Preqin’s Venture Deals Analyst reveals that deals in North America and Europe represent 62% of the total aggregate venture capital deal value in 2015 YTD. Breaking this down, we see that North America outnumbers Europe by a ratio of 3:1 in terms of the number of deals, with 50% of venture capital deals this year taking place in North America and 16% in Europe. In 2014, the difference between both regions was even more drastic, with North America accounting for 58% of the total number of deals, leaving Europe behind with an 18% share of venture capital deals (see chart below).
This gap is slightly smaller than in previous years, with 65% of deals occurring in North America in 2009 compared to 21% attributable to deals in Europe in the same year. However, this slightly decreasing gap can be explained by Asia picking up pace in the venture capital market and eating into the shares of the more traditional regions. Asia increased its market share in terms of number of deals from 10% in 2009 to 30% in 2015 YTD, overtaking Europe.
Venture capital, as seen in private equity as a whole, has ever growing levels of capital to be put to work, with dry powder in the North American venture capital market from December 2012 to 2015 YTD rising from $61bn in to $85bn, and dry powder in Europe increasing from $14bn to $19bn over the same period. North America-based deals tend to be focused on the more capital-intensive, later stage financings (Series D to Series J) when compared to Europe. 2015 YTD saw 6% of all venture capital deals based in North America go towards later stage financings, accounting for an aggregate deal value of $11bn. On the contrary, later stage deals in Europe only accounted for 2% of those in 2015 YTD, amounting to a deal value of just $1.1bn. However, European deals have a greater focus on growth capital investments, which account for 8% of all Europe-based venture capital deals compared to only 3% in North America.
The exit environment for venture capital deals shows a similar picture. Five of the six exits in 2015 YTD which had an exit value above $1bn took place in the US, with the other one occurring in Asia. North America accounts for 57% of the number of venture capital exits in 2015 YTD, whereas Europe makes up just 17%.