DEALROOM’S EUROPEAN VENTURE CAPITAL REPORT

A record year in Europe for venture capital

According to Dealroom’s European Venture Capital Report, 2016 was a record year in Europe for venture capital (VC). Funding (€16,200 M) grew a 12% (11% when excluding top-8 mega-rounds), and number of deals (3,376) grew a 32% over 2015.

Dealroom, Europe’s leading VC database, has recently launched its 2016 European Venture Capital Report. It covers VC funding in Europe and Israel (also Russia and Turkey). It includes angel & seed rounds, VC series, growth equity and converts, and excludes private equity buyouts, M&A, private placements and lending capital.

The report includes Barcelona in a diversified group of tech hubs. By capital invested (€ 1,038 million), Barcelona is the 8th European city after London, Berlin, Paris, Stockholm, Tel-Aviv, Amsterdam and Moscow. Marketplace and enterprise software are the main angles. Enterprise software, security and healthcare, the main markets. By number of rounds (318), Barcelona also ranks 8th in Europe.

Funding from US and domestic funding

On average 25% of VC is source from US based funds. About 35% is sourced domestically. Countries attracting most US funding (above 30%) are Israel, Austria, Sweden, Ireland and UK.

As for Spain, 22% of total funding came from US and 29% from domestic funding. The report points out that lower percentage of domestic funds in Spain is explained by high interest from abroad (like Sweden) and not a sign of weak local VC funding options (as it is in Ireland or Austria).

Main facts and trends are the following: 

  • There was a strong growth across most parts of Europe -France saw seed rounds tripled and early stage doubled-. UK and Germany experienced a slowdown, although London remains the epicenter in European tech. 
  • 2016 saw largest ever European cohort of early stage startups funded, whereas later stage rounds slowed down. Also, VCs are allocating more capital to B2B models, after being more B2C focused during 2014-2015. 
  • Recent years saw more European than ever startups, but a smaller proportion reaching the next funding round stage This is likely due to a combination of increased competition and higher risk appetite by VCs.