How will the VC landscape develop over the coming months and years? Startups have to deal with increased difficulty in fundraising, valuations drop and “cherry picking” became a strategy. A survey, which was conducted among DACH-focused venture capital investors, published last week by one of our key partners Deutsche Börse Venture Network (DBVN), found that 40% of funds have concerns that their LPs will not be able to meet upcoming capital calls. This has already resulted in funding rounds globally dropping by 22% in March 2020, making it the worst month for deal-making in two years. Valuations have taken a sharp hit as well. In the last two months, VC deals in China, the epicenter of the virus, have dropped by more than half. If extrapolated to the rest of the world, that would equal $28 billion of lost investments. The European Venture Sentiment Index calculated by our partner, Venionaire Capital, showed a drop in Q1 2020, with an even sharper fall predicted for Q2.
It´s not all bad news, though. It´s true, founders have already faced and will most likely have to face some more tough situations such as cost cuts, hiring freezes, difficulty in fundraising and down rounds. However, we should keep in mind that times of great challenge are also times of great opportunity. We have supported startups in successful fundraisings in the last weeks and started an acquisition process for another one. Market consolidation might bring up even stronger tech companies in Europe and could turn out to be healthy after all. Airbnb, one of the most successful startups of all time, was founded during the depths of the 2008 financial crisis. A study by Startup Genome states that in the period of 2007-2009, over 50 startups were founded that later went on to become Unicorns. Outstanding startups with great potential are still out there –spotting and selecting them has become much more challenging. European Super Angels Club has never stopped exploring opportunities, and we’d love to see even more. If you have a winning startup at hand, forward our call for applications, or simply have them apply here.