Venture capital (VC) valuations and deal values displayed  robustness across financing stages in 2022 despite  mounting uncertainty across the VC ecosystem and  broader financial markets. As 2022 progressed, reports of  down rounds, valuation haircuts, and layoffs emerged with  increasing regularity. Valuations, deal values, and step-ups,  particularly at mature financing stages, cooled and fell from  the peaks of the past two years. Early signs of lower valuations  surfaced in H2 2022, and with top deciles and quartiles  dropping, it appears depressed valuations have filtered into  the VC ecosystem amid wider public market struggles.

The median deal value for the information technology  (IT) sector, which dominates almost half of all VC deals,  increased across most financing stages (seed, early stage,  and late stage). The energy sector experienced similar  increases. It was the centre of attention in Europe in 2022  due to the energy crisis stemming from the war in Ukraine as  well as the push into renewables, which has attracted a lot  of VC capital. The median late-stage deal value in the energy  sector increased the most of all the stages, going from €4.2  million in 2021 to €7.2 million in 2022. 

VC deals in the France & Benelux region have been on the  rise since Brexit. In the past five years, the median premoney valuation in France & Benelux has grown at a higher  compound annual growth rate (CAGR) than that of the UK &  Ireland. In 2022, the median pre-money valuation for France  & Benelux increased 23.0% year-over-year (YoY) for the  angel and seed stage, 44.9% for the early stage, 21.2% for the  late stage, and 16.7% for the venture-growth stage. This is in  contrast with the UK & Ireland region, which saw the median  venture-growth pre-money valuation drop 27.8% from €26.0  million to €18.7 million amid political and economic turmoil  in the UK. In 2022, the median venture-growth VC step-up  in the UK & Ireland dropped from 1.2x to 1.1x while the same  figure in France & Benelux increased. 

The trend of nontraditional investors on portfolio  companies’ capital tables continued in 2022, as the median  value of deals with nontraditional investors increased  across all financing stages. The median deal value for  venture growth went from €8.0 million in 2019 to €24.0  million in 2022. Corporate VC (CVC) arms participated in  more deals than any other nontraditional investor type, but  they tended to be smaller in terms of median deal value. 

Private equity (PE) firms participated in fewer deals, but they  tended to be larger in terms of median deal value. 

2022 saw 47 new unicorns emerge in Europe, the secondhighest figure on record, taking the cumulative unicorn  count to 129 in Europe. Aggregate unicorn post-money  valuations increased 46.3% YoY, going from €287.3 billion  to €420.2 billion. However, there were notable signs of a  slowdown in 2022. Average unicorn valuations dropped  sequentially, starting from a record-high €3.6 billion in Q1 and  slowly dropping to €3.3 billion in Q4 as the macroeconomic  picture worsened through the year. The median unicorn  rolling four-quarter step-up also dropped sequentially  from its record high of 2.8x in Q1 2022 to 1.8x in Q4 2022 as  unicorn valuations experienced a reality check. 

In 2022, European VC exit valuations retreated from the  record highs of 2021. Exit appetite was fervent in 2021 as  investors and founders rushed to take advantage of conducive  market conditions. 2022, however, reflected a muted  exit market, with recessionary fears and previously VCbacked public companies faltering. Exit markets have been  unpredictable for the past two years, and we expect more of  the same in 2023. Recalibrated public market valuations are  filtering into the VC ecosystem and will impact future exit  valuations in the near term. A healthy amount of exits still  took place in 2022, and corporate acquisitions could become  the favoured exit route in 2023 instead of public listings.