Q3 2022 Startup Funding Market Data:
The headlines tell us that deal volume is down, but what we’re actually seeing is a ‘reset’ back to fundamentals after 2 years of covid-excesses in the European start-up funding venture capital ecosystem.
The good news is that investors (both venture capital funds and angel investors) are still sitting on billions in ‘dry powder’ (investable cash).
We’ve rounded up some of the Q3 2022 data released over the last few weeks, showing what’s happening in the European start-up and venture capital funding ecosystem:
- Accel Partners “2022 Euroscape” report on the SaaS market found that:
SaaS multiples have dropped back to pre-covid levels:
SaaS multiples are averaging 5.7x in September 2022, versus 6.1x over the 10-year pre-covid period (they topped 18.2x in the covid-peak). All sectors are impacted including payments; e-commerce; productivity; data/analytics; finance; sales; developer and more.
The priority has shifted to profitability:
Investors increasingly expect portfolio companies to achieve profitability faster. This includes a focus on unit economics that fell by the wayside during the period of covid excesses.
Deal values are returning to pre-covid levels:
While the headline figure is down, there is still billions in VC flowing into European companies. Numbers are returning to pre-covid levels.
M&A will continue with $770 billion in dry powder:
Strategic acquirers are attracted to venture by lower (more affordable) valuations and c. $770 billion in dry powder sitting on the sidelines (including an estimated $440 billion from strategic acquirers and $330 billion from private equity software acquirers).
- SaaS multiples have dropped back to pre-covid levels:
- KPMG’s “Venture Pulse Report” found that:
The UK is attractive to American investors:
UK deal volume is down, but the declining value of the pound is likely to make the UK attractive to American investors looking for deals.
- The UK is attractive to American investors:
Crunchbase News found that:
$16 billion was invested in startups in Q3 2022:
Funding for the third quarter in Europe totalled $16 billion, down 44% year over year from $28 billion and down 35% quarter over quarter from $24 billion, per an analysis of Crunchbase data.
$1.6 billion in angel seed funding was announced in Q3 2022:
Accounting for about 10% of total venture capital funding, the value of seed funding in the quarter largely returned to pre-covid levels.
- $16 billion was invested in startups in Q3 2022:
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