EUVC Newsletter 21.04.24 | From sandboxes to castles and Europe, the Phoenix, soars on megaround wings
Join us as we digest the week's news in European VC 📰
This week, European venture capital experienced fluctuations across sectors, indicating a cautious but active market. While some sectors like AI and healthcare continue to attract significant investments, others face challenges due to economic uncertainty and regulatory changes. But before diving in, let’s welcome 23 LPs, VCs & Angels who have subscribed since our last newsletter. Join the 23,345 that do & share it with your besties.
Fund Modelling Workshop: Assumption Sheet Construction
This advanced session guides you through creating a VC fund model assumptions sheet, focusing on Core Assumptions, Asset Development, and Equity Valuation Dynamics. Receive a template a week before, and learn how these assumptions influence fund performance based on your registration details.
Highlights
This week we saw signals of a rejuvenated European VC landscape, with strong activity in climate tech, a resurgence in late-stage funding, and significant participation from institutional investors.
🌍 Broad Recovery Signs: Despite a previous slump, early 2024 indicators suggest a robust recovery in the European late-stage funding scene, with significant contributions from both equity and debt instruments.
📈 Market Dynamics Shift: The European VC market is experiencing a strategic shift towards more mature, growth-stage companies. Could it be driven by more attractive valuations and a higher potential for successful exits 🤔?
🇪🇺 European Megarounds Surge: Q1 2024 witnessed an unprecedented volume of "megarounds" in the European VC market, marked by 42 deals each over $100 million, doubling from the previous year. Climate tech startups were at the forefront, with notable rounds like Northvolt's $5 billion debt financing.
🚀 Startup Ecosystem Vibrancy: The substantial number of deals - 1,453 in Q1- reflects a vibrant startup ecosystem in Europe, with a healthy mix of new entrants and scaling businesses seeking capital.
🇺🇸 U.S. Funding Crunch: The challenging funding environment in the U.S. showcases over 55,000 VC-backed startups vying for limited capital, with a significant number of VCs pausing new investments. This competitive landscape is prompting a shift towards bootstrapped growth strategies among new founders and pushing companies to consider early acquisitions.
🔮 Emerging Tech Investment Shifts: In 2023, investment in emerging technologies like Generative AI, Electric Vehicles, and NFTs totalled $57.5 billion across 3,202 deals, despite a year-on-year decline in both capital and deal volume. This trend underscores the sustained investor interest in sectors poised for transformative growth.
We're determined to create a community for investors tapping into the vast potential of Europe. LP investments underpin our approach, offering access to European tech at scale.
As a member you get:
🌟 Curated investment opportunities, including access-constrained deals.
🤝 Privileged connections with inspiring people in the industry, building strong networks and relationships across Europe.
🔍 Proprietary insights into cutting-edge tech and emerging markets.
📖 Access to best practices, skill development, and valuable insights to enhance your investment expertise.
💸 Exposure and access to the asset class we all love - Venture Capital.
And the best part? You get all of this for FREE, as long as you remain an active and engaged member.
Today’s Shoutout: a bank you can build on
Banking on green and growth! Talk about raising the BaaS!
Griffin, a UK-based Banking-as-a-Service (BaaS) fintech, has recently transitioned to a fully operational bank status while securing an additional $24 million in funding. This recent funding round brings Griffin's total capital raised to approximately $39 million. The investment was contributed by a combination of new investors such as MassMutual Ventures and NordicNinja, along with previous backers including Notion Capital and EQT Ventures. The funds are earmarked for meeting regulatory capital requirements essential for the newly obtained bank status and for expanding service offerings to their clients.
Griffin's commitment to sustainability is notably underscored by their investment choices and internal practices. The involvement of EU Article 8 funds, NordicNinja and Breega, indicates a focus on investments that promote environmental or social characteristics, aligning with broader "light green" investment strategies. Furthermore, Griffin has appointed a dedicated sustainability manager to oversee and integrate sustainable practices within its operations, highlighting a proactive approach to embedding ESG principles in its business model.
The transition to a fully operational bank was marked by the UK financial regulators, the Prudential Regulation Authority (PRA) and the FCA, lifting operational restrictions previously placed on Griffin. This approval not only demonstrates Griffin's compliance with stringent regulatory standards but also reflects the robustness of its operational and risk management frameworks. As a fully licensed bank, Griffin now offers a comprehensive suite of BaaS functionalities including access to the UK's payment rails, bank accounts, debit cards, and advanced client onboarding processes. This capability allows Griffin to tailor its offerings either as a complete package or in a modular fashion, catering to specific needs such as financial crime prevention tools.
Griffin’s evolution from a startup with restricted operational capabilities to a fully licensed bank with a strong sustainability agenda positions it uniquely in the competitive BaaS landscape.
By integrating banking services into non-bank businesses, Griffin not only expands its market reach but also enhances its appeal to potential clients looking for comprehensive, compliant, and sustainable financial solutions. This strategic positioning, supported by significant capital infusion and regulatory endorsements, sets Griffin up for potential growth and expansion in the fintech sector, particularly within the UK market.
As Griffin banks on becoming a sustainable fintech force, it's clear they're not just playing in the sandbox anymore—they're building castles!
Did European megarounds just pull a terminator?
Based on Sifted and Dealroom data
Just when you thought they were out, European megarounds thunder back onto the scene, declaring, "I'll be back!"—and this time, they're packing a hefty climate tech arsenal and billion-dollar deals that could make even Skynet jealous. 🤖💰
The first quarter of 2024 marked a notable high in the frequency of megarounds in the European venture capital market, with 42 equity, debt, and grant funding rounds reaching or exceeding $100 million each.
This is the highest count since Q2 2022, representing a substantial increase from the 17 megarounds recorded in the same period last year. The total amount raised through these rounds summed up to €17.4 billion, with €5 billion attributed to equity-based deals.
Climate technology startups prominently dominated these funding rounds, accounting for 43% of the total megarounds. They secured 13 out of the top 20 spots in terms of fundraising amount, highlighting a strong investor focus on sustainability and green technology sectors within Europe.
Germany emerged as the leader in hosting these megarounds, contributing 12 out of the total, followed by Sweden with eight and the UK with six. Noteworthy deals within these countries included a $5 billion debt financing round for Northvolt and a $4.5 billion debt and equity package for H2 Green Steel, indicating strong investor confidence in scalable, sustainable technologies.
The European Investment Bank and Sweden's Kinnevik were among the most active investors during this period, engaging in multiple significant transactions. Their investments primarily targeted innovative solutions in clean energy and technology enhancements, underlining a strategic emphasis on sectors poised for growth and sustainability.
The substantial inflow of capital is not confined to the technology sector alone but spans a diverse range of industries including fintech, e-commerce, and digital infrastructure.
This broad sectoral investment is indicative of a robust and versatile market environment in Europe, capable of sustaining varied investment interests.
The marked increase in both the number and scale of funding rounds in Q1 2024 suggests a 🎉 rejuvenation of the European VC market 🎉, potentially signaling the beginning of a recovery phase. This is particularly significant considering the downturn experienced in late-stage funding during 2023, where there was a 50% decline compared to 2022.
🗓️ The VC Conferences You Can’t Miss
There are some events that just have to be on the calendar. Here’s our list, hit us up if you’re going, we’d love to meet!
0100 Conference CEE 2024 | 📆 14 - 16 May | 🌍 Prague, Czech Republic
SuperVenture | 📆 4 - 6 June | 🌍 Berlin, Germany
Nordic LP Forum & TechBBQ | 📆 September | 🌍 Copenhagen, Denmark
North Star & GITEX Global | 📆 14 - 18 Oct | 🌍 Dubai, UAE
GITEX Europe 2025 | 📆 23 - 25 May 2025 | 🌍 Berlin, Germany
Anything else you’d like me to cover on the newsletter? 👇