European Venture Capital: Navigating the Shifts and Trends of October
Month by month, the European venture capital landscape evolves and transforms. October was no exception, with early signals maturing into more defined trends and structures. The market saw new directions emerge across sectors and geographies, as capital flow patterns became more apparent and new forms of coordination emerged among investors and regions. This article explores the shifts and trends noticed in October and what they could mean for the future.(source)
Validation Phase: Early Signals Now Scale
October didn’t bring about drastic changes; instead, it solidified earlier dynamics, making them more pronounced. The blending of public, private, and corporate capital funding, widening deal polarisation, and consistent vertical defence dominated the marketplace.
The Mixed-Capital Model Proves Durable
Initially noted mid-year, the convergence of public, private, and corporate capital funding has continued to expand from isolated co-investments to a new norm for European financing. France, in particular, has been a testing ground for this mixed capital model with companies like Dracula Technologies and Scintil Photonics utilising a blend of sources for their funding.
Polarised Capital Leads to Blurred Stages
The venture capital market in Europe appears to be polarising, with record-breaking rounds at one end of the spectrum and a flood of micro-seeds at the other. This split has resulted in a thinner middle ground, making the distinguishing of stages increasingly challenging.
How October Shaped Defence Spending
October saw a significant shift in defence funding. With the launch of Bpifrance Défense’s €300M Fund, a national vehicle has been established to build and manage a new venture instrument using clear LPs, return logic, and targeted sectors.
Southern & Eastern Europe Cross the Scaling Threshold
October marked a significant milestone for start-ups in Southern and Eastern Europe. These regions demonstrated their readiness for scale, with companies like NanoPhoria in Italy closing some of the biggest rounds, backed by XGEN, Sofinnova, and CDP VC.
The October Emergence Phase: More Startups Learn Government-Speak
October brought about a notable trend among start-ups – the incorporation of government and corporate procurement from the outset. Instead of solely focusing on funding, these start-ups are learning to win lucrative contracts by designing businesses for compliance, integration, and reliability.
Is Co-Development Replacing Buyouts?
October also highlighted a shift in corporate involvement. Instead of outright buyouts, corporations are taking minority stakes, co-developing products, and embedding start-ups into crucial supply chains.
Private Rounds Now Include Liquidity
Another significant shift noticed in October was the inclusion of liquidity in private rounds. Founders are now able to take some value off the table without stepping away, indicating a potential lengthening of a company’s lifespan and less pressure on founders to sell.
Women’s Health Startups Are Finally Funded to Scale
October brought a breakthrough for the underfunded “femtech” sector. Women’s health start-ups are now raising rounds that resemble growth plays, not just pilots, and investors are recognising the viability of this category.
What October Means for Investors and Founders
October signalled a shift in the European venture market from a state of expansion to one of optimisation. For investors, this means the ability to combine public, corporate, and private money into repeatable stacks is key. For founders, the future is about fitting into hybrid procurement systems, capital structures, and collaborative value chains.
Understanding these shifts and trends is crucial for both founders and investors to navigate the evolving landscape of European venture capital. With a clear grasp on these developments, they can make informed decisions and better strategise for future growth and success.
