Governments were the leading source of capital for venture fundraising in Europe last year, according to Invest Europe.
The trade association’s Private Equity Activity 2023 report, recorded that venture fundraising on the continent reached €14.2bn in 2023 – down 21% on the previous five-year average. A total of 278 venture funds raised capital last year, with 70 of them first-time funds. The top three sources of funds were government agencies, which provided 37% of the funding, far outstripping corporate investors at 13 % and private individuals (10%) .
Total fundraising, added Invest Europe, reached €132.9bn in 2023, down 3% on the previous five-year average. That said, the number of funds raising capital during the year remained broadly static with that of 2020.
Eric de Montgolfier, CEO of Invest Europe, said there had been well-documented challenges facing the private equity and venture capital industry in 2023 after a boom two years following the Covid pandemic. “Yet far from enduring a crash, the European industry had a soft landing, returning to pre-pandemic levels or higher across buyouts, growth, and venture capital,” he added.
As important as quantum of capital is where the money is going, said Montgolfier, adding: “Of the 8,391 companies receiving investment in 2023, 85% were SMEs, and almost half were in the information communications technology [ICT] and biotech & healthcare sectors. Energy & environment was a top-five sector for overall investment and a leading sector for VC.
‘Transforming health and lives’
“This means companies [receiving funding are] at the heart of Europe’s green and digital transitions, as well as those making medical discoveries that will transform health and lives. Moreover, that investment comes with expertise to help drive innovation, growth, and job creation.”
In total, the ICT sector attracted more than €24bn of investments and, combined with consumer goods & services businesses, accounted for more than 44% of investments by amount.
Invest Europe also noted the total equity amount invested in European companies in 2023 was €99.8bn – a 25% decrease on the previous year and 11% below the previous five-year average. During the same period, venture capital investment reached €12.9bn in 2023, about 5% down on the average from the past five years. 4,764 companies received a venture investment in 2023.
