February 21, 2024

Exit values plunge as founders, investors dig in for another tough year

Exit options for European startups are largely constrained to M&A as public listing activity reaches a ten year low, new Pitchbook report says

The value of exits for European startups plunged nearly 30% in 2023 amid ongoing macroeconomic uncertainty and a 10-year low in public listings, according to a new report from PitchBook. 

The average exit for startups in 2023 clocked in at €23m, 28.7% lower than in 2022. Those that did occur were driven by acquisitions rather than public listings, the total value of which was  €1.4 billion in 2023, the lowest in 10 years and 90.2% lower than a year earlier. 

For founders, this tougher exit environment means that management teams will have to extend internal cash runways or take on debt or follow-on rounds in order to survive, Navina Rajan, senior EMEA private capital analyst at PitchBook, tells Sifted.


"We think the former is more common, where several high-profile and smaller companies have started cost-cutting processes to scale back overheads, cash burn and increase profitability.

"As often is the case with tougher market environment, we see a consolidation of markets where unprofitable and unsustainable businesses go bankrupt or are bought out. We have seen examples of this and expect more rationalisation could take place. We have also seen an uptick in activity in secondary markets."

The lack of exit opportunities is hitting European unicorns, the report found, with further redundancies expected during 2024. A total of 12 unicorns were minted on the continent last year, six went out of business and two lost their $1bn valuations after funding rounds. 

Downrounds on the up

Downrounds made up 21.3% of total fundraising deals in 2023, up from 14.4% in 2022. Looking forward, analysts predict that an increasing number of startups will need to pursue down rounds in 2024 — and that they will be increasingly reluctant to talk about them. 

Sifted reported in November that fewer companies are raising up rounds and are instead having to settle for rounds with a less favourable reputation, like bridge, flat and downrounds.

Tourist investors flee

Meanwhile, the non-traditional investors that piled into VC in 2021 and early 2022 have continued to flee the market. The report found that non-traditional investors made up 43.5% of total VC funding in 2023, the lowest level since 2015.

The number of corporate venture capital (CVC) investments remained relatively steady, 50.9% in 2023, from 48.8% in 2022, but the year saw a number of major corporations acquiring or partnering with startups in their fields, including Nestlé’s acquisition of Yfood in March and Saab’s partnership with Helsing in September 2023. 

AI caramba

Some of the largest deals in 2023 involved AI companies — Aleph Alpha and Mistral AI both raised €400m or more — while climate tech H2 Green Steel raised €1.5bn.

But the AI hype has not translated into a general increase in valuations for AI startups. 2023 saw only marginal increases in seed and pre-seed valuations, while post Series A valuations halved. When it comes to AI, a rising tide has so far not lifted all boats.

Orlando Crowcroft

Orlando is commissioning editor at Sifted. Follow him on X and LinkedIn