Today’s Insights 🔍 

• Probability of VC funding

• The VC firm spending $5 billion

• VC Returns vs Stock Index

• European startup funding

Read Time: 2.5 minutes

Probability of VC funding 📊 

A European VC receives an average of 851 startup pitches a year, only 6% receive funding. For government funds, the odds increase to 9%.

With the data from close to 900 European VC firms, they meet an average of 37% of the pitch proposals, 12% go through due diligence, 8% are handed a term sheet offer and 6% receive a funding commitment.

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Startup feature
How Atomico is investing $5 billion in European startups

Atomico manages several of the largest venture funds in Europe, with a total of $5 billion in capital targeting tech-centric startups.

Last year alone they raised $1.1 billion in new capital despite a 45% decline in VC funding for Europe

The billion-dollar question for startups is how Atomico chooses their investments.

Here is what we found:

> The majority of investment focuses on Series A & later, with check sizes of $5 to $25 million.

> Atomico specifically places a preference on founders with proven technical expertise.

> The investment approach focuses on startups that have an active product with a likely ‘inflection point for hyper growth’.

Despite the European VC market being regarded as more risk-averse, Atomico’s portfolio has actively invested in over 23 billion dollar unicorns and 130+ startups

VC Returns vs Stock Index ⚖️

Over two decades, European VC performance has matched or outperformed long-term benchmarks, with a 10 year return of 20%.

The negative returns for the one-year performance are largely caused by a lag time to profitability as startups leverage both VC capital and expertise. As such the record years of 2021 and 2022 have been a key driver of recent out-performance for startup investments.

Total VC funding 📊

With over $45 billion invested in European startups for 2023, a total of 32% was through venture capital deals.

Contrary to the North American market, reliant on the VC firms of Silicon Valley & New York, the startup capital of Europe places a greater emphasis on the role of government funding and family office investments.

Read more about this comparison

SearchVentures Insights

A 6% chance of receiving European VC funding underscores the reality that only a select few startups make the cut. This selective process is likely a key driver for the funds to outperform the European public markets.

Additionally, the data on the European startup market brings to light the significance of external funding sources, accounting for 68% of startup investments. Highlighting the opportunity for startups to explore varied funding avenues in a competitive VC environment.

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See you next week

Cheers,

Odin Lund & Hariprasad Mohandas