In Q1 2022, European VC pre-money valuations paced above the highs across all financing stages in 2021. Valuations maintained an upward trajectory, as dealmaking activity in Q1 2022 carried momentum from a record-breaking 2021. However, exit value declined sharply in Q1 2022, and reduced appetite could filter into valuations later this year. In 2021, numerous records were broken, and record liquidity was delivered to the European VC ecosystem; however, 2022 has commenced cautiously on the exit front.

Nonetheless, valuations tied to sizeable VC rounds in Q1 have been strong. Valuations have developed impressively during the past two years, as the COVID-19 pandemic increased capital flows and valuations tied to top VC-backed companies. Pandemic-driven growth has enabled tech businesses to flourish, and VC investors have competed to participate in flagship rounds that have reflected robust valuation step-ups. Now, with the worst of the pandemic over, focus has shifted onto the true economic cost of the past two years and what will drive post-pandemic growth.