Hot or not: Where European VC funding went in 2022
Startups in the region—including Israel—raised €81 billion (about $86 billion) across 9,921 deals as of Dec. 14, according to PitchBook data, a decrease of 18.6% and 14.3%, respectively, from 2021’s totals.
Rising interest rates and inflation, as well as geopolitical crises, halted the frenzied pace of dealmaking set last year. Investors became more cautious with their capital and less willing to place big bets on large, and often unprofitable, tech startups. Portfolio companies were cautioned to focus on capital conservation, diverging from the “growth at all costs” mindset that dominated the asset class during the bull run.
Over half of European countries saw capital invested fall from last year. However, dealmaking activity has yet to fall below pre-2021 levels, and the continent still registered its second-best year for VC both in terms of deal count and value.
See the map below for details on how VC investment broke down by country.
UK and Ireland
While the UK attracted the largest amount of investment of any European country this year, it still recorded a 16.1% decline in deal value from 2021, which saw over €30 billion invested.
Its biggest VC round came courtesy of payments specialist Checkout.com, which raised $1 billion in January at a $40 billion valuation—although the Financial Times recently reported that the company has cut its internal valuation to around $11 billion.
DACH
This year, Germany was replaced as Europe’s second-largest VC hub. However, the country does lay claim to 2022’s two biggest European venture rounds. In August, data processing company Celonis closed a $1.4 billion Series D, while investing app provider Trade Republic wrapped up a roughly €1.1 billion Series C in June.
Switzerland was the only country in the DACH region to see an increase in capital, with €3.8 billion invested versus €3.6 billion in 2021. Cleantech startup Climeworks’ €582 million round was the country’s largest.
France and Benelux
With an 18.4% increase in deal value, France is only surpassed by the UK for capital invested this year. Healthtech startup Doctolib became the country’s most valuable VC-backed company after a €500 million round in March and several new unicorns, including payroll software developer PayFit and ecommerce startup Ankorstore, were minted.
Of the countries in the region, Belgium saw the biggest rise in deal value—up 55.4% to €2 billion.
Nordics
Sweden recorded the biggest drop in capital invested compared to last year, but it remains the Nordic’s largest venture hub. Buy now, pay later provider Klarna raised one of the country’s largest VC rounds, but it came with an 85% cut to its previous $45.6 billion valuation, which now stands at $6.7 billion.
Iceland fared better, with a 55.5% increase in capital raised from 2021. However, much of that growth is thanks to fintech startup SaltPay’s $500 million Series C.
Israel
After crossing the €10 billion mark for the first time last year, it’s unlikely that Israel will repeat the same feat, with only €8.8 billion invested as of Dec. 12.
Notable deals this year include networking software provider DriveNets’ $262 million Series C.
Central and Eastern Europe
While Lithuania recorded the largest increase in capital invested last year, the country’s deal value has now dropped 69.5% to €118.1 million. The country saw no mega-rounds in 2022. Its largest round was a $65 million Series A for payment infrastructure provider Kevin.
The Czech Republic recorded a 550.6% increase in deal value. Notable deals include Prague-based online supermarket Rohlik’s €220 million Series D.
Southern Europe
Greek startups raised €359.5 million in venture funding this year, a 279.7% increase from 2021. Two deals, both in the automotive sector, accounted for the majority of the capital: FlexCar’s €210 million investment and Spotawheel’s €100 million Series B.
The region’s largest hub, Spain, saw a 28.5% cut in deal value while neighboring Italy performed better and notched a 62.6% rise.
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