State of European Angel Investing 2024
Globally, venture capital investing took a significant nosedive in 2023, falling to $314 billion, a 35% decrease compared to 2022. Several factors contributed to the adverse environment, including high interest rates, geopolitical uncertainty, the failure of financial institutions that enabled the VC ecosystem, and a cool-down in tech valuations.
Europe’s VC ecosystem was not immune to the broader decline. However, there were signs of resilience, particularly in fundraising, where the region doubled its share of the global total. Even so, Europe remains far behind the United States in terms of funding.
Why does this matter? Who benefits from a successful startup beyond the innovators and investors? A fertile ecosystem for startups brings rewards to the broader society. For example, VC-backed companies are the strongest creators of jobs in Europe, and the link between a healthy VC ecosystem and the level of innovation in a country is borne out by the numbers: The 10 most innovative countries in 2022 were also among the top 10% of startup environments.
Given the importance of venture capital and the startups they fund to the broader economy and to economic growth, Europe’s VC ecosystem must regain momentum and create a positive environment for innovation. Arguably, the single most glaring gap between Europe and other regions is the falloff in investments after the seed stage. The region has a robust pipeline of innovation—particularly in deep tech—and accounts for more than 30% of global pre-seed investment but has failed to match the support in the late-stage funding rounds.
Against this backdrop, Europe’s angel investor community made significant strides in 2023, attracting record numbers of new angels and undergoing consolidation, creating robust networks with the scale to support startups over a longer term. They brought much-needed expertise and guidance along with funding. Angel investors cannot, on their own, lead the European VC ecosystem to catch up with the United States. Europe additionally needs to simplify access to capital markets and unlock domestic institutional capital for startups, Incorporate Entrepreneurial ecosystem in educational institutions, Enable Risk-sharing through co-investment funds, Streamline regulations for deep-tech innovation, and Expand access to domestic and global talent, to name a few levers
This report looks in depth at the European VC ecosystem, both from a region-wide perspective and through a country-by-country lens. It describes what makes a supportive environment for startups, details the investment themes emerging in the region (for example, deep tech), and concludes with recommendations for stakeholders across the startup spectrum.