European startups in the early stages are finding some relief during the current funding shortage. As per Pitchbook's Q1 2024 European VC Valuations report, the median funding amount for early-stage European startups rose to €2M ($2.17M), driven in part by notable deals such as French EV network startup Electra's €304M ($330M) Series B funding round.
The percentage of up rounds increased to 76.3%, and this positive direction is anticipated to persist due to declining interest rates. Nonetheless, the percentage of down rounds grew to 21.7%, demonstrating the ongoing challenges encountered by mature startups in raising funds because of limited opportunities for successful exits.
As early-stage startups are feeling relieved, later-stage ones are facing a new set of challenges. The median pre-money valuations for late-stage European startups decreased by 5.4% to €10.6M ($11.5M) in the first quarter. Due to the closed IPO listing window, the majority of exits are now occurring via acquisitions, and the average valuation of acquired startups dropped from €29M ($31.45M) in 2023 to €22.7M ($24.6M) in Q1 2024.
As the funding environment changes, young companies in Europe are taking advantage of bigger investment deals, while established companies are facing challenges with decreasing valuations and limited exit opportunities.
