European VC Deal Value to Surpass €100B in 2022

According to recent data from Pitchbook, European venture capital (VC) deal value hit €54.4 billion in the first half (H1) of 2022, with late-stage capital from international investors, larger traditional VC funds and nontraditional backers contributing 66.3% (€36.1 billion) to the total amount raised.

The U.K. remained the undisputed regional leader in terms of VC deal value, and together with Ireland cemented their positions as the leading VC hubs in Europe. The countries secured combined investments of €17.9 billion in deal value in Q1 2022, representing 32.8% of the aggregate total across the region, the Q2 report noted.

France and Benelux, as well as DACH — Germany, Austria, and Switzerland — regions were also cited as having recorded “healthy deal value figures” in Q2 at €10.8 billion and €10.2 billion, respectively, followed by the Nordics, which contributed €4.8 billion to the total H1 2022 deal value.

But while the region’s deal value figures were somewhat in line with 2021, the VC ecosystem could not escape the impact of record inflation and economic uncertainty brought on by the coronavirus pandemic and the ongoing Russia-Ukraine conflict. As a result, there was a quarter-on-quarter (QoQ) decline of 10.6% in capital invested between Q1 and Q2 2022.

Read more: Europe VC Ecosystem Smashes Records In Q3 2021, Setting The Stage For Promising 2022 Deals

The challenging landscape in Q2 was characterized by mass layoffs at companies such as food delivery platforms Turkey’s Getir, UK’s Zapp and Berlin-based Gorillas in May, all of which attributed the job cuts to the global economic downturn.

Related: Pink Slips Mount as Ultrafast Grocers Confront Global Challenges

Also related: German Delivery Service Gorillas Cuts 300 Jobs

The buy now, pay later (BNPL) sector, which exploded in the wake of the pandemic, was not spared either.

Sweden’s Klarna, a global industry leader and one the most valuable VC-backed companies in Europe, was recently forced to go shopping for capital after its valuation plunged nearly 90% from $45.6 billion to about $6.5 billion, PYMNTS reported, per The Wall Street Journal.

Learn more: Klarna’s 85% Haircut Sees BNPL Investors Shooting First, Asking Questions Later

And despite the firm eventually raising $800 million from investors this month, the significant valuation loss by a major VC-backed company is bound to negatively impact other European FinTech firms, particularly those operating in the increasingly competitive and saturated BNPL space.

“Any haircut is significant, and the magnitude of Klarna’s down round will increase scrutiny for European fintech companies, particularly in the BNPL space, which has become highly saturated and competitive in recent months, further highlighted by Apple Pay’s latest announcement of its rival BNPL offering,” the report noted.

That said, European VC fundraising remained robust in H1 of 2022 and is expected to surpass €100 million for the second consecutive year.

As the report noted: “VC is a long-term strategy, and we believe dealmaking will flatten rather than collapse in the current climate given the record-breaking YoY pace set in the past few years.”

For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter.