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With a solid Q4’19, Europe cemented its incredible record-breaking year of VC investment. The strength and resilience of Europe’s VC market is particularly notable given a number of challenges plaguing the region – including the ongoing Brexit uncertainty, a Q4’19 general election in the UK, economic challenges in Germany and other localized issues in different European jurisdictions.

The VC market across Europe continued to grow and expand throughout Q4’19, led bya $575 million raise by Deliveroo, a $290 million raise by Germany-based business productivity company Celonis, a $276 million raise by Netherlands-based online retailer Picnic, and a $268 million raise by UK fintech company Hastee. The breadth and diversity of Europe’s VC market and growing innovation ecosystems continued to be on display this quarter, with six countries accounting for the top ten deals in the region.

Average deal sizes increased across much of Europe throughout the year, with startups in maturing jurisdictions like Lithuania (Vinted) and France (Algolia) able to attract $100 million+ megarounds. As ecosystems have evolved and companies have attracted later rounds of investment, the VC market has also become increasingly attractive to a broader array of global investors.

Trends to watch for in Europe

VC investment across Europe is expected to remain strong well into 2020, while exits will likely come primarily from M&A rather than IPOs as per historic trends.

The large amount of dry powder UK investors have in their pockets suggests that there could be a significant amount of capital deployed quickly in the country should the outcome of the December general election result in more certainty in early 2020 – regardless of the actual Brexit outcome.

VC investment in France is only expected to grow heading into 2020, with health and biotech continuing to be hot in the eyes of VC investors. VC investment is also expected to remain very strong in Israel in 2020. Over the next year, Japan is expected to become a significant source of Israel-based investment, with a number of Japanese corporates looking to set up their R&D offices in the country.

Venture financing in the Europe 2012-Q4'19
Venture Pulse Q4'19 - Europe quote by Tim Kay
Venture Pulse Q4'19 - Europe infographic