Venture capital fundraising has been resilient so far in 2022. Pictured, the LPEA Insights 2022 conference, organised by the Luxembourg private equity and venture capital association (LPEA) and held at the Philharmonie on 13 October 2022. Photo: Nader Ghavami/Maison Moderne

Venture capital fundraising has been resilient so far in 2022. Pictured, the LPEA Insights 2022 conference, organised by the Luxembourg private equity and venture capital association (LPEA) and held at the Philharmonie on 13 October 2022. Photo: Nader Ghavami/Maison Moderne

Despite a turbulent political and economic year, European venture capital seems to be resilient. In 2022, deal value had already reached €76bn by Q3 2022, compared with a total deal value volume of €103.5bn in 2021, according to financial data and software company Pitchbook’s “European Venture Report 2022.”

The venture capital fundraising has been resilient in 2022 so far, according to the recently published report. And, despite the widespread uncertainty in financial markets globally, stakeholders involved in VC fundraising efforts have pressed ahead.

Deal value keeps pace

In 2022 so far, deal activity totalled a value of €76bn over 9,027 deals as of 30 September, against a total deal value of €103.5bn in 2021 over 12,191 deals. European VC deal value has therefore kept pace in 2022 so far with 2021.

However, dealmaking activity dropped in the third quarter. This fall was expected by many analysts, the report noted. According to the authors of the report, this is because of capital efficiency measures, rather than growth at any cost. These measures have established greater importance in recent months, and this is expected to continue through 2023, the report said.

Non-traditional investors continue VC

Despite markets entering correction territory globally, non-traditional investors, such as financial institutions, sovereign wealth funds, hedge funds, private equity, investment banks and pension funds have continued to participate in VC rounds.

In 2022 so far, 2,874 VC deals with non-traditional investors have taken place, not far behind 2021’s record figure of 4,485 over the whole year.

However, overall deal value fell in Q3 and is anticipated to flatten further. The authors of the report, Nalin Patel, lead analyst EMEA private capital, and Nicolas Moura, analyst EMEA private capital believe: “non-traditional investor involvement will mirror wider market sentiment. Investment and consolidation in the VC space will remain elevated moving forward, with particular interest from non-traditional sources”.

Exit values dropping

But not everything is rosy, because venture capital exit values seem to have suffered.

In the first three quarters of 2022, exit value totalled €33.6bn, down 70.4% year on year. In Q3 alone, exit value dropped significantly to €2.8bn, a fall of 81.7%.

However, the report pointed out that 2021 was an outlier year in terms of exit value. It also added that 2021’s low interest rates, low inflation and high valuation was a different environment to 2022’s increasing interest rates, stagflation and dropping valuations. The report concluded that a 2022 exit count of 878 year to date shows VC exits have remained resilient.

A clearer picture of 2022 will emerge in upcoming quarters as monetary and fiscal policy shifts take effect in the VC markets.

European Venture Report 2022, Pitchbook

Luxembourg as VC centre

Resilient VC fundraising so far in 2022 could also be considered as a good sign for the inflow of alternative investment capital to Luxembourg. The for private equity and VC, hedge funds and real estate funds, with current alternative assets under management of €962bn by regulated alternative funds, according to financial development agency Luxembourg for Finance.

“A clearer picture of 2022 will emerge in upcoming quarters as monetary and fiscal policy shifts take effect in the VC markets,” explained the authors of the report.

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