Venture capital (VC) money flowing into Europe has “skyrocketed” in recent years, according to Invest Europe, formerly the European Private Equity & Venture Capital Association.
The body’s Venture Capital: Fuelling Innovation Report found venture capitalists had invested more than €96bn in almost 27,000 European companies over the last decade, with €18bn of that coming in 2022.
The report highlighted how European VCs had averaged a net annual return of 12% since inception, beating the MSCI Europe benchmark’s 7.67% a year average over the same period. It also noted recent performance had accelerated, with European VCs delivering a net return of 23.07% over 10 years, “creating wealth for long-term investors including funds of funds investing on behalf of pension funds, family offices and corporate investment divisions”.
Eric de Montgolfier, CEO of Invest Europe, said: “European venture capital is the fuel that keeps the engine of innovation running. With the help of VC investment and expertise, European start-ups are at the forefront of developments in software and cloud computing, driving deep tech advances in AI and robotics, creating cutting-edge biotech treatments for cancer and infectious diseases, and pushing the boundaries of cleantech solutions for a cleaner, greener future.”
He added: “Europe’s venture capital and start-up ecosystem is not only producing transformative technologies that will change people’s lives, it is also generating social and economic benefits that can improve livelihoods, from new jobs to wealth creation for long-term investors.”
‘Dry powder’
Invest Europe went on to note the VC industry had increased capacity to support startups across the continent, citing the fact that “dry powder” rose to an all-time high of €53bn last year. That relates to figures it cited last month when it said capital under management had more than doubled since 2016.
The organisation said then that private equity and venture capital managed a record €1.004tn in capital on behalf of investors at the end of 2022, up from €873bn in 2021 – the first time the European industry had broken through the €1tn threshold. Of the total, €656bn represented portfolio value at original investment cost, held by 2,863 firms across 8,140 funds, underlining the expansion of the industry.
Private equity and venture capital ‘dry powder’ reached €348bn in 2022 – equating to 94% of the total equity invested by the industry between 2020 and 2022 – underscoring the balance between investment capacity and the opportunities. Buyout investment potential increased to €219bn in 2022.
