2020 VC Funding Trends
Updated: Nov 1, 2020
Today I came across this Sifted article with the headline 'The Covid-19 pandemic has resulted in a 12% decline in VC investment compared with 2019, a less severe impact than many had feared.'
Having talked to many of my peers in the industry over the last months, this data doesn't surprise me. As predicted in this post from May, VCs are as active as before when it comes to deal sourcing, but are naturally more cautious when deploying capital.
Let's have a look at the big picture
'Compared to the big rises and falls in overall venture capital spending shown by the chart above, the 12% fall in overall funding in Europe is not dramatic.'
Indeed, if you look at the chart below, you can see that European Venture funding comes from a high. In addition, early Q3 numbers are encouraging and might signal the start of a rebound.
'Normally the third quarter is a quieter period because of summer holidays, but this year it appears that some of the deals that may have been shelved in the second quarter re-emerged in Q3.
It looks like the peak moved forward by a quarter. In Q2 everyone was trying to figure out what was happening with their portfolio, but then people started learning how to deal with the situation.
The big question, of course, is what happens next. If normal investing patterns continue in Q4, the year will end up only slightly down on 2019.'
A decade full of opportunities
So, overall, European Venture Funding seems to be doing well. I am convinced that the next decade is full of opportunities and that the years ahead of us will be exceptional years for tech as the digitalization of the world accelerates. We also see early signs of new long-term behavioral patterns emerge, which is very exciting... More on this in the coming weeks.
Life is awesome,