Q3 2023
Summertime sadness
Last updated: 12 Oct 2023
Market 101
European VCs are very different from one another, but they all have one thing in common: they love a good summer holiday. This can often make Q3 a dull(er) quarter, but data from the past three months paints a more nuanced picture.
The point-proving snapshot: a mere 2,000 deals were signed off over the summer — the last time so few were recorded, Mad Max: Fury Road had just hit the movie theatres in late 2015. But actual cash injections were at the highest level in 12 months, with tech bringing in $18.8bn against $19bn from the same quarter last year. An interesting story — one that may suggest a turning of the prolonged VC downturn tide. Alas, a brief look at deal distribution says otherwise.
Megarounds of $100m+ ate up 50% of total injections, inflated by (incredibly) large rounds for high-capex climate infrastructure startups — including H2 Green Steel, Northvolt, Zenobe and Verkor, which racked up $4.8bn between them (or 26% of total funding). Mind you, these deals were a mix of debt-laden convertibles and traditional equity, thus falling outside the traditional VC realm.
Things were much slower at baseline: early-stage funding fell 27.6% — the lowest absolute level since Q1 2018 — with a sharper drop for Series A startups at negative 32.5% from Q2. Matched against the usual makeup of European funding, dips in early-stage cashflows are a disheartening trend, as they had kept a stable pace for a good year up until the summer.
Will things improve in Q4? A look at the past six quarters provides some clues. We know that Q4 has not outperformed Q3 since 2020, and it has only done so a meagre four times since 2012, but there’s little other evidence suggesting it shouldn’t this time around. We also know that the feeling out there is still one of (buzzword alert) “optimised stabilisation”, whereby operators try to make the best of what they find. Either way, Q4 is already seeing some cool rounds coming in — including Brite Payment’s $60m Series A and Habyt’s $42m Series C — and there’ll be more to come soon.
Early stage market map
Key facts
$17.6bn
total VC funding raised in Q3 2022
1,891
companies tracked
3,140
investors tracked
Trends to watch
“Optimised stabilisation” in action
Still eating at the head of the tech table, the UK is a good exemplar of wider trends: 54% of the country’s Q3 funding came from $100m+ rounds, with little movement up to Series A. Elsewhere at the top of the Q3 leaderboard, Germany vacated the podium but maintained some traction at early-stage, while Sweden snatched second place — one of only 13 times another country challenged the top three (UK, Germany and France) since Q1 2012.
France raised the same amount as in Q3 last year, as it narrowly escaped a bad summer by virtue of an €850m Series C for battery maker Verkor, with otherwise poor performance from Series B and below. As for the underdogs: only 10 countries are running on positive growth rates compared to Q3 last year, including Austria (+45.15%), Portugal (+49.7%) and Denmark (+3.31%). But even then, these countries were starting at a relatively low level of activity.
On average terms, the worst performer across the past four quarters was Spain (-17.25%), while the best was Lithuania (+16.33%). The good news? Things are settling, overall: no other country is experiencing major growth diversions in either direction, with most countries trotting along at small positive rates.
Whatever happened to dating?
Sectoral analysis is returning a mixed picture. Since Q3 last year, more than half of all sectors have been growing at positive average rates, including security (+21%), semiconductors (+16.45%) and sportstech (+37.53%); the “steady eddie” sector was B2B software, with a positive 0.48% rate across the year. But some other verticals are losing their grip on the top end.
Europe’s fallen tech ruler, fintech, dropped down to fifth most-funded sector — out of the top three for a second consecutive quarter for the first time since 2016 — leaving the spotlight to energy, transportation, health and B2B software respectively. The worst performer was dating tech, with only $6.7m raised in Q3 2023.
Backing climate (for real)
Never in European tech has there been such high-volume consistency to backing climate-focused startups. The VC playbook is changing here: between carbon capture, nuclear fusion, battery plants and general infrastructure, Europe’s largest rounds are almost exclusively climate-driven and led directly by state banks, pension funds and PE firms.
Look no further than Q3 2023 for hard proof: $7.5bn was raised by climate startups, the most ever by a 53% margin, with the money dividing widely from earlier stages up to Series C.
Tough, tough exit landscape
To investors’ dismay, the exit market is still stagnant with little signs of recovery. Only 187 VC-backed M&As have been tracked in Q3 2023 — the lowest since Q1 2021 — with a few major transactions above $1bn, including SaaS platform LeanIX’s $1.2bn acquisition from SAP (good news for Insight Partners, IRIS, Capnamic and Goldman), and a $1.3bn ticket for healthtech Kerecis.
While it can’t be called a comeback, things looked slightly brighter on the public market side with 20 recorded listings, only six of which were VC-backed — still way off the numbers we saw in bubblier times.
Startups tracked by Sifted
Sifted take
It’s no time for white lies and sugarcoating: Q3 2023 was not a good quarter. Things are still slow, very slow, across the board; disproportionately large rounds have just about saved tech’s face, but slight dips in earlier stages and weak exit markets are not the much-needed signs of recovery the ecosystem was expecting. Again, Q3 is seldom the fastest dog in the race, and it’s rather telling a story of stabilisation for most countries and sectors. That’s the good bit: it’s not the fall that matters, it’s the landing — Europe has survived both and it’s getting ready to rise up again.
Rising stars
British biotech developing “gene silencing” tech to suppress genes associated with certain diseases. It’s backed by Mercia Asset Management, Maven Capital Partners and Calculus Capital among others.
Round
Seed
Valuation
Undisclosed
Date
2023
Size
€3.8m
B2B identification and verification platform backed by Eurazeo and ISAI.
Round
Seed
Valuation
Undisclosed
Date
2023
Size
€3.8m
Offers software that enables consumption-based electricity payments for tenants. Investors include Tiny VC, 468 Capital, Match VC and German footballer Mario Götze.
Round
Seed
Valuation
Undisclosed
Date
2023
Size
€2.7m
This startup offers users help writing emails and other texts in Spanish without errors. It is backed by RiverPark Ventures, Octopus Ventures and Carya Venture Partners.
Round
Seed
Valuation
Undisclosed
Date
2023
Size
€6.5m
Early stage startups to watch
11x
Enterprise Software
€1.8m
€1.8m
-
36h-immo
€1.5m
€1.5m
-
73 Strings
Fintech
€9.1m
€9.1m
-
Animaj
Media
€85m
€80m
-
ARX Landsystem
€1.1m
€1.1m
-
askui
€6m
€4.3m
-
Aviwell
Health,Food
Health Platform,Biotechnology,Innovative Food,Agritech
€7.6m
€2.8m
-
Awell
Health
Health Platform
€6.8m
€4.5m
-
Axoflow
Media
€2.3m
€2.3m
-
beeOLED
Semiconductors
€13.3m
€13.3m
-
Béa Fertility
Health
Medical Devices
€3.8m
€2.9m
-
Borderless
€3m
€3m
-
Cardino
€1m
€1m
-
Cello
€5.4m
€3.1m
-
CergenX
Kids
€1.2m
€1.2m
-
Chemify
Enterprise Software,Chemicals
€43.2m
€43.2m
-
Cikisi
Security
Cloud & Infrastructure
€2.7m
€2.7m
-
Coachbetter
Sports,Home Living
Sport Platform & Application
€3.5m
€2.6m
-
Codee
Enterprise Software
€4.5m
€4.5m
-
ColibrITD
Enterprise Software
€1m
€1m
-
Comand AI
€3m
€3m
-
Communion (Formerly Join Communion)
€3m
€3m
-
Comptek Solutions
Semiconductors
€11.4m
€8m
-
constellr
Food,Space
Agritech
€31m
€17m
-
Continuum Industries
Real Estate
Construction
€13.9m
€9.1m
-
corpus
-
-
-
Correcto.
Education
Learning Tools And Resources
€7.1m
€6.5m
-
CRESCENTA
€1.5m
€1.5m
-
Cycle (formerly GetHenry)
Transportation
Logistics & Delivery,Search,Buy & Rent
€20.8m
€10.3m
-
Datagalaxy
Enterprise Software
€11.3m
€9.1m
-
Dattak
Security,Fintech
Insurance
€18m
€11m
-
DBtune
Enterprise Software
€2.8m
€2.4m
-
Delft Circuits
Semiconductors
€8.3m
€6.3m
-
deskbird
Enterprise Software
€17.9m
€12m
-
DiagRAMS Technologies
Robotics
€2.9m
€1.2m
-
Distil
Legal
€1.8m
€1.3m
-
driveblocks
Transportation
€2.2m
€2.2m
-
Egonym
-
-
-
Embla
Health
Medical Devices,Health Platform
€13.5m
€10m
-
Enzai
Legal
€3.6m
€3.6m
-
Exeliom Biosciences
Health
Biotechnology
€22.3m
€8m
-
Fairlyne
Marketing
€2.7m
€2.7m
-
Fernride
Transportation
Logistics & Delivery,Autonomous & Sensor Tech
€63.4m
€17.8m
-
FINE Legal
Fintech
-
-
-
finres
€4.1m
€4.1m
-
Fipto
Fintech
Crypto And Defi
€15m
€15m
-
fxhash
Media
€4.5m
€4.5m
-
Gaia Tech
Food,Energy
Waste Solution,Agritech
€400k
€400k
-
Gensensor
Health
€2m
€2m
-
Gradient Denervation Technologies
Health
Biotechnology,Medical Devices
€17.5m
€14m
-
Greenscope
€1m
€1m
-
Hive Power
Energy
Energy Efficiency,Clean Energy
€920k
€440k
-
Hologate
Gaming
€8.3m
€8.3m
-
Hubflo
€2m
€2m
-
Immersive Fox
Media
Content Production
€3.3m
€3.3m
-
inContAlert
Health
Medical Devices
€2.5m
€1.5m
-
INVERTO
Food,Robotics
Agritech
€130k
€130k
-
Iventis
Telecom,Enterprise Software
€2.6m
€1.8m
-
Ivy
Fashion
€25.2m
€18.2m
-
Kayna
Fintech
Insurance
€1m
€1m
-
Kenjo
Jobs Recruitment
€15.6m
€8.8m
-
Kenko
€1.3m
€1.3m
-
Kinnu
Education
€8.1m
€5.9m
-
Kuano
Health
Pharmaceutical,Biotechnology
€5.9m
€2.2m
-
Lindus Health
Health
Health Platform
€21.5m
€16.4m
-
Magic
Sports
€2.3m
€2.3m
-
Malo
Health,Kids
Medical Devices,Health Platform
€2.5m
€920k
-
Materials Nexus
Energy
€2.4m
€2.4m
-
Measurlabs
Health
€2.5m
€2.5m
-
memtime
Enterprise Software
€1m
€1m
-
Metaloop
€15.4m
€15.4m
-
Metroc
Real Estate,Marketing
Real Estate Software,Crm & Sales
€2m
€2m
-
Micron Agritech
Health,Enterprise Software
€4.9m
€2.7m
-
Mimbi
€1.5m
€1.5m
-
Mindgard
Security
€3.6m
€3.6m
-
Mironid
Health
Health Platform,Pharmaceutical
€15.4m
€9.4m
-
Mjuk
Home Living
€7.5m
€2m
-
Mob-Energy
Energy
Energy Providers,Clean Energy
€12.1m
€10m
-
Neko Health
Health
Medical Devices,Health Platform
€60m
€60m
-
Netspeak Games
Gaming
Console & Pc Gaming
€11.1m
€10.9m
-
Ondorse
Fintech
Regtech
€2.4m
€3.8m
-
Openvolt
Energy
Energy Efficiency
€1.5m
€1.5m
-
Opna
Fintech
€5.9m
€5.9m
-
Ostrom
Energy
Clean Energy
€21.2m
€7.5m
-
Peroptyx
Enterprise Software
€3.6m
€3.6m
-
Phasecraft (Formerly Phaseworks)
Enterprise Software
€20.9m
€15.6m
-
Polar Analytics
-
€8.2m
-
Polar Analytics
Marketing,Enterprise Software
€9.4m
€8.2m
-
Pollen robotics
Home Living,Robotics
€2.5m
€2.4m
-
Prolific
Education
€30.3m
€29.1m
-
Puraffinity
Energy
Water,Waste Solution
€17.2m
€12.6m
-
Quazel
€1.4m
€1.4m
-
Quench.AI (Formerly NewMN)
Media,Education
Learning Tools And Resources,Content Production,Social Media
€5.4m
€4.5m
-
Rayon SAS
€1.8m
€1.8m
-
ReCatalyst
Energy
€1.7m
€1.7m
-
Recruitroo
€1m
€1m
-
REEV
Health
€4.5m
€3m
-
Refluenced
Marketing
€500k
€500k
-
ReOrbit
Robotics,Space
€6.7m
€6.7m
-
River BioMedics
Health
Biotechnology
€3.8m
€2m
-
RoomPriceGenie
Travel
€3.1m
€170k
-
Saeki Robotics
Robotics
€2.1m
€2.1m
-
Scoreplay
Sports
Sport Media
€5.5m
€4.5m
-
SeaBeLife
Health
€2.6m
€1.2m
-
sewts
Fashion,Robotics
€8m
€7m
-
Shop Circle
Marketing,Enterprise Software
Ecommerce Solutions
€109.1m
€109.1m
-
Sonio
Health
Health Platform
€20.2m
€12.7m
-
SorareData
€2.5m
€2m
-
Spot My Energy
€1.6m
€1.6m
-
Staff & Go
€900k
€900k
-
Starcart
Consumer Electronics
€4.9m
€3.5m
-
Statinf
Security
€500k
€500k
-
Stayrai
€1.2m
€1.2m
-
Stokelp
Food
Agritech
€3.5m
€3m
-
StreamForge
Media
Social Media
€1.1m
€1.1m
-
Strise
Marketing,Enterprise Software
Marketing Analytics
€14.5m
€9.8m
-
SureIn
Fintech
Insurance
€4.9m
€4m
-
teale
Health,Wellness Beauty
Health Platform
€12m
€10m
-
Tenpoint Therapeutics
Health
Biotechnology
€63.6m
€63.6m
-
TolerogenixX
Health
Biotechnology
€7m
€7m
-
Tolremo
Health
Biotechnology,Pharmaceutical
€42.4m
€28.4m
-
Toopi
Food
Agritech
€14.4m
€10m
-
Traceless materials
Food,Energy
Agritech
€39.9m
€36.6m
-
Traide
Fintech
€100k
€100k
-
Translucent
Fintech
Financial Management Solutions
€9.2m
€6m
-
Tresio
€540k
€540k
-
Verisian
€1.2m
€1.2m
-
Vertama
Enterprise Software
€910k
€910k
-
Viboo
Energy
Energy Efficiency
€1.7m
€1.7m
-
Voliro
Robotics
€5m
€3.3m
-
weflow
€5.4m
€2.9m
-
Worldover
€3.6m
€3.6m
-
YOND
-
-
-
Zelt
Jobs Recruitment,Enterprise Software
€3.2m
€3.2m
-
Zinc
€7.3m
€6m
-
Zurimed Technologies
Health
€12.1m
€12.1m
-
Europe’s success stories
Who early stage startups are up against
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
Large-scale fossil-free steel producer targeting large European OEMs and backed by Temasek, GIC and Mercedes-Benz among others.
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
Delivering tailored dog meals based on variables such as breed, gender, age, and weight and includes L Catterton, General Atlantic and Kreos Capital among its backers.
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
An open ecosystem in fitness combining smart gymtech, software and services into a solution for fitness or health facilities. It raised its recent €207m Series F from Bayern Kapital, Mayfair Equity Partners and Affinity Partners.
(Pre-)Seed
Series A
Series B
Series C
Series D+
IPO/Exit
Defence AI company partnering with governments to connect existing and new hardware platforms with advanced AI. It raised its €209m Series B from General Catalyst Partners and Saab Automobile.
Sources
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