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The PitchBook report suggests Europe’s VC deals are growing in both size and valuation across most sections, but issues remain among UK and Ireland start-ups.
Europe’s venture capital (VC) sector appears to be entering a period of recovery, after the value of deals across the continent fell sharply last year.
That’s according to a new report by PitchBook, a data and research company covering capital markets. This report claims that the median deal sizes in Europe increased across all stages in the first quarter of 2024.
This report also found that pre-seed funding appears to be the most resilient VC stage in terms of valuations, something that the company noted towards the end of 2023. Pre-seed deals increased in both valuation and deal sizes quarter-over-quarter.
The median pre-seed pre-money valuation increased the most out of all stages, reaching €4.6m at the end of this first 2024 quarter, compared to €2.5m in 2023.
“We have also seen a rationalisation of industry players, where tougher conditions have led to survival of the fittest, potentially leaving a higher quality start-up pool, as the proportion of down rounds have also shown signs of plateauing this quarter,” PitchBook said in its report.
The report suggests that only the median late-stage valuation saw a dip in the first quarter of 2024, while the percentage of down rounds – rounds where the pre-money valuation is lower than the post-money valuation of a previous round – have stabilised. However, the report also claimed that the majority of down rounds were from UK and Ireland start-ups.
The median deal size for UK and Ireland start-ups was €2.8m, lower than various European regions, while valuations in the region have dipped by more than 9pc compared to 2023.
In terms of specific sectors, the largest median round of €3.3m was in the fintech sector. This was followed by clean-tech at €2.9m, while consumer tech had the smallest average at €1.3m.
A recent PitchBook report found that US VC funding in the first quarter 2024 hit the lowest level since 2016, as dealmaking in global markets remained “relatively subdued”.
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