Value of venture capital investments in Europe 2021

As of 2021, the UK received the largest amount of venture capital investments in Europe amounting to approximately 35 billion euros. This was over double the amount received generated by Germany which followed in second place receiving roughly 17 billion euros. A relatively stable climate was a contributing factor to the level of venture capital investment generated in the UK. High rates of vaccination during the coronavirus pandemic and a relatively stable business climate emerging post-Brexit provided a somewhat solid economic environment for venture capital firms.

What is venture capital investment?

Venture capital is a form of private equity. During a venture capital investment deal a limited number of investors bought large stakes of a company through a limited partnership deal. Venture capital firms were used to establish these deals. The goal of venture capital investment is to receive high returns in exchange for high-risk investment in a young business. The United Kingdom, Germany, and France have some of the highest numbers of unicorn startups (a company valued at over one billion U.S. dollars) per country in Europe. Revolut and N26 are prime examples of unicorn startups generating funds through venture capital investment.

Why is venture investment relevant?

Startup businesses experience a high fail rate, venture capitalists take on this large risk allowing the potential for new startups to access the resources required to become profitable. Venture capitalists are professional investors with a diversified portfolio of new companies. While the average venture capital investment deal value in Europe has steadily increased over recent years the most popular point of investment has remained a later-stage deal. Companies in this stage have developed a product and proved a viable market opportunity, reducing the investment risk for venture capitalists. Without venture capitalists there is a potential that many successful businesses would not have gained the resources required to grow past the startup stage.