and had the dry powder to invest in startups (€18.2bn raised in 2021 with fundraising setting record levels with €10bn only in H1 this year — Source: H1 2022 European Private Equity Activity — Invest Europe) and we continued to see deployment levels similar to previous years but in a market that has dramatically different deal terms and deals done at a slower speed to normalize the outlier 2021 year.

In this article, we will talk about our year in review in the backdrop of the larger macroeconomic evolution as we saw two distinct halves of 2022 with two different behaviors.

All in all, the metrics of 2022 are for you to see on the strategy we adopted this year through this infographic between our new investments and follow-on rounds:

H1 vs. H2 — two faces of the weather

The first half of 2022 was a continuation of the frenetic pace of investing seen throughout 2021 and there is a possibility that it was just a spillover effect from the end of 2021 where only in France we saw the birthing of 5 new unicorns. Nearing the end of H1, we started to see signs of the famous ‘fly to quality’ in European VCs that started tightening up deal terms, slashing valuation expectations and taking more time to properly due diligence companies in order to increase the selectivity of their bets. But it was far from a complete freeze of funding yet.

Post summer break, this effect was all the more pronounced as there was a sharp decline in the number of deals being done (funding across Europe almost halved from $62.3bn in H1 to $32.1bn in H2 — source: Dealroom) and we saw VCs investing in bridges, extensions or whatever you may call it to bolster the positions of their portfolio companies. They also scrutinized new investments who had to deal with a reality check of taking a haircut in valuation or multiplying their unit economics manifold to keep the valuation intact.

Nevertheless, we still managed to invest in 16 new portfolio companies from across Europe, spanning multiple sectors and stages in this weather. Take a look:

Dry powder waiting to be deployed

It’s no secret that there is currently a significant amount of capital floating around in the market waiting to be deployed on suitable companies (like Elaia with the final closing of our €77m deep tech Alpha II fund and reaching the hard cap of our B2B digital DV4 fund).

While valuations may not be as high as they were in 2021, we may also not be at the bottom of a crisis, indicating a reasonable level of balance. This is likely due to the fact that many businesses and investments achieved successful exits or raised successful rounds in the past year, resulting in a surplus of funds that could be reinvested and recycled in new companies or acquisitions. With so much money available at scale, it’s clear that 2022 was still a great year for returns and to put money to work.

In 2022, we also wanted to partly use the liquidity generated from our exits to increase our reinvestment capacities to support our winners, instead of having to reduce any of the positions that we held in our largest companies, in the current market conditions, by either selling shares or being heavily diluted.

Below you’ll find a list of some of our refinancing rounds that we are proud to support:

M&As concentrated at the top of the market but Elaia still scores great points

During this period, Tech M&A activity was mainly reserved for the top targets worth billions with notable ones including Adobe acquiring Figma, Microsoft acquiring Nuance and more.

However, our conviction that 2022 would still offer opportunities on smaller consolidations and that this small window could close anytime soon made us accelerate our discussions with certain entrepreneurs to consider all the cards on deck and make the right decision.

At Elaia, we are proud to witness a record year of exits with a large majority being strategic acquisitions and many of the others being PE-backed.

Our portfolio is attracting increasing interest from international players (PSG Equity invested in Zenchef, SandboxAQ acquired Cryptosense), while our local M&A market is also getting more mature (e.g. OVHCloud acquired ForePaaS).

On the other hand, some of our well-developed portfolio companies sought to expand towards different verticals and horizontals by acquiring sector specific startups in the case of iBanFirst acquiring Cornhill to expand to the UK and Mirakl acquiring Target2Sell and announcing its foray into new products to add on top of their platform for e-merchants offering.

All in all, this was one of our best years in terms of generating liquidity for our investors with 11 exits and providing perspectives of sustainable development in a much bigger framework to quite a few of our startups that hadn’t quite yet attained critical mass to go it alone. We are very proud to have been able to roughly balance, for the 3rd year in a row and despite the changing market conditions, our investment amounts and exit proceeds, this year being even higher for proceeds than the record 2021.

A new paradigm awaits us

2023 is anticipated to be a transitional period for investing. While this may be a period of uncertainty, it is also an opportunity to embrace a new paradigm that departs from previous investment strategies in an abundant world and inches towards a more realistic worldview.

As we move into 2023, it will be interesting to observe the ramifications of this shift on the landscape of venture capital. The adoption of this new paradigm has the potential to invigorate the market by fostering innovation and enabling companies to reach their full potential as we saw in the post-2008 years. It will nevertheless be painful for a lot of companies that will be faced with a ‘bridge or die’ scenario followed by a frantic search for strategic acquisitions but in some cases it might be too late as corporations will revise their budgets and announce further fat-trimming in their organizations.

The adoption of this new paradigm will also bring back into view values like capital efficiency that were oft-forgotten in the upward frenzy of years past. Moreover, there will be a handful of these extension rounds that won’t be helped by the eye-watering valuations on which the startups in some sectors raised funds in the last two years.

Investors then find themselves in a situation where they have to be extremely realistic and take off the rose-tinted glasses to see reality in the face and take action and be selective as there are only so many rounds left in the chamber. The performance of a fund in times of crisis ultimately comes from the capacity to winnow through a diversified portfolio more than to hope that all investments are going to be winners. As we all know, it is in the downturns that the most interesting companies are created and forged but there will inevitably be some disappointments.

The countercurrent lies in the fact that we as investors have been disciplined enough to maintain a steady rate of investment and divestment despite frothy waters last year and choppier seas in the latter part of this year. None of us are doted with a crystal ball so discipline over the longer term is key as we need to be able to ride every wave and take advantage of the best in each cycle.

Embracing transition — a new worldview

In a nutshell, this year we have seen a dynamic shifting worldview and we believe we made the best of it despite declining public markets, increasing inflation, tightening deal terms and a gloomy outlook towards the next few years as a new reality sets in.

We acknowledge that for our new portfolio companies and their founders that this will require resilience, and continued discipline from our end to support them. This year saw us make more reinvestments (33 refinancing rounds) and put more money (€45m invested) in our portfolio companies than new investments (16 new portfolio companies and €42m invested).

Only the next few years will show whether our strategy turns out to be right or not but until then, we will continue supporting ambitious tech and deep tech founders to build tomorrow’s champions. After all, the role of an investor is to digest bad news fast and act accordingly in order to free as much time and capital to be able to concentrate our efforts on the most promising ventures.