Venture capitalists fell in love with Europe last year

What comes next?

Amid this long-lasting startup era, 2021 may go down as the peak venture capital year.

When The Exchange looked at global data for venture capital activity in 2021, we used words like “bonkers” and “record-setting.” Those might have been a little modest when we compare just how much the venture asset class has grown from comparatively humble beginnings. To put it into perspective, per CB Insights 2021 data, venture capital activity around the world was up around 4x since 2016, and 2021 more than doubled 2020’s record-setting result of just under $300 billion in total activity. Last year saw more than $620 billion invested in venture rounds, the data provider reports.

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Given how large the European venture capital scene has grown, it’s not surprising that its 2021 was similarly remarkable. But just how good?

Pulling from CB Insights, EY and PitchBook, today we’re exploring a year of superlatives in the European startup scene, both from a regional perspective and, in a number of cases, from a per-country view.

Today our goal is simply to get our heads around just how much money European startups raised last year, and how big an aberration those results are in historical terms.

Later in the week, we’ll explore what’s ahead for startups in the region. In short, we want to know how recent market gyrations may or may not impact how VCs fundraise and how capital disbursement may shift in 2022 as public-market valuations slip and the IPO window seems to be closing amid market volatility giving companies jitters about making a big debut.

Can the good times continue? Before we can answer that, we need to know just how great the last four quarters were for European startups. Let’s talk about it.

Europe’s 2021 in VC

Europe had a monster 2021. Capital invested reached all-time highs. Deal volume reached all-time highs. Exits reached all-time highs. The market was firing on all cylinders.

Per PitchBook’s European data set, there were 10,583 venture deals in Europe last year worth €102.9 billion. Of those, some 2,865 deals were first-time venture financings worth €9.9 billion. Those figures were up from €3.6 billion and 2,457 deals in 2020.

Follow-on rounds took up the rest of the capital and deal volume, but we highlight the first-financing number as indicative of venture investment in Europe’s future unicorns and IPOs; the capital invested on the continent today is not merely going to super late-stage rounds.