How VCs invested in Asia and Europe in 2020

The unicorns are feasting

Wrapping our look at how the venture capital asset class invested in 2020, today we’re taking a peek at Europe’s impressive year, and Asia’s slightly less invigorating set of results. (We’re speaking soon with folks who may have data on African VC activity in 2020; if those bear out, we’ll do a final entry in our series concerning the continent.)

After digging into the United States’ broader venture capital results from last year with an extra eye on fintech and unicorn investing, at least one trend was clear: Venture capital is getting later and larger (as expected).

Record dollar amounts were being invested, but across falling deal volume. More money and fewer rounds meant larger rounds, often going to the late and super-late stage startups in the market.

Unicorns are feasting, in other words, while some younger startups struggle to raise capital.


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There have been some encouraging signs of seed activity, mind, but full-year data made it clear that in America, the more mature startups had the best of it.

But what about the rest of the world? After parsing KPMG data concerning both how VCs invested in Europe (here) and Asia (here) last year, there are clear echoes. But not entire reproductions.

Let’s discuss key data points from the two reports. This will be illustrative, brief and painless. Into the data!

European VCs: Rich, but not evenly distributed

Compared to historical investment levels, KPMG’s European VC report describes a venture capital scene at its peak. Q4 2020 saw $14.3 billion invested into EU startups across 1,192 deals, the highest dollar amount charted and a modest besting of the previous record set in Q3 2020.

However, despite impressive investment totals, the number of deals that the money was spread over proved lackluster.

The Q4 2020 deal count was the lowest on record since the continent’s deal peak in Q1 2019. Squinting at the provided chart, it appears that deal volume in Europe has fallen from around 2,200 in that peak quarter, to Q4’s fewer than 1,200 deals.

The Q4 deal count will improve some as more data comes in, but not enough to do more than blunt its declines; EU VCs are making big bets, just fewer of them.

This is something that we’ve seen around the world throughout 2020. Perhaps COVID-19 really did cut the number of startups that were venture-ready and made those that were all the more attractive?

Evidence of this later, and larger trend abound. For example, European seed, Series A, Series B, Series C and Series D+ rounds reached their largest median sizes ever in 2020. The median size of a Series B rose from $10 million in 2016 to $20 million in 2020. Series C rounds were similar, rising from $20.6 million in 2016 to $43.6 million in 2020, on a median basis.

How bad was 2020 really for European seed and angel deals in 2020? KPMG reckons that the group had its smallest number of deals in the EU since 2013. Indeed, the falloff of seed and angel deals is why European deal volume declined 2020, it appears.

Notably I am not hearing much complaint about a dearth of seed capital when chatting with investors and founders. But I usually chat with folks who have raised seed capital. This means what I am hearing is pretty one-sided. The data paints a much bleaker picture for the earliest-stage founders. At least in Europe. Let’s see how Asia fared.

Asian VCs: A muted recovery

Asia’s VC industry is larger than its European counterpart, with $25.2 billion invested in Q4 2020 across 1,398 deals.

But, as in Europe, that deal number fell sharply in recent quarters. Per KPMG data, Asian VC deal volume peaked around Q1 2018 at around 2,400 deals worth comfortably more than $30 billion in investment.

Since then, deal volume has nearly halved and dollars invested have fallen as well.

But it’s not all bad news: Q3 and Q4 2020 were dramatically better for Asian startups than Q1 and Q2 of last year, with venture capital investment rising around a fourth and staying there. If the pace can be maintained in Q1 2021, the continent should have a nice rebound to crow about, at least on a year-over-year basis.

There do appear to be more clouds than silver linings, however. Seed deal volume was its lowest since 2013 and has fallen yearly since its 2015 peak. Series As also had a blah year in Asia, while Series B deals did not do much better. Late-stage volume seem fine, of course.

The number of venture funds raised in China kept falling in 2020, keeping up a trend in place since 2017. In 2013, Asian VCs raised 77 funds worth $4 billion. Those figures rose to 172 funds and $34.2 billion in 2017. And have since fallen to 74 funds and $15.6 billion in 2020.

Parsing India and China individually, India saw rising deal volume as the year closed, along with rebounding dollar results. We’ll have to see what happens in Q1 2021, but the country looks to be entering the new year on good footing.

China is somewhat similar, with dollar volume in venture capital investments rising from Q1 2020 lows throughout the year. But even three quarters’ recovery didn’t push its results up to more than a fraction of its historical highs. And deal volume slipped in Q4 compared to Q3.

Why the Chinese venture capital engine, once so powerful and loud that it started to drown out the United States’ own VC industry, appears to be accelerating back to just the middle of its gearbox is unclear. Perhaps the party really is reining in its capitalistic experiment. If so, India looks poised to take China’s mantle as the leading Asian venture capital scene, I suppose.

Falling seed volume, lots of big rounds. That’s 2020 VC around the world in a nutshell.