The dreaded downround has effectively and really taken maintain throughout European VC in 2023.
In line with a brand new report by PitchBook, 21.3% of raises this yr priced an organization decrease than their earlier spherical — often known as a downround — as median valuations throughout all phases fell on yr. That’s the highest degree since 2014.
Within the frothy days of 2021 and 2022 downrounds made up simply 16.9% and 14.8% of raises, respectively.
Newest phases hardest hit
Europe’s enterprise progress firms — Collection E and past — have been the worst hit by decrease valuations, with median valuation figures for 2023 sitting 26.1% decrease than 2022.
A fast turnaround for enterprise progress valuations isn’t doubtless anytime quickly as rates of interest keep excessive and public markets stay closed, say PitchBook analysts.
Firms at Collection C and D have seen much less of a valuation drop off, with median valuations falling 4.3% this yr.
Unsurprisingly, the unicorn secure is wanting fairly naked this yr.
Simply seven new billion-dollar European startups have been minted within the first three quarters of 2023 — together with AI startups Synthesia and Deeply and monetary crime firm Quantexa — and the overall worth of all unicorns within the area has dropped from €453.8bn on the finish of 2022 to €447.4bn within the first three quarters of 2023, the PitchBook knowledge reveals.
Unicorn deal worth has seen a extra vital dip. In 2023, unicorn raises introduced in simply €3.9bn throughout 34 offers, falling from €22.3bn throughout 88 in 2022.
Valuation crunch catches up with early-stages
The downturn has lastly caught up with valuations on the early phases too — which have been holding agency initially of the yr.
Throughout the primary three quarters of 2023 mixed, median pre-seed, seed and early-stage valuations all dropped from 2022 ranges.
Non-VC traders pull again
2023 has additionally seen non-traditional traders — which PitchBook defines as non-public fairness traders, mutual funds, sovereign wealth funds, hedge funds, companies and household places of work — pull again from the market.
Funding into European tech firms by these traders fell from €82.3bn in 2022 to simply €32.4bn throughout the primary three quarters of this yr.
Quite a few non-traditional traders have additionally pulled again from their investments as LPs, the report says. It’s additionally put the brakes on the fundraising plans of many fund managers — significantly rising ones.
