SeedBlink Blog

Growth is a clear indicator of investor’s confidence in the European venture market.

In the second quarter of 2024, VC investment in Europe saw a significant increase from $13.9B in Q1 to $17.8B, according to KPMG. As valuations recover and interest rates decrease, VC deal activity in Europe is on a trajectory to a more positive level, with larger transactions gaining a significant share.

“I think the European fundraising sentiment is more positive because we have a more rational market, and it’s a market that we can understand. [...]

The power law is operating well here, 20% of the companies is creating 80% of returns. Europe continues to have this dynamic of building companies with less capital”

Mentioned Chris Wade, Founding Partner at Isomer Capital, in a recent episode of the EUVC podcast.

Now, let’s dive into the data!

European seed and angel investments in Q2

The seed stage funding increased to $1.8B across 900 rounds, down from $2.3B in Q2 2023.

Source: European Venture Funding by Crunchbase

European early-stage investments in Q2

Early-stage funding totaled $6.5B across more than 300 rounds in Q2, with Series B funding experiencing the largest year-over-year increase at this stage.

Source: European Venture Funding by Crunchbase

European late-stage investments in Q2

Late-stage funding hit $7.5B across over 100 rounds in Q2, according to Crunchbase, showing the most significant quarterly and yearly increases, though not the highest in the past year. Since funding began fluctuating a couple of years ago, quarterly totals have varied, with late-stage funding rising and falling over the past five quarters.

Source: European Venture Funding by Crunchbase

European VC funding in Q2

In Q2 2024, VC investment in Europe went from $13.9B in Q1 to $17.8B.

Source: European Venture Pulse Q2 by KPMG

The increase was driven by substantial mega-deals, including a $1 billion funding round by AI autonomous driving technology company Wayve, a $999.6 million raise by consumer lending platform Abound, a $650.6 million raise by LLM-focused Mistral AI, and a $621M raise by neobank Monzo.

In Germany, VC investment held steady at $2.2B in Q2 2024, featuring notable rounds for AI-driven deeptech DeepL ($300M), chip manufacturer Black Semiconductor ($275M), and satellite launch company Isar Aerospace ($237M). Austria also saw VC investment rise to $283M, its highest since Q1 2022, driven by significant rounds for companies like StoryBlok and enspired.

VC deal activity in Q2

In Q2 2024, European venture capital investment increased by 14% from Q1 and 12% year over year, with European startups raising $15.B, according to Dealroom.

Source: Europe Tech Update – Q2 2024

Venture investments are performing above all previous years except the outlier years of 2021/22 in 2024. In the first half of this year, 1450 rounds and +$2M were raised, which shows that the sector is more active than it used to be before 2021.

Source: Europe Tech Update – Q2 2024

Early-stage European venture capital has shown remarkable stability in recent years, a reassuring sign for the market. Breakout-stage VC has reached its highest level in six quarters, and late-stage investment in Q2 2024 is up year over year, surpassing Q1 levels.

Source: Europe Tech Update – Q2 2024

Top 3 European regions in VC deals

The UK, France, and Germany continue to lead as the top venture-funded countries in Europe, maintaining their strong positions in attracting venture capital in the first quarter of 2024 and Q2.

Source: Europe Tech Update – Q2 2024

Top 3 industries in VC deals

In 2024, Energy was the most funded sector in Europe, continuing its dominance from 2023 when it led funding every quarter. It marks a significant shift, as before 2023, Energy typically ranked behind Fintech, Health, and Enterprise Software in venture.

Source: Europe Tech Update – Q2 2024

In terms of leading sectors in the first half of 2024, Generative AI, Hydrogen, and Electric Mobility are leading the way, according to Dealroom.

Artificial intelligence.

AI remained a hot investment area in Europe during Q2 2024, with investments pouring into companies focused on core AI technologies and those leveraging AI to enhance business models. Germany-based DeepL raised $300 million, while France’s H Company secured $220M.

The broad interest in AI reflects its potential to revolutionize various sectors, from customer experience to product development. This potential makes AI a key focus for VC funding, inspiring innovation, and growth in the market.

Additionally, the regulatory environment is evolving, with the Council of the EU approving the AI Act, the first global effort to harmonize AI regulations.

Energy & CleanTech.

VC investors continue to look for alternative energy and cleantech in Europe. In Q2'24, notable funding rounds included $381.9M for UK-based energy storage company Highview Power, $168M for Estonia-based hydrogen company Elcogen, and $152M for Netherlands-based hydrogen startup Tree Energy Solutions.

The EU's Carbon Sustainability Reporting Directive (CSRD) and other evolving sustainability regulations and climate change commitments have also driven interest in RegTechs focused on the sustainability space. These regulatory pressures push larger companies to report on their sustainability metrics, making this sector increasingly attractive to investors.

However, while we are happy and optimistic about seeing the fundraising process moving toward a more positive trend, we must remember that we are only moving on to the year's first half. So, we don’t have much market visibility if the trends continue by the end of the year!

We recommend you watch these market reports every quarter and one on our blog, as we publish a summary of the most important trends every three months.

Expectations for H2 of 2024

European VC fundraising in 2024 is on track to decrease by 13.1% year-over-year, potentially dropping from €21.7B in 2023 to a lower figure, according to Pitchbook. As of the first half of 2024, €9.4B has been raised, leaving a significant €12.3B gap to match last year's total.

Source: European Venture Report Q2 2024

The top 20 open VC funds already amount to €15.6 billion, suggesting that if these funds close as expected, with additional contributions from smaller funds, the overall fundraising levels could match those of 2023.

Source: European Venture Report Q2 2024

As we move into the second half of 2024, there is a growing sense of optimism, especially around sectors like AI, Energy, and CleanTech, according to KPMG.

The IPO market in Europe could see new activity in Q3 2024 as more companies regain confidence in the current market conditions beginning to look optimal for a listing starting Q2, according to EY.

Source: EY Global IPO Trends Q2 2024

However, there is also a feeling of uncertainty due to the presidential elections in different European countries and the US, which, in some cases, are most likely to make investors cautious.

Additionally, the upcoming compliance deadline for the EU's Digital Operational Resilience Act (DORA) on January 17, 2025, is expected to drive increased interest in regtech companies. As a result, we anticipate a surge in investments aimed at regtech solutions that assist companies in meeting these new regulatory requirements, highlighting the ongoing importance of regulatory technology in the evolving financial landscape.

Find the right investor and financing vehicle for your round

If you want to connect with these investors or check out other active investors in the region, check out the European VC Network list covering venture capital funds from SEE, DACH, Benelux, and others.

At the same time, we strongly encourage you to consider more flexible funding options for your next round, such as SeedBlink's syndicate infrastructure with its rolling facility.