The number of active VCs in Europe has dropped off from its peak in 2022, as exits slow, LPs wait for liquidity and startups have sought profitability over growth at all costs.
The count of European VCs involved in at least one deal in Europe per year has dropped about 30% from 5,704 in 2022 to 4,044 in 2024, according to data from PitchBook provided to Sifted.
“What we’re seeing is that the big brand VCs continue to remain in the market and continue to do deals, but… newer funds which entered the market more recently have partially stopped doing investments,” says Jan Miczaika, partner at multi-stage VC HV Capital.
Across the board, European VC fundraising has fallen in recent years. European VCs raised roughly €21bn in 2024, down from €34bn in 2022, according to PitchBook data.
More zombies?
In 2024, deal-making proved tough for VCs as a “flight to quality” took hold in the ecosystem, with many VCs preferring to write big cheques into a select few companies.
That trend’s bound to continue in 2025, says Miczaika. “We’ve seen a number of funding rounds in our portfolio, as well as companies we want to invest in, become very dynamic — where you’ll see five, six, seven term sheets on the table,” he says. “But this is, unfortunately for entrepreneurs, a very limited subset of the market where everyone gets very excited about individual assets.”
Some VCs have slowed deployment, while others may have become ‘zombie’ firms: still managing funds raised and looking after portfolio companies, but not actively doing deals.
Still, not everyone is convinced the zombie fund apocalypse is here yet. “Are there a few anecdotal examples? For sure. Is it a major trend? I'm not seeing it,” Joe Schorge, founder and managing partner of Isomer Capital, which is an LP in many European VCs like Seedcamp and Entrepreneur First, tells Sifted.
But the data may be murky, he points out: “There's always a press release about the new fund, the first close, whatever; there is never a press release about the, 'We can't raise it, we're shutting down.' It plays out over multi-years.” One rare example he points to is Stride VC founder Fred Destin’s LinkedIn post in late 2023, announcing that the firm wouldn’t raise its third fund and that it would let go of partners.
Schorge says he met a VC recently who decided to nix their newest fund after falling short on their fundraising efforts — and they’re likely not the only one.
Many more VCs may be finding themselves in that ‘we can’t raise’ position in the future, especially as LPs like Isomer grow impatient waiting for returns due to a lack of exits. “In some cases, yeah, we're having some tough conversations right now: [Telling fund managers] ‘we've invested in four of your funds, and we don't have any money back’,” says Schorge.
“The middle will struggle”
There’s been a lot of chatter recently about how the VC market will eventually bifurcate into small, specialised firms and big firms with multiple partners and increasingly numerous (and large) funds (like London-based Balderton, which raised its largest-ever pair of funds last year, totaling $1.3bn). Miczaika thinks it will be the mid-sized firms of between €100-300m that will “have issues.” It’s a sentiment echoed by Oliver Holle, CEO and managing partner of early-stage VC Speedinvest in a recent interview with Sifted.
“I believe you will have institutional investors who look for established brands, track record, a certain amount of safety, and then, on the other hand, solo GPs or small structures that can be more exciting, more volatile, (and provide) more outsized returns, which takes a certain appetite for risk,” adds Miczaika.
The VC industry at large is seeing a shakeup. Some firms are grappling with the topic of succession: Austrian VC firm Speedinvest recently re-jigged its management team, and HV Capital promoted a series of investors within the firm. Other firms are seeing partners leave: longtime Sequoia Capital partner Matt Miller left the firm with plans to start his own Europe-focused fund; Berlin-based VC Cavalry Ventures saw three partners depart in 2024; and the NATO Innovation Fund’s managing and founding partners left a few months apart last year.
“I think the industry is just kind of reconfiguring itself,” says Miczaika.
