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Venture capitalists interested in European projects
After two years of stagnation, venture capitalists are returning to the European market. Global and regional problems have cooled investors’ interest in local startups. However, analysts have noted increased activity in the sector since the beginning of the year. This is particularly noticeable in financing startups in the early stages of growth.
Creandum is a vivid example of the market’s revival. It is known for early investments in Spotify, Klarna, and Depop and backing other promising projects. The firm has launched a new fund with €500 million in assets, making significant capital available to interesting startups. Importantly, Creandum is the only investor who exclusively backs European technology projects.
Other notable investment firms include:
- Accel’s European arm launched a US$650m fund in May 2024;
- Plural has raised €500 million to fund ‘deep tech’ startups;
- Plural’s fund also raised an additional €100m in May 2024.
Creandum’s fund raised the required amount in record time. According to Carl Frithjofsson, partner at the firm, this indicates a positive market change. The European sector is showing a change in sentiment, both among investors and among the startups themselves.
Investment market trends
Over the past few years, the market has had its ups and downs. After the pandemic, there was a frenzy in the technology sector. Large venture capital firms and private investors were eager to invest in promising projects. However, the situation changed dramatically in 2022 when the economic and geopolitical crisis hit. Rising interest rates and record inflation forced venture capitalists to scale back their activities. This led to severe cuts in spending on startups.
This downturn affected mainly European markets. Many investors turned their attention to funding US companies. The latter were in a more favourable position due to the stability of the American system. Some large venture capital firms, such as Tiger Global and Coatue, turned away from deals with European startups. Without sufficient funding, the region’s technology sector has slowed.
Investors have returned to European projects with the surge in interest in artificial intelligence technology. Companies have been actively preparing and are ready to offer their ideas in exchange for generous funding. Analysts note a positive change in the mood of venture capitalists. However, they also warn that the effects of the previous stagnation in the venture capital market are still visible and may affect investment decisions in the future.