2023 to be Europe’s ‘most depressed’ year for VC exit value in a decade

Amid the economic downturn, 2023 is expected to be the “most depressed” year in Europe’s VC exit value since 2013, data from Pitchbook has shown.

According to the report, during the first three quarters of 2023, exit value reached €9.1bn — down 72.8% compared to the same period in 2022. Unsurprisingly, public listing value continued its downward trend, seeing a 79.8% drop. Meanwhile, buyout exit value showed the biggest resilience, although it also declined by 56.4% compared to last year.

Against this backdrop, IT hardware was the most resilient sector in exit activity, while energy saw the biggest decline. Software remained the largest sector among the pack, but its exit value did drop 69.3% compared to the first three quarters of 2022. Still, software alongside biotech & pharma generated most of the value in Q3 2023. The biggest exit was the €1.2bn acquisition of Kerecis, an Icelandic biotech startup that uses fish skin to treat wounds.

VC fundraising continues to struggle

In the first nine months of 2023, the VC capital raised amounted to €13.9bn — about half of the €27.6bn invested for the full 2022. While there has been an upward trend since H1 2023, Pitchbook’s analysts don’t expect this year’s total fundraising to exceed 2022 levels.

Region-wise, France & Benelux and the DACH countries (Germany, Austria, and Switzerland) raised the biggest share of capital through Q3 2023 compared to 2022 — reaching 27.8% and 24.3%, respectively. This was achieved thanks to a number of large closes in the Netherlands: NATO’s Innovation Fund’s €1bn close and Forbion Venture Fund VI’s €750mn close.

Cause for hope?

Although VC deal value is set to end 2023 well below 2022 levels, signs of recovery “could be evident.” According to the report, while VC activity in the first three quarters of this year didn’t match the peak levels of 2021 and 2022, it did echo prior-to-2020 levels, which could indicate structural growth in the long term. Nevertheless, it remains to be seen whether Europe’s unclear macroeconomic environment can sustain market recovery.