CVCs claim highest ever share of European VC deals

Corporate venture capitalists may have invested less last year, but they still took part in more than a fifth of all European VC rounds.

CVCs participated in 2,375 European rounds in 2022, worth an aggregate €42.6 billion (about $46.3 billion), according to PitchBook data. While this is down from the previous year’s 2,661 deals, CVCs were involved in 21.7% of all European VC rounds in 2022—the highest annual percentage to date.

 

Late-stage VC accounted for 37.3% of all European venture deals with CVC involvement, and some of Europe’s largest rounds included these corporate investors. Electric vehicle startup Rimac’s €500 million Series D was joined by Porsche Ventures, and GoStudent’s €300 million Series D was led by Prosus Ventures.

The way in which most corporate venture arms are structured potentially puts them in a better position to maintain their activity during a downturn. With the majority investing out of evergreen funds, or from the parent company’s balance sheet, budgets are often set before a market shift. They also don’t have to rely on external LPs, many of whom reconsidered their commitments to VCs after the fall in public equity valuations.

According to Gary Dushnitsky, associate professor of strategy and entrepreneurship at London Business School, CVC activity could become more prolific with the downturn.

“The shifts being seen among startups in response to the downturn are those which more directly play into how CVCs operate,” Dushnitsky said. “With a greater focus on profitability, the networks CVCs can offer alongside capital are attractive to startups. Partnering with a CVC builds credibility and can act as a stamp of approval for all would-be customers. Not to mention the real-world, on-hand experience and support.”

The benefits of CVCs also extend to the parent company. Many CVCs, like Intel Capital, invest strategically as well as for financial gain. Backing startups is a way for the parent company to access new technology or enter new markets, directly or indirectly increasing their sales and profits. With the downturn impacting large corporations as well as startups, maintaining their CVC programs can benefit them in the long run.

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