European startup funding took a hit in the third quarter of 2024, according to Crunchbase data, reaching $10 billion. This figure represents the lowest quarter since the third quarter of 2020. The numbers point to a considerable slowdown in investment across the continent.
Quarter-over-quarter, funding dropped by 36%, and year-over-year, the decline was 39%. However, Germany stood out as the only major European country to see increases in both of these periods. It’s also worth noting that venture investment has fluctuated significantly since the downturn began.
“Europe is really a grouping of many smaller markets,” said Teddie Wardi, a managing director at Insight Partners. He added that the continent is often viewed as a single region, but investors really need to approach it market by market.
Leading Countries
The United Kingdom, traditionally the leader in European venture investment, saw a 43% year-over-year decrease in funding, totaling $3.2 billion. Germany experienced a surge, with funding to its startups growing by over a third to $2.4 billion. This placed Germany as the second-largest recipient of venture funding in Europe during Q3. France, a usual contender for the second spot, saw a slowdown, with $1.4 billion invested last quarter.
European Late-Stage Slows
Late-stage funding, which saw the biggest drop, fell by more than 50% year-over-year. Across the continent, late-stage funding reached $4.2 billion across over 70 rounds, reflecting a 57% year-over-year decrease. Notable late-stage funding rounds include:
- Berlin-based defense tech company Helsing, which secured $488 million in a Series C round, led by General Catalyst.
- London-based women’s health app Flo Health, which raised $201 million in a Series C, led by General Atlantic.
- Munich-based smart fitness company Egym, which received $200 million in Series G funding, led by L Catterton and Meritech Capital Partners.
- Paris-based digital health insurance provider Alan closed a $193 million Series F round, led by Belfius Bank.
Early-Stage Funding
Early-stage funding totaled $4.5 billion across just over 290 funding rounds. Some of the key early-stage funding rounds in Europe include:
- Paris-based atomic energy company Newcleo raised a $151 million Series A.
- ESG compliance service company Osapiens, based in Germany, raised a $120 million Series B, led by Goldman Sachs Alternatives.
- Munich-based Marvel Fusion, a laser fusion energy company, secured a $70 million Series B, led by HV Capital.
Several health tech companies also received significant early-stage investments:
- London-based cancer treatment biotech startup Myricx Bio raised a $114 million Series A.
- Belgium-based cancer treatment biotech PanTera received a $110 million Series A.
- London-based Vicebio, which is developing vaccines, secured a $100 million Series B.
Seed Round Pullback
Seed-stage funding also saw a decrease, reaching $1.5 billion across 800 rounds in the third quarter. Seed funding was down from $1.8 billion in Q3 2023. However, Crunchbase notes that seed rounds are often reported with a significant lag.
A Competitive Market
Despite the funding slowdown, the market is highly competitive, according to Wardi. European startups are expanding rapidly within Europe and to the U.S. This requires businesses to be agile and seize opportunities, as rivals don’t hesitate to capitalize. Wardi says the trend is particularly pertinent in software, where startups compete on a global scale. “Customers have very similar needs anywhere in the world, and they don’t really care that much about where the software they buy comes from, as long as it’s best in class,” Wardi noted.
Methodology: The data used in this report is sourced directly from Crunchbase and is based on reported data as of October 2, 2024. All funding values are given in U.S. dollars unless otherwise noted. Foreign currencies are converted to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs, and other financial events are reported.
