64% of European VCs are unprofitable

This week our data analyzes the risks & challenges of European Venture Capital.

Today’s Insights 🔍 

• VC Portfolio Valuations

• Connecting investors & startups

• Perceived VC/LP challenges

• Startup Exit Multiples

Read Time: 2.5 minutes

Valuation of VC Portfolios 📉

A survey conducted across 472 European VCs show that 64% of startup portfolios had a decrease in valuations for 2023.

This follows a 55% decline in European startup investments from the record high in 2021. The key driver behind the fall in startup valuations entering into 2024 is largely due to a significant decline in exit valuations, with 77% of VCs indicating that exit values declined in 2023.

Weekly Startups News 🧑‍💻

Swiss VC Fund Reaches 70% Capacity
Founderful has secured $85 million towards a new $120 million fund focused on the Swiss ecosystem, aiming to back 40 B2B pre-seed startups.

French startup Bioptimus raises $35m seed
Bioptimus plans to build an LLM that is based on the complex data needed to represent organisms.

New €150m European Seed Fund
Ex Société Générale executive has launched a €150 million seed fund to support startups with a focus on healthtech, climate tech, enterprise software, and fintech​.

Sponsor feature
The EU-Startup conference connecting a fragmented market

The European startup market is characterized by its fragmentation, diverse regulatory environments, and a hotbed for new innovative startups.

However, navigating the uncertainty of the startup market in a year where the trends are still to take shape is not easy. This makes connectivity between startups and investors critical, especially for Europe.

The EU-Startups Summit 2024 in Malta addresses this by gathering over 1,300 founders and investors to share their knowledge, impact and innovation in the startup space.

We will be there to hear from the thought leaders of tomorrow, and to ask a whole list of questions we intend to publish on through our research.

If you would like to join us in Malta you can use code SEARCH20 for a 20% discount.

Perceived VC/LP Challenges 

Venture capitalists (VCs) and limited partners (LPs) highlight key challenges in fundraising, exits and fund performance. In addition to this liquidity is a major concern for startup investments due to the uncertain economic outlook for 2024 and the long lock-up period of VC investments.

European VCs are facing a challenging year, marked by pessimism toward the fundraising environment and challenging exit valuations, hitting a record low confidence. LPs are now prioritizing follow-on capital to support existing investments amidst these difficulties.

Startup Exit Multiples 📊

45% of the startup exits backed by European VCs sold for either below the initial investment or did not provide above a 2x return.

With the high-risk view of VC investments, they place reliance on a few outperforming startups to offset the significant amount of startup failures.

SearchVentures Insights

The European VC landscape in 2023 was marked by a decline in portfolio valuations, investor pessimism, and challenges in fundraising & exits. With over half of VC firms failing to return capital to LPs, the reliance on a few standout startups to counterbalance widespread failures becomes evident.

This year underscores the nuanced risks within the European startup ecosystem, spotlighting the critical need for strategic investment decisions amidst a cautious market outlook. As VCs navigate through these challenges, the emphasis on supporting existing investments with follow-on capital reflects a tactical shift to safeguard against the uncertain economic forecast for 2024.

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See you next week

Cheers,

Odin Lund & Hariprasad Mohandas