European VC deal activity

VC deal activity in Europe reached €9.5 billion VC deals (€) by size in Q2 2020—the third largest quarterly figure on record—a remarkable figure amid the widespread economic uncertainty caused by COVID-19.

 Although deal count slightly dropped off in comparison to the last four quarters, deal value managed to grow 5.7% QoQ despite certain sectors having to adapt operations, have employees work from home, or shut down completely across major European venture ecosystems.

 Given how the coronavirus has wrecked broader macroeconomic indicators, few would have expected H1 2020 deal value to be on course to match and potentially surpass the annual record set in 2019. But, strong VC deal value emphasizes the resilience and independence of the venture ecosystem considering the macro-level and sector-specific challenges facing Europe. Tech-heavy businesses, long-term return horizons, near-term illiquidity and growth in capital resources in recent years could have all led to the unexpectedly strong.

In H1 2020, deals over €25 million comprised 61.2% of overall deal value, building upon the shift towards larger rounds we have witnessed in the last decade.

Largest deal to close in Q2 was Deliveroo’s delayed €527.6 million round led by Amazon.

Fierce food delivery wars have ratcheted up in the last three years as consumer behaviour has altered and increasingly favoured convenience.

In Q2 2020, challenger bank N26 extended its latest round by €92.0 million to €523.5 million. The extension was funded by existing investors and underscores the long-term shift in devotion from backers to support their prized startups, which may be facing challenging circumstances and heightened cash demands.

VC deals with CVC participation reached €8.2 billion through H1 2020, keeping pace with the tear away record set in 2019.

CVC participants were involved in sizable Q2 2020 rounds for Deliveroo, N26 and Lilium, resulting in a surprisingly high figure considering the muted corporate confidence we observed at the beginning of the quarter.

Israel-based BioCatch’s €132.9 million round was one of the biggest VC deals with CVC participation in Q2.

UK-based cybersecurity startup Privitar also attracted CVC investment from financial institutions, and its €77.8 million round.

Ecommerce payment specialist Checkout.com continued its rapid growth to close a €134.2 million round in Q2 2020, roughly tripling its valuation within a year to become one of the most valuable VC-backed companies in Europe.

In Q2 2020, Londonbased Onfido, a developer of cloud-based identity verification tools, completed a €91.6 million funding round.

Diagnostic software developer LumiraDx completed a €276.9 million funding in Q2, one of the largest rounds of 2020 YTD.

Although Q2 exit value was unexpectedly buoyant at €2.7 billion, exit value in 2020 is still on track to register the lowest figure since 2012.

European VC exit activity
European VC exit activity
European VC exits (€B) by sector
European VC exits (€B) by sector
European VC deals (€B) with CVC participation by sector
European VC deals (€B) with CVC participation by sector

The largest exit in Q2 2020 was the IPO of Switzerlandbased biotech company ADC Therapeutics (NYSE: ADCT), which exited at a €989.9 million pre-money valuation.

Only 11 Europe-based startups have listed on the public market in H1 2020.

Israel-based startups exiting the ecosystem generated €1.2 billion in H1 2020, accounting for 31.8% of overall exit value. Mobility-as-a-Service (MaaS) startup Moovit was acquired by Intel for €826.9 million and was the major contributor to the jump in Israel exit value. Moovit will join Intel’s Israel-based Mobileye business, which specialises in advanced driver-assistance systems, including robotaxi services, a market that Lilium is also looking to penetrate.

VC fundraising in Europe has totalled a defiant €7.6 billion halfway through 2020, setting the year on pace for a record annual total if momentum persists.

The largest closed fund in Q2 2020 was Francebased Cathay Innovation II at €505.3 million.

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