European investment firms see 27% drop in new deals during first quarter
Affinity —the relationship intelligence platform for dealmakers—today launched The Relationship Intelligence Benchmark Report: Unicorn Edition, which shares industry trends and analyzes over 390 unicorns in Europe and the United Kingdom with a deep dive into relationship intelligence and deal flows of the firms that invest in them.
Integrated data from the Affinity and Dealroom.co’s intelligence platforms found Europe has a unicorn growth rate more than twice that of the US and is home to 65 “unicorn cities.” These unicorn cities consist of London, Berlin, Paris, Stockholm, and Amsterdam, with more than half of all European unicorns located in the UK and Germany. Recognizing the growth internationally, U.S. investors have flocked to join and now account for 35% of all funding in Europe. This flood of investment has also increased unicorn valuations which are up by 305% in the last five years.
“The past decade has seen an exponential increase in the volume and diversity of new capital investing in startups - and is now entering turbulent economic times,” said Ray Zhou, co-CEO and co-founder at Affinity. “Our report highlights how Europe has adapted and grown, despite the effects of the pandemic, and shows how relationship intelligence plays a role in these major industry trends.”
As expected, many firms experienced a period of “bounce back” from 2020. In 2021, European unicorns raised over $45B, twice the amount raised in 2020. However, these unicorns only account for 14% of new unicorns globally. This means the competition among VC’s is significant as they try to time the right investment. Index Ventures is a single venture responsible for backing 10 European decacorns by itself. The combination of high valuations and less late-stage funding rounds requires VC’s to capitalize on their networks, warm introductions, and outreach. But as these firms and startups face uncertain economic conditions, it is important to understand the drivers for the previous success and how investors identify the next generation of high-growth startups in Europe.
Other key takeaways from the report include:
- Unicorns are roaming: Europe produced 5 times more unicorns in 2021 than in 2020.
- Germany is now a hotspot: German funding of unicorns grew over 300% in the last 5 years. Together with the UK, they have funded 2/3 of all Europe-based unicorns.
- Decacorns are on the rise: Over the past five years, this percentage of multibillion-dollar unicorns has risen by a staggering 560%. The total value of decacorns in 2021 was $777.4B; to date in 2022 is at $718.3B, guaranteeing it will exceed 2021’s numbers.
- The rebound is over: While firms saw an increase in deals, meetings and email volume in 2021, the beginning of 2022 tells a different story. In the first quarter of 2022, firms experienced 27% less meetings and deals, likely due to the inflation in Europe and predictions of an impending recession.
Read the full report here and then watch Affinity’s webinar “European Unicorn Trends: How to Make Unicorn Hunting More Predictable,” which brings industry experts together to discuss the trends impacting dealmakers in this report as well as the role relationship intelligence plays in the evolving market landscape.
Affinity is a relationship intelligence platform that empowers dealmakers in relationship-driven industries to find, manage and close more deals. With the most automated relationship intelligence insights and technology, Affinity enables leaders to drive deals, free themselves from data drudgery and ensure their teams can take action with confidence, knowing the context and history of every relationship. The Affinity platform, including Affinity CRM, is used by over 2,000 relationship-driven organizations worldwide. Founded in 2014, Affinity is headquartered in San Francisco and backed by leading investors, including Menlo Ventures, Advance Venture Partners, 8VC and MassMutual Ventures.
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