Previewing the 2023 European Investment Benchmark Report

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2023's first quarter was the slowest fundraising quarter for Europe in 6.5 years, with only two unicorns emerging. Higher interest rates and inflation and geopolitical risks have caused dealmakers to adapt sourcing strategies to stricter criteria, working harder to find those companies most likely to thrive in the years to come. They must also do this while simultaneously providing their existing portfolio companies with the help they need to navigate this market.

Both tasks are easier said than done. That’s why we’ve created the 2023 European Investment Benchmark Report, which will help you better understand Europe’s current investment landscape and how to adapt your firm’s investment strategy to find, manage, and close the highest quality deals.

Here’s what you’ll find in the report:

An analysis of Europe's macroeconomics and how they impact VC investment
A closer look at the rise of climate tech and perspectives from firms working in the area
How Notion Capital uses Affinity to maximize deal flow
Key benchmarks your firm can use to find success—regardless of market conditions

Download the full report or keep reading to get a preview of what’s inside.

How does network nurturing lead to successful deals?

Top VCs have consistently sent more emails than the average firm for every quarter over the past two years. This indicates that consistent, regular check-ins have been fundamental to their involvement in the most promising opportunities.

Additionally, regional data shows that top VCs in southern Europe, like in Italy, Croatia, Greece, and Spain, had the largest uptick in both network growth and email activity YoY, with an impressive 251% increase in network size from H1 to H2 of 2022.

Such growth demonstrates the importance of network expansion and frequent communication with a firm’s most critical contacts, like prospect and portfolio founders. It also shows that consistent check-ins and concentrated efforts in network growth can improve the chances of success for portfolio companies.

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Where are the best investment opportunities?

The U.K., France, and Germany saw immense unicorn growth in 2021. However, the funding landscape changed significantly in 2022 as investors began to pull back. Considerable declines occurred in all three countries, with the U.K. having a drop of more than 20%, Germany at nearly 40%, and France at more than 45% reduction in new unicorns.

This doesn’t mean that Europe as a whole is seeing the same decrease. Croatia, in particular, has had an impressive 400% YoY growth in investment, establishing itself as an emerging startup hub. The Nordic region, including Denmark, Norway, Sweden, Finland, and Iceland, is also experiencing a startup boom, which many experts attribute to their innovative business practices and its ability to spot trends early, like with climate tech.

The Central Eastern European (CEE) region has also shown potential for VC investments. Countries like Ukraine, Slovakia, Belarus, Hungary, and Poland have demonstrated strength in deal flow. Ukraine has been especially interesting, with the combined enterprise value of the country’s startups having more than tripled since 2020 to 23.B€ in 2022.

Overall, the slowdown seen in unicorn markets like the UK, Germany, and France indicate that VCs and PEs are being more cautious about the deals they go after as capital becomes more expensive.

Learn the behaviors of top VCs

What will Europe’s investment landscape look like for the remainder of 2023? We predict that it will continue to change as firms adjust their investment strategies to be more selective in the opportunities they pursue. However, by gaining a better understanding of investment trends, patterns, and the behaviors of Europe’s top VCs, you’ll be better equipped to adapt and compete in today’s business environment.

Download the entire 2023 European Investment Benchmark Report to learn more.