The European venture capital industry has set a new annual record for deal value in each of the past three years, as individual businesses attract greater valuations and larger investment tickets for follow-on rounds. And despite the presence of an economy-shaking pandemic, the region is running at pace to make it a fourth year in a row.
Venture capitalists have completed €29.5 billion worth of deals this year already. That stunning sum is a sign of how the European market has boomed in recent years, developing into a mature ecosystem that can support steady deal flow even amid an ongoing global health crisis.
Fundraising within funds also powered ahead in Q3, and a new annual record could be set if the current pace of investment continues. Across the board there has been greater volumes of capital accessed by fund managers, including at diversified funds, first-time funds, and specialists focusing on evolving areas such as ESG. On the current momentum activity looks set to remain strong in Q4, even despite the threat of a second COVID-19 wave.
So who are the beneficiaries of this seeming free-flow of capital (other than the funds themselves of course!)? If you run a business with a disruptive tech USP then you’ll continue to be the darling of the investment space. Logistics and online services have increased their slice of the pie too, with down-stream beneficiaries including distribution and warehouse operators looking for Private Equity money, as our increasingly digital and socially distanced way of life looks set to embed itself for some time to come.
For those businesses looking to capitalise on current market liquidity, we like to see sustained month-on-month growth across your user or revenue base, or sustained profitability and margin enhancement if we’re looking at a buy-in proposition. Where you have a need to deploy funds into marketing to fuel growth we have a particular interest in businesses that can demonstrate measurable ROI on their marketing spend so we can see investment value at a more granular level.
So gear up for Q4, the year is far from over!