The European venture capital market remained strong in Q1, although the macroeconomic background threatened to cool investors’ appetites.
Total valuations have continued to rise since the records of 2021, but continuing uncertainty, especially in public markets, may slow their growth.
Here’s a closer look at our six charts Report on the European VC award for Q1 shows the trajectory of European awards.
Early-term pricing in Q1 exceeded last year’s highs, with a median of € 9.4 million (about $ 9.9 million). Public market unrest has had less of an impact on the market at an early stage, allowing the valuation of these younger companies to rise across all quartiles.
Volatility in public markets and rising inflation have not yet dampened pre-money valuations in the final phase, with the median price tag rising 6.5% to € 19.4 million in the first quarter. Trade sizes are also rising in the final phase, but macroeconomic uncertainty could slow down valuations and trade downwards in the coming quarters.
Wheels are down and are the lowest share of VC trading in decades. In Q1, only 14.9% of rounds were completed with a reduction in valuation, which is slightly below last year’s value of 15%. However, the looming economic downturn has intensified control over valuation sustainability, which could lead to further cuts.
The growing presence of non-traditional investors in European VCs has led to record trading volumes and their valuations. In Q1, trading sizes, including non-traditional investors, grew at all stages, but the current economic environment could lead them to focus on less risky, defensive money-generating companies across their portfolios in the near future.
About 28 new unicorns were killed in the first quarter, which increased the pace this year and reached the highest number of new companies worth $ 1 billion in a calendar year. Trading with existing European unicorns was strong and the total valuation of the herd after the payment of the money reached a record EUR 424.5 billion.
Outbound activity in Europe fell sharply in the first quarter from a record 2021, but nevertheless the median valuation rose to € 60 million after the payout, from € 42.7 million last year. However, the median stock market valuation fell to EUR 21.1 million, amid a large sell-off in public technology shares.
Read more: European Venture Capital Valuation Report for the 1st quarter of 2022
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