Welcome to Venture Pulse Q4 - quarterly report highlighting the key trends and opportunities facing the venture capital market globally.
The Nordic VC investments hit its record with over $4 billion during 2019. The data, compiled by PitchBook, shows a whopping 86% increase in the amount of money invested in the Nordic growth companies during 2019 compared to 2018 (7% growth in between 2017-2018). There were 595 completed VC investments during 2019 (589 in 2018), pointing clearly the impact of growing number of larger rounds and the increase of international and CVC activity on late-stage rounds.
Top Nordic Deals 2019
Northvolt - $1,000m (Q2)
Klarna- $460m (Q3)
Relex- $200m (Q1)
Wolt - $130m (Q2)
Voi Technology - $85m (Q4)
Aprea Therapeutics - $64m (Q1)
Pleo - $56m (Q2)
Bynk- $56m (Q1)
Trustpilot- $55m (Q1)
ePassi Payments- $48m (Q3)
Quarterly statistics show that Q4 (and H2) was significantly slower in terms of mega-rounds and number of deals. However, there is a record number of dry powder in the market after raises of several new venture funds during the year-end including EQT Ventures ($740m), Northzone ($560m) and Lifeline Ventures ($135m), and more on its way.
We can also expect to see large volumes of international investments continuing to find its way to the regions maturing local ecosystems if the overall economic and political environment stays comfortable. Below the later-stage the Nordics has a steady flow of A and B rounds c. “tens of millions”.
Volumes in 2019
Q1: $1 000m in 233 deals
Q2: $822m in 192 deals (+ Northvolt $1 billion corporate round)
Q3: $935m in 100 deals
Q4: $458m in 70 deals
In Europe we saw incredible record-breaking year of VC investment throughout Q4’19 with diversity and innovation ecosystems and six countries accounting for the top ten deals in the region. The strength and resilience of Europe’s VC market is particularly notable considering number of challenges plaguing the region, such as the ongoing Brexit uncertainty, general election in the UK and challenges in German economy. Despite the demanding environment in the UK and a breather in Q4’19, the total VC market for the year remained robust with investors’ interest particularly in the financial services, biotech and healthcare sectors.
VC investment across Europe is expected to remain strong well into 2020, while exits will likely come primarily from M&A rather than IPO’s as per historic trends. Should there be more certainty in early 2020, there could be significant amount of capital deployed quickly in the UK. In addition the startup ecosystem in France continued to grow and broaden and we see the trend continuing strongly in 2020.
Despite a decline in the number of deals, VC investment globally remained strong in Q4’19. While 2019’s total VC investment fell sharply compared to 2018’s, it remained significantly higher than all previous years.
As a result of several disappointing IPO results for large consumer-focused technology companies, VC investors have grown more cautious with their funding, increasing their scrutiny of corporate business models and expected profitability.
The record number of unicorn births in 2019 was not limited to key VC markets like US, UK, Germany etc, but we saw also companies from Europe gaining unicorn status with a new record of 18 unicorns in 2019.
Looking ahead to 2020, political and economic uncertainty is expected to remain high in several regions as a result of Brexit concerns, the continued US-China trade war and number of localized challenges in jurisdictions.
VC investment across Europe is expected to remain strong well into 2020 and while the IPO market may see some increased activity, M&A and the trend to stay private longer, will likely continue to dominate. Late stage deals with a focus on companies who have strong business fundamentals and sustainable global growth models will continue to lead the way.
Fintech, health, B2B Services, AI and biotech are expected to continue to attract large volumes of investment whilst logistics, education, and ecommerce are all expected to remain hot areas of growth. Deep technology innovation is an area which is gaining momentum with investors from Asia in particular, even at early stage deal levels.
Corporate VC investment is also expected to remain robust, with a continued focus on investments to support fundamental market shifts in industries as diverse as energy, healthcare and media.
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