European startups saw a spike in US capital and total VC investment during 2019, despite declining deal flow and lower early-stage opportunities.
There was a 35 percent increase of US money into European startups in 2019, according to a recent report from PitchBook. More than €16.5 billion was invested from US investors last year compared to €10.6 in 2018.
The deal count was virtually the same across the two years. There were 880 deals with US participation in 2018 and that fell by two to 798 in 2019.
This trend continued in the broader European VC market, as well. Last year brought increased capital and a lower deal count across the continent.
There was more than €32 billion invested into the European VC landscape last year, up from €24.33 million the year before. Deal count fell to 5,017 deals from 5,929 in 2018.
The market continued to mature in 2019, with higher rounds continuing to grow their market share. Deals worth under $5 million experienced a decline of 25 percent between 2018 and 2019. There were 3,624 million early-stage deals in 2018 compared to 2,715 in 2019.
The report stated that this is the third year in a row of decline for angel and seed investment. It added that many startups now skip those first two funding rounds and go straight to institutional backing.
This claim is further backed up by the increasing decline in first-time financing rounds. First time deals in 2019 were only a quarter of the deal activity, 1,259 rounds. First-time deals peaked in 2014 when 2,396 first-time deals were completed, 43 percent of all activity that year.
Later-stage deals and larger rounds saw the opposite. These deals saw a 10.8 percent increase in 2019 from 1,007 deals in 2018 to 1,130 deals.
The UK and Ireland continue to see the most activity in the area. The UK/Ireland region saw €10.39 billion worth of investments, which is 32 percent of 2019 European activity.
DACH, the region including Austria, Germany and Switzerland, saw the second highest amount of deal activity in 2019. DACH saw 23 percent of the capital invested, €7.46 billion.
Software deals continue to dominate the European market. More than 38 percent of the deals in 2019 involved software companies with more than €12.4 billion heading into that sector. The industry captured a lot of the top deals of the year too.
Deliveroo, an online food delivery service, raised a $575 million round from Amazon last May. In August, Babylon Health, completed a $550 million Series C round from Saudi Arabia’s Public Investment Fund.
Exit value saw a sharp decline in 2019. The region only saw €14.7 billion of exit activity compared to €52.9 billion in 2018. The exit total did not experience as drastic of a change with 2019 seeing 472 compared to 502 in 2018.