Q2'24 Venture Pulse Report – Europe

AI remained a very hot area of investment in Europe during Q2’24; in addition to UK-based Wayve and France-based Mistral AI, Germany-based AI language translation company DeepL raised $300 million and France based AI automation company H Company raised $220 million. VC investment in AI remained quite broad in Europe, with investments going to both companies focused on developing core AI technologies and those focused on leveraging AI to help companies improve different aspects of their business models, such as the customer experience or product development.

Alternative energy and cleantech also attracted sizeable funding rounds in Europe during Q2’24, including a $381.9 million raise by UK-based energy storage company Highview Power, a $168 million raise by Estonia-based hydrogen-focused company Elcogen, and a $152 million raise by Netherlands-based hydrogen-focused startup Tree Energy Solutions. Given the EU’s Carbon Sustainability Reporting Directive (CSRD) — which requires larger companies to report on their sustainability metrics — and other evolving sustainability regulations and climate change commitments in the region, regtechs focused on the sustainability space have also been of interest to investors. 

Across Europe, there was growing optimism that the IPO window could reopen slightly in Q3’24 should economic conditions remain stable, with a growing number of companies beginning to consider and prepare for the possibility of a future IPO. During Q2’24, the London Stock Exchange saw some positive activity, with budget computer company Raspberry Pi raising $211 million in its June IPO; the company’s stocks continued to perform well in post-IPO trading.²

The LSE, in particular, has also undertaken efforts to support startups earlier in their lifecycle; it recently partnered with Floww to create connections between investors and Early-stage businesses.³ It is also undertaking a consultation process on the implementation of a Private Intermittent Securities and Capital Exchange System (PISCES) that would allow for the intermittent trading of shares in private companies.⁴

After falling to a low not seen since Q2’18 in Q1’24, VC investment in the UK more than doubled quarter-over-quarter, rising from $2.9 billion to $6.9 billion between Q1’24 and Q2’24. The largest deals of Q2’24 included Wayve’s $1 billion raise and two large deals in the fintech space — a $999.6 million raise by Abound and a $621 million raise by Monzo. While many later stage companies in the UK found it challenging to raise money and close deals in Q2’24, the increasing number of mega-deals over the latter half of the quarter was viewed as a positive sign. Pre-seed and seed stage deals continued to see robust interest from VC investors in the UK, with median deal sizes increasing quite substantially. This growth likely reflects both a growing appetite for making investments in Early-stage companies as the market in the UK begins to pick up and a desire on the part of VC investors to derisk their portfolios. 

VC investment in Germany held nearly steady at $2.2 billion in Q2’24. This total included a good number of $100 million rounds, including AI-driven deeptech DeepL ($300 million), chip manufacturer Black Semiconductor ($275 million), satellite launch company Isar Aerospace ($237 million), credit card as a service company Pliant ($163 million), and intermodal transport systems company Cargo Beamer ($150 million). ESG companies, particularly those focused on the B2B space, continued to attract investment in Germany during Q2’24. Certain areas of fintech also saw solid investment, while others floundered; in particular, VC investors showed interest in fintechs acting as industry enablers, while interest in crypto continued to fall. Last mile delivery also took a hit as grocery delivery company Gorillas announced plans to shutter operations in Germany and several other countries during the quarter.⁵

VC investment in Austria rose to $283 million in Q2’24 — its highest level since Q1’22. Several companies raised substantial funds during the quarter, including content management company StoryBlok ($80 million — Series C) and Energy grid optimization company enspired (€25.5 —million Series B).⁶ Startups with AI-enabled solutions were in particular demand, attracting significant interest from international investors. Outside of the AI space, many startups struggled, with a growing number declaring bankruptcy. PE firms showed some interest in Austria during Q2’24, likely driven by the relatively low valuations, the number of distressed investment opportunities, and the amount of dry powder at their fingertips. 

VC investment in the Nordic region remained very subdued in Q2’24, falling to $1.3 billion — the lowest level since Q2’20. Despite this decline, early-stage funding continued to be very healthy in the region. Energy, cleantech and deeptech solutions continued to be key area of interest for VC investors. While a number of growth companies in the Nordic region have struggled in recent quarter given the extended economic challenges, there are many others that are well positioned  to attract money moving forward. If the economy continues to stabilize, the region could see some companies looking to hold IPO exits towards the tail end of 2024 and into 2025.

VC investment in Ireland picked up in Q2’24, reaching $239 million compared to $150 million in Q1’24. A $110 million raise by biotech SynOx Therapeutics — a drug discovery company focused on developing treatments for diffuse tenosynovial giant cell tumors — accounted for a large part of this total. Nory, a fintech company focused on using AI to help restaurants operate more efficiently, also raised $16 million during the quarter. In Ireland, VC investors showed increasingly willingness to make bigger bets again in Q2’24, although their focus was somewhat narrow — on areas like AI, biotech, and fintech. 

While positivity is growing in Europe, a number of uncertainties are expected to keep VC investors cautious heading into Q3’24, including the UK general election held at the beginning of July and the US presidential election slated for November. AI will likely remain a very hot area of investment in the region, in addition to energy and cleantech. Despite these uncertainties, there is some optimism that the IPO market in Europe could see some fresh activity heading into Q3’24.

As of January 17, 2025, financial institutions in the EU will be required to comply with the Digital Operational Resilience Act (DORA). Given the complexities associated with compliance, there will likely be growing interest in regtechs focused on helping companies comply.