European VC fundraising continues strong showing

Greg Gille
05 November 2018

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With strong numbers for the third year in a row, European VC funds seem to have benefited from the rising tide of LP appetite. Greg Gille reports

"European venture capital is enjoying a golden period in its development," Nenad Marovac, the DN Capital founder and current chair of Invest Europe, recently said in a statement praising Europe's VC success. From the Nordic region's iZettle and Spotify, to France's BlaBlaCar and the UK's Deliveroo, there is no question that the best European startups have been able to build momentum, attract capital and grow in value at a rapid pace, and compete with their US counterparts for headlines in doing so.

Less well-documented, but perhaps even more encouraging for the region's innovation ecosystem, is the increasing amounts of capital raised by VC fund managers in Europe over the past three years. As Unquote Data shows, 2016 and 2017 were exceptionally strong vintages for European fundraising – but while buyout-focused vehicles tend to drive these figures to a large extent, VC funds also benefited from the rising tide of LP appetite.

The sums are not comparable, of course: in 2016, Unquote recorded €8.6bn in commitments secured across 51 venture vehicles raised by European managers. The number of fund closes remained broadly similar last year, for slightly lower aggregate commitments of almost €8bn. This may appear a drop in the ocean compared with the incredible €267bn raised by European managers overall in that two-year period. But these VC fundraising totals over 2016-2017 marked a healthy increase of nearly 50% on the amounts raised in the previous two-year period.

The number of funds closed has remained remarkably steady around the 50 mark in recent years though, going as far back as 2012 – hinting at the fact that the best European VC managers have been able to capitalise on growing LP demand to raise larger funds in recent months, much like their buyout counterparts.

Furthermore, while 2018 has definitely seen a cooldown on the buyout fundraising front, venture fund closes have maintained a healthy pace. Unquote recorded 41 closes between January and October, for aggregate commitments of €6.7bn. Matching the 2017 performance is still within reach should a decent number of vehicles close before year-end, something that definitely cannot be said on the buyout side.

Index notably closed its Index Ventures Growth IV on its hard-cap of $1bn in July, while the likes of Forbion, Digital+ Partners and Andera Partners all raised funds in the €350m region. Further down the value range, a raft of key players including High-Tech Gruenderfonds, BlackFin Capital Partners and Isai also successfully crossed the finish line for their latest efforts in recent weeks. With a healthy distribution across the different tech hubs of Europe, as well as a number of sector-specific funds in the mix, this strong showing will no doubt be welcome news for the hundreds of promising startups emerging across the region.