Fewer and fewer startups in Europe are receiving venture capital. At the same time, the amount per deal is growing rapidly. Internationally, fintechs are benefiting in particular.
In the second quarter of this year, 631 venture capital deals in Europe generated USD 5.6 billion. This continues a downward trend in the number of deals that has been ongoing for over a year. In the first quarter of 2017, investments in European startups were roughly twice as frequent, according to the latest edition of the regular market analysis "Venture Pulse" by the management consultancy KPMG. However, the decline in the number of deals by no means indicates a crisis for venture capital in Europe. Quite the opposite: The total volume invested has stabilized at a high level and has remained roughly constant for a year.
Late startups benefit
The high deal volume in Europe is thus spread across fewer individual deals, and the average amount of money flowing per investment is rising. Angel and seed investments increased by an average of a full $501,000 in the first half of 2018 compared to the previous year, from $800,000 to $1.2 million per deal. The increase is even greater for later investment rounds: Early-stage startups received $2.2 million per financing round in the first quarter. This amount has more than doubled to $4.9 million. Later-stage investments also saw an impressive increase, from $5.2 million to $9.1 million per deal.
Rapidly increasing VC volume in fintechs
Globally, the financial sector in particular benefited from growing VC funding. Venture capital invested in fintechs worldwide totaled $57.9 billion in the first half of the year, already exceeding the $38.1 billion for the entire year of 2017. A total of 875 fintech financings were completed worldwide in the first half of the year. KPMG partner Sven Korschinowski says:
"Not only is the total investment volume impressive, but also the growing geographical and thematic range. For example, Brazil, South Korea, and Japan appeared on the map with significant fintech deals in the first half of the year."
On a technological level, investor interest in fintechs that focus on topics such as artificial intelligence or robot-assisted process automation has increased.
