BY Fraser Tennant
Venture capitalists (VCs) invested €96bn in almost 27,000 European companies over the past decade, including more than €18bn in 2022 alone, according to a new report by Invest Europe.
In its ‘Venture Capital: Fuelling European Innovation’ report, Invest Europe highlights VC’s contribution to a stronger European economy and a better society – digging deep into the data on fundraising, investment, returns to investors and job creation, among others.
The report shows the step change in European VC fundraising over the five years to 2022, including an eight-fold increase in capital raised by Nordic VCs and a three-fold increase in the Germany, Austria and Switzerland (DACH) region, as capital committed to funds reached a record €23bn last year.
In addition, Invest Europe highlights European VC’s 12 percent net return since inception, far outperforming the Morgan Stanley Capital International (MSCI) Europe benchmark, which returned 7.67 percent per annum over the same period.
Furthermore, recent performance has accelerated, with European VC delivering a net return of 23.07 percent over 10 years, creating wealth for long-term investors including funds of funds investing on behalf of pension funds, family offices and corporate investment divisions.
“European VC is the fuel that keeps the engine of innovation running,” said Eric de Montgolfier, chief executive of Invest Europe. “With the help of VC investment and expertise, European start-ups are at the forefront of developments in software and cloud computing, driving deep tech advances in artificial intelligence and robotics, creating cutting-edge biotech treatments for cancer and infectious diseases, and pushing the boundaries of cleantech solutions for a cleaner, greener future.”
The report also outlines the role of venture capital as a cornerstone of European economies and communities, with the ecosystem providing jobs for nearly 900,000 people at the end of 2021. Companies backed by VC have generated double-digit employment growth in most years since 2018, including 15.3 percent net new jobs in 2021, compared to 1.2 percent growth for all European companies.
Mr de Montgolfier concluded: “Europe’s VC and start-up ecosystem is not only producing transformative technologies that will change people’s lives; it is also generating social and economic benefits that can improve livelihoods, from new jobs to wealth creation for long-term investors.”
Report: Venture Capital: Fuelling European Innovation Report