April 14, 2023

Just 9% of European VC deals make the coveted 10x return on investment

A new report on the practices of European VCs also reveals that only 7% of startups IPO and VCs based in less mature markets see better returns

Amy Lewin

3 min read

Less than 10% of the deals that VCs see result in an investment, only 7% of startups IPO and VCs based in less mature markets see better returns. They're just some of the findings in a new — and very comprehensive — report on the practices of European VCs. 

It’s been compiled by a group of researchers from European business schools and universities, and is based on responses from 885 European VCs.

Their firms have an average fund size of €100m, 60% are focused on early-stage investments and 75% are independent (ie. not corporate, government or family office investors). 20% of respondents are based in France, 13% in Germany, and 10% each in Spain and Sweden. 


Here are some of the findings that caught our eye. 

Just 6% of startup pitches to VCs result in investment

VCs receive an average of 851 investment proposals a year. Only 6% of proposals received get investment.

To break that down further: VCs meet on average 37% of founders that pitch to them. 20% of deals they see end up at their investment committee, and 12% go through due diligence. 8% of founders seeking funding are offered term sheets, and 6% ultimately do a deal with the VC. 

Want to increase your likelihood of landing funding? Pitch to the public sector: founders are more likely to close a deal with a government VC than an independent VC. 

Only 7% of startup exits are via IPO

Most startups (40%) exit via trade sales. Just 7% list on public markets. 

Northern European startups are the most likely to IPO (9%), while central and eastern European startups are the least likely (5%). 

45% of investments fail

45% of investments fail, or don’t achieve more than a 2x return on investment.

25% of investments make a 2-5x return. Only 9% of deals return 10x or above on invested capital.

Government VCs have higher failure rates (33%) and lower exit multiples than other kinds of VCs. They aren’t, however, as focused on financial returns as some other kinds of investors. 78% of government VCs say their investments have achieved a key objective — creating jobs — and 77% have led to economic growth in a specific region or sector. 

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VC funds based in less mature markets have better returns

VCs based in less mature markets — which the report considers to be Italy, Norway, Portugal, Poland and most other eastern European markets — are the most likely to get a 10x return on investment (13%). They are also the most likely to get a 0-2x return on investment, however (27%). 

The average net IRR (internal rate of return) for European VCs that raise funds is 13% (averaged out across three funds). The highest average IRR was for VCs in the lowest-maturity European markets.

83% of VCs help their portfolio companies raise follow-on financing

The report also confirmed that when VCs say they provide support to portfolio companies, they’re doing the same thing as basically everyone.

85% of independent VCs help their portfolio companies raise follow-on financing and provide strategic guidance. Early-stage VCs do the most work on follow-on funding (85%).

76% of independent VCs ask for a seat on the board. 

96% of VCs think the management team is a key factor in a startup’s success

A third of VCs also think that good luck is an important factor, while 56% say that timing plays a big role in whether a startup makes it. 


Just 12% of VCs think that investors’ contributions play a meaningful role in the success of a startup, and just 22% think that the board of directors is especially important. 

Amy Lewin

Amy Lewin is Sifted’s editor and cohost of Startup Europe — The Sifted Podcast , and writes Up Round, a weekly newsletter on VC. Follow her on Twitter and LinkedIn