A record number of venture capital (VC) partners and firms within the European market were valued at over €1bn in 2020, reaching unicorn status, investment monitoring platform Pitchbook has reported.
The news follows a decade of sustained growth, and multi-billion valuations flooding the European VC market in 2020, despite economic and social disruption by COVID-19.
And the report backs early-stage VCs for long-term growth, as all four quartiles in 2020 outperformed 2019, with COVID-19’s impact enhancing the appeal of specific sectors such as emerging tech.
Disruptive tech-based start-ups also built on their valuations and maintained growth while rapidly evolving new angel and seed start-ups secured capital from investors seeking the next big opportunity.
An increased variety of start-ups attracted non-traditional investors (NTI) in larger numbers too, with NTI deal sizes expected to continue rising this year.
Covid-19 is a growth driver
And while the report notes subdued VC-backed exit values at the start of 2020, many companies have since been exiting at loftier valuations, with the biotechnology and pharmaceutical sectors being the catalyst for that growth, notching a record $28.5 billion of capital across 1,073 deals, representing the most significant year-on-year increase to date at 60.5%.
The driver here was COVID-19 revealing weaknesses in healthcare systems across Europe, proving that long-term, innovative solutions are needed to upgrade our technology and prevent future pandemics; this was backed up by the record development and rollout of the Pfizer and AstraZeneca vaccines in 2020. Pitchbook expects this trend to continue, as start-ups could play a key role in developing essential healthtech.
“It is a critical time”
World Nano Foundation Co-Founder Paul Sheedy was pleased to see the rising investment in emerging tech at a most critical time for healthcare and pandemic protection:
“Early-stage investors aware of the knowledge and expertise within emerging tech start-ups, and notably healthcare, will benefit most from the current environment. The pharmaceutical and biotechnology markets show there is still an appetite for late-stage investment too.
“COVID-19 exposed our pandemic vulnerability and the weakness of our global healthcare systems, so investment must continue to grow to deliver the technological advances needed to avoid being caught out again.”
Sheedy is also a general partner in the Luxembourg-based Vector Innovation Fund, which recently launched a sub-fund raising an initial $300m for pandemic protection and future healthcare, focusing on precision medicine, advanced point of care, and AI technologies that support sustainable healthcare, the global economy, and human longevity.