According to Preqin’s Venture Capital Online platform, Europe-based venture capital funds have raised a total of €26bn since 2012 (as at May 2017) . In this blog, we delve into the fundraising data for these countries and analyze the evolving landscape for European venture capital.
The three countries that contributed the most capital over this time were the UK, France and Germany. As shown in the chart below, these three countries together account for 63% of all Europe-based venture capital raised since 2012. The breakdown is as follows:
- The UK accounted for 41% (€2.5bn) of capital raised by Europe-based fund managers in 2016 , the largest sum raised since the Global Financial Crisis. The UK has had a good start to 2017, having already raised €840mn.
- France hopes to bounce back in 2017, with funds currently in market targeting €1.8bn, despite a disappointing 2016 in which they raised their lowest amount (€559mn) since 2012.
- After raising €300mn in the whole of 2016, Germany-based fund managers have already raised €1.1bn in 2017, the majority of which has come from the closure of Rocket Internet Capital Partners Fund in January 2017, which raised $1bn (€940mn). This figure has room to grow with €1.0bn currently targeted by Germany-based funds in market as at May 2017.
Other European countries have also experienced venture capital fundraising success.. Venture capital managers in the Netherlands and Sweden both had a strong 2016, raising €872mn and €876mn respectively – the only countries outside the UK, France and Germany to reach those marks. They will be hoping to build on this momentum in 2017 with a combined target size of over €1.1bn.
Can the fundraising success of Europe-based venture capital funds be maintained in 2017? Fund managers in Europe must certainly hope so: 148 Europe-based funds are currently in market, targeting €12bn in aggregate capital. However, the uncertainty surrounding the UK’s exit from the European Union (EU) could reshape the European venture capital market, leaving future fundraising potential somewhat unpredictable.
As the British Private Equity & Venture Capital Association (BVCA)’s Gurpreet Manku argues in the 2017 Preqin Global Private Equity & Venture Capital Report, the removal of the UK from the European market could “substantially impact” the number of funds UK-based firms can raise, especially if it is not accompanied by effective measures to ensure UK firms still have access to EU investors, and vice versa. UK-based firms currently account for 24% of Europe-based venture capital funds in market. The UK leaving the EU and the ramifications of this could create opportunities for fund managers based in other European financial centres. However, with the UK’s withdrawal not due to take place until 2019 at the earliest, there remains considerable interest in UK-based venture capital funds, and early fundraising totals indicate that 2017 could still be a good year for European venture capital.