Market Insights Financial Capital Raising Traditional Capital Raising

Venture Debt - Europe

Europe

The country in Europe is projected to raise a Total Capital of US$4.5bn in the Venture Debt market market by 2024.
Traditional Venture Debt is expected to lead the market with a projected volume of US$4.1bn in 2024.
When compared globally, the United States is set to generate the highest Capital Raised (US$31,850.0m in 2024).
In Europe, the Venture Debt market is gaining traction as an alternative source of capital for startups amidst uncertain economic conditions.

Key regions: India, United Kingdom, China, Europe, Israel

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Analyst Opinion

The Venture Debt market in Europe has been experiencing significant growth in recent years.

Customer preferences: One of the main reasons for this growth is the increasing preference among European entrepreneurs for alternative financing options. While traditional bank loans have been the go-to source of funding for many years, entrepreneurs are now exploring other avenues to raise capital. Venture debt offers a unique solution to this problem, as it allows entrepreneurs to access additional capital without diluting their ownership stake in the company. This is particularly attractive to entrepreneurs who want to maintain control over their business and are looking for a more flexible financing option.

Trends in the market: Another trend driving the growth of the Venture Debt market in Europe is the increasing number of startups in the region. Europe has seen a surge in entrepreneurial activity in recent years, with many startups emerging in various industries. These startups often require additional funding to fuel their growth, and venture debt provides a viable solution. As a result, venture debt providers have seen an increase in demand for their services, leading to the expansion of the market.

Local special circumstances: Furthermore, Europe has a well-established ecosystem for startups, with numerous incubators, accelerators, and venture capital firms supporting the growth of these companies. This ecosystem provides a conducive environment for startups to thrive and attracts entrepreneurs from all over the world. The availability of venture debt in Europe adds to the attractiveness of the region for startups, as it provides an additional source of funding that complements traditional venture capital.

Underlying macroeconomic factors: The macroeconomic factors in Europe also contribute to the growth of the Venture Debt market. The low-interest-rate environment in the region makes venture debt an attractive option for both entrepreneurs and investors. With interest rates at historic lows, entrepreneurs can access capital at relatively low costs, while investors can earn higher returns compared to traditional fixed-income investments. Additionally, the supportive regulatory environment in Europe encourages the growth of the venture debt market by providing a framework that allows for the efficient deployment of capital. In conclusion, the Venture Debt market in Europe is experiencing significant growth due to the increasing preference for alternative financing options among entrepreneurs, the surge in startup activity in the region, the well-established ecosystem for startups, and the favorable macroeconomic factors. As the market continues to evolve, it is expected that venture debt will play an increasingly important role in the funding landscape for European startups.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.