The rise and rise of late stage scaleups

14 April, 2022 | insight

Just into the second quarter of the year and 2022 is already shaping up to be broadly a high performing year in terms of investment into growth companies. To put a spotlight on this article, it’s the emergence of the European scale-up ecosystem that has caught our attention.

 

Prior to 2021, a smaller proportion of Europe’s venture investment went to late-stage growth rounds. In 2021 a shift began to take place, with more significant amounts allocated to late-stage funding. Funding for those companies came from equity-led investment firms in the private capital markets and from a number of small-cap public listings where those scaleups could get access to public markets liquidity.

 

Let’s look at the numbers. Quarterly funding in Europe in 2020 ranged between USD$10 billion and $13 billion in each quarter. This trended upward through 2021 when it totalled $24.6 billion in the first quarter alone. 2022 is set to dwarf those numbers with venture investment already up by 21% on an annualised basis. Through our client portfolio alone we have seen offers of co-investment into companies in the EV, battery-tech, medical, and SAAS sectors to give a combined post-money value of more than $300m in private and public capital markets.

 

The six countries that led in scaleup funding over last quarter are the UK at the forefront with France, Germany, the Netherlands, Switzerland and Spain also showcasing support for stellar growth companies.

 

At a global level capital flows into VC backed companies in fact fell in the first quarter, but in Europe the picture was quite different with scale-ups receiving more investment on both an annual and quarter-over-quarter basis.  Europe is a growing venture market with an increasing number of high-performing scaleup companies, and clearly those businesses that prove their revenue model and their market fit are attracting the bulk of funding in 2022. The message is clear, where there’s traction money will follow.