European VC ecosystem on the rise, says new report

i5invest and the Vienna University of Economics’ Entrepreneurship Center publish ‘The European Capital Report 2021’, revealing that both Venture Capital and Private Equity Funds have substantially been gaining ground despite Covid-19. 

With 64 new European funds that have been established in the last 24 months, the total number of players rises to 676, including 443 Venture Capital and 233 Private Equity Funds located in Europe. An extensive effort to map out the ecosystem reveals new insights.

With a substantial margin, the United Kingdom still leads the ranking of countries home to the most investors in Europe (306), followed by Germany (181), France (119), and Luxembourg (66). The last 24 months however show an interesting trend: It is not the United Kingdom that has been seeing the most Venture Capital and Private Equity newcomers lately, but the region of Germany, Switzerland, and Austria. “With more than a quarter of all new European funds established in this region, we’re noticing an interesting development also in hindsight of the Brexit,” says Herwig Springer, CEO of i5invest.

The most powerful European Venture Capital Funds based on Assets under Management in 2021 are Balderton Capital, Verdane, Atomico, BGF and Sofinnova Partners, with CVC Capital Partners, Ardian, ICG, Permira and Apax Partners leading the Private Equity Ranking. The combined European Assets under Management of all funds covered by the European Capital Report 2021 amount to EUR3,036.84 billion.

The ranking of the most active European funds based on number of investments in 2020 is led by Hiventures from Hungary (200 investments), Germany’s HTGF (160), Kima Ventures from France (100), UK based Seedcamp (92) and Speedinvest headquartered in Austria (86).

While the UK still leads the ranking of countries home to the most investors in Europe, most new funds were founded in German speaking countries in the last 24 months, “an interesting development in hindsight of the Brexit”, adds Herwig Springer. The region continues its strong focus on investments in growth-stage companies, with the most popular industry being Life Science and HealthTech in 2021.

London is the city with the highest number of European HQ’s of US funds, and overall, the UK is home to the most European Corporate Venture Capital Funds as well.

Most powerful Venture Capital Funds in the UK based on Assets under Management are Octopus Investments, Balderton Capital, Atomico, BGF and Highland Europe, with Intermediate Capital Group, Permira, Apax Partners, HG Capital and Bridgepoint leading the Private Equity ranking. The most active UK investors based on number of investments in 2020 are Seedcamp, Parkwalk Advisors, Balderton Capital, Octopus Ventures, and Bethnal Green Ventures.
The 14 new funds founded in the UK are a/o PropTech, ALSA Ventures, Flourish Ventures, Form Ventures, Giant Ventures, Hiro Capital, Jigsaw VC, Pretiosum Ventures, Veg Capital, Zero Carbon Capital Corten Capital, Curve Capital, Inspirit Capital, and MavensWood Investments.

In the last 24 months 64 new funds have been established across Europe with a strong focus on early-stage investments in Industry 4.0, Life Science and HealthTech. The most powerful newcomers based on Assets under Management are London based Corten Capital, Röko from Sweden, a/o PropTech headquartered in the UK, Future Energy Ventures from Germany and NordicNinja VC based in Finland. Among the newcomers are four Corporate Venture Capital Funds: Smart Works from Austria, Helen Ventures from Finland, Sparrow Ventures from Switzerland and DNV GL Ventures from Norway.

With only four new funds, the Corporate Venture Capital (CVC) ecosystem in Europe has not been showing substantial growth. In total there are 55 CVCs located across Europe in 2021, most powerful based on Assets under Management are Novo Holdings from Denmark, Rabo Corporate Investments based in The Netherlands, Novartis Venture Fund from Switzerland and BMW i Ventures from Germany. Home to the most CVCs is the United Kingdom (18), followed by Germany (16), and Switzerland (6). The key investment verticals for CVCs in Europe are AI and Big Data, Industry 4.0, Life Science & HealthTech, Software as a Service and Future of Mobility. “For 2021 we’re hoping to see many more corporates making Venture Capital part of their innovation strategy”, says Stephan Jung from the WU Entrepreneurship Center.

Some 124 US funds have established a presence in Europe, the preferred cities for office locations being London, Paris, Luxembourg, and Berlin. The investment focus of US headquartered funds in Europe is primarily growth-stage with the most popular industries being Life Science & HealthTech, IT, Media, and Telecommunications, FinTech and InsurTech, everything B2B and Industry 4.0.

Most popular investment focus among European funds in 2021 is Life Science & Health, followed by IT, Media and Telco, everything B2B and Industry 4.0. In terms of stage focus, funds based in Germany and Austria prefer to invest early-stage, while the rest of Europe continues a stronger focus on funding growth-stage companies in 2021.

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