VCs are increasingly willing to pay more for promising startups, especially in sectors that performed well during the pandemic, and factors like the increasing presence of nontraditional investors have brought additional capital to the ecosystem. Here’s a look at six charts from our 2021 Annual European VC Valuations report showcasing some of the key trends that shaped valuations last year.
1. Investors’ search for the next big thing drives up values at the earliest stages
Startups receiving angel and seed funding saw their median valuations rise to €4 million last year, more than 30% higher than the previous record, set in 2020. Investors’ fear of missing out contributed to considerable checks for companies displaying initial traction and the pandemic has led to the emergence of new, competitive sectors.
2. Mega-rounds push late-stage valuations to an all-time high
Larger rounds saw the median valuation for late-stage startups rise 61% year-over-year to reach €18 million. Late-stage capital accounted for 70% of overall VC deal value in 2021, according to our latest European Venture Report, and deal sizes are expected to continue on their upward trajectory.
3. Nontraditional investor participation skyrockets
An influx of capital from PE firms, corporate VCs, sovereign wealth funds and pension funds, among others, pushed up both valuations and round sizes last year. Deals with nontraditional investor participation reached a record €79.3 billion in 2021, as these backers sought to capitalize on VC’s outsized returns.
4. Pandemic-related growth leads to lofty software premiums
Median late-stage pre-money valuations for software companies roughly doubled last year from 2020, reaching €26.2 million as the pandemic continued to push companies and consumers online. Earlier stages also saw an uptick in both deal sizes and valuations as software became more entrenched in global industries.
5. European unicorn value triples with expanding stable
The rise in late-stage capital last year helped create a record number of new European unicorns. By the end of 2021, there were 128 such companies with a combined post-money value of €329.7 billion, nearly triple that of 2020’s total worth.
6. A bumper year produces record exit valuations
Investors rushed to exit last year with the total value reaching an impressive €142.5 billion. Post-money valuations across all quartiles reached record highs, particularly for public listings, with the top quartile reaching €488.3 million.
Related read: 2021 Annual European VC Valuations Report
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