July 17, 2023

Europe’s CVC wave dips as corporates feel the pinch

CVC investment into European startups has fallen sharply in 2023

Last month, French energy firm TotalEnergies announced it had sold off its entire CVC portfolio, TotalEnergies Ventures, which it had been investing with since 2008. 

It was a move that confused many — TotalEnergies has got deeper pockets than perhaps ever before thanks to record profits last year and interest in the sector it was investing in, climate tech, is red hot. 

But the decision — which the company didn't want to comment on — is emblematic of a wider trend of falling CVC investment into startups. Globally, there were 12,597 venture deals which included CVC money in 2022 (down from 13,570 in 2021), according to data from PitchBook. 


From January to July 10 this year, there have been just 4,335 CVC deals — if the second half of the year follows a similar pace, 2023 will see a global CVC dealflow drop of about 30% on 2022. 

European CVC investment mirrors the worldwide trend closely, with 977 deals and $12.5bn invested up until early July, compared to 2,741 deals and $49.5bn last year. 

'They went bananas'

Olav Ostin, founder of TempoCap, a firm specialised in startup secondaries, says the decline should be contextualised within the huge hike of CVC investing across the last decade.

“In the seven years to 2021, CVCs multiplied by 10x their investment in the asset class,” says Ostin. “They just went bananas on the asset class, which no one expected.” In Q1 2022 they continued to be very aggressive, he says, but have since pulled back sharply amid the larger market decline. 

Budget strains

The recessionary environment won’t be the only factor, Ostin says, but it will play a part. “Normally every five to seven years they will sell,” he says. “The first reason is that the corporate needs some cash. If we have a recession, they’ll look at selling.”

Alberto Onetti, chairman of Mind the Bridge, an open innovation consultancy, says the current economic climate will have an impact on how much money corporates decide to give their venture arms.

“Corporates typically have a one-year delay in reacting,” Onetti says. “Now they’re probably doing the planning for 2024. Some CVCs are probably slowing down or minimising the budget allocations.” 

Shedding assets

Ostin’s firm, TempoCap, used to see one CVC portfolio a month go up for grabs as secondaries. He now says he’s seeing four to six each month.

Hélène Maxwell from Aster Capital, a VC firm focusing on CVC secondaries and the buyer of Total Energies’ portfolio, says she’s seeing a similar phenomenon, with an uptick in CVC secondaries available to firms like hers. 

For Maxwell, the sluggish macroeconomic situation is one factor — but, she says, CVCs are always “fragile” because they’re at the whim of management. If a new CEO comes into a company and decides it's not a strategic priority, the venture arm’s future is in doubt.


“CVCs are questioning whether they should carry on with their activities,” she says. “There are different reasons for this. It’s often about misalignment with internal expectations, and sometimes it’s decisions from the CEO.”

With more CVCs looking to shed their assets, there are concerns that the number of VC firms willing to gobble up their portfolio stakes could be limited.

“I can imagine that most of these portfolios are not going to transact and that companies [selling CVC portfolios] are going to have to find an intermediary solution for one or two years, like trying to sell the companies one by one,” says Ostin.

That would put some pressure on the companies themselves, he says, because “they’ll have some deadwood as shareholders”.

Larger tickets

Another factor, Onetti says, is the maturity of the CVC industry as a whole. “There is a mega trend that 10 years ago, there were very few pioneers investing into stuff and now it’s becoming definitely more mainstream,” he says.

It’s led to increasingly large funds in the market. “Startup investing is becoming a place for larger bets that requires a lot of capital, a lot of dry power. And consequently, CVCs that want to play the game need to play with the same weapons,” Onetti says. 

He stresses the importance of distinguishing between different types of CVCs — particularly between listed and private companies.

“Listed public companies are obviously under more scrutiny," he says, meaning they're perhaps more likely to make more drastic moves to free up capital for shareholders. 

The golden era of CVC?

Despite the downtick in CVC deals, Onetti says we’re still very much in a golden era of CVC, compared to 10 years ago. “CVC is super hot as a topic but it's becoming a bit more selective and corporates are trying to understand how to do that in a way they can afford.”

Maxwell agrees — and says that, despite the reconsideration from some multinationals, there’s a bubbling ecosystem of smaller corporates entering the game.

“The first wave was big corporates,” she says. “Then there was another wave, which was where the smaller companies, which were investing off their balance sheets, started just setting up their own CVCs.”

Freya Pratty

Freya Pratty is a senior reporter at Sifted. She covers climate tech, writes our weekly Climate Tech newsletter and works on investigations. Follow her on Twitter and LinkedIn

Eleanor Warnock

Eleanor Warnock is Sifted’s deputy editor and cohost of Startup Europe — The Sifted Podcast. Find her on Twitter and LinkedIn