The venture capital benchmark report:
European Edition

Top Firms remained dominant in 2024, but they were far more selective.

Across all four quarters, Top Firms added significantly more deals to their pipeline than All Firms—more than four times as many in Q1 alone. Yet even the most active investors weren’t immune to the broader slowdown. By Q4, Top Firms had added 42% fewer deals YoY, marking a sharp pullback.

This trend reflects a shift in the market toward “value over volume,” as PitchBook notes in its Annual European Venture Report. Top Firms are likely focusing on fewer, higher-quality deals. In turn, there’s an increased emphasis on thorough and specialized diligence, including greater scrutiny around companies’ product-market-fit, scalability, and founder growth potential.

Meanwhile, All Firms saw steadier, albeit slower, activity—ending the year with a 10% YoY decline in deal flow. For less established firms, competing for high-quality deals is proving increasingly difficult. The market continues to consolidate around brand-name firms with the capital and reputation to win the most competitive opportunities.

After two slow years of dealmaking, All Firms shifted gears to outbound efforts in 2024, sending and receiving 15% more emails YoY in Q4. To counter heightened competition—a concern for 42% of investors—many firms are reaching out to a broader range of founders in niche sectors and less saturated, international locations. 

By contrast, engagement for Top Firms stayed relatively flat and they sent and received 6% fewer emails YoY in Q4 2024. Rather than casting a wide net, their priority was clear: lean into existing relationships.

With established brands and proven track records, Top Firms could rely more on inbound channels, and they ended 2024 with a 10% YoY decrease in new contacts.

All Firms took a different approach. Despite a dip in Q3 2024, they had higher, more consistent network growth throughout the year—especially in Q1 when they added 5% more contacts to their networks than Top Firms.

Regardless, to widen the deal funnel beyond their existing relationships, more firms are turning to data-driven sourcing tools. 

Top Firms prioritized introductions in early 2024, especially in Q1, when they made 15% more introductions QoQ. This spike came even as their network growth slowed, signaling a deliberate shift: Top Firms focused on introductions not primarily for sourcing deals but to support their portfolio companies.

With stronger visibility into their connections and larger networks to draw from, Top Firms leveraged their existing relationships to create value for their portfolio companies—connecting them with talent, potential customers, and vendors. 

While All Firms followed a similar pattern, the volume and intent of introductions differed. For All Firms, making introductions played a more traditional role—helping fuel their deal flow. 

Many firms are feeling the pressure to deliver returns on aging funds. According to Carta, “Half of all funds from the 2018 vintage have still not distributed any capital back to their LPs.” In response, Top Firms are doubling down on portfolio support to boost LP confidence.

While European venture capital continues to face an array of challenges, looking at the industry’s performance over a longer horizon offers reason for optimism. 

Over the past decade, European venture investment has increased 10-fold, and the number of early-stage companies has more than quadrupled—from 8,000 in 2015 to over 35,000. Many investors remain hopeful about the industry, with 72% of dealmakers expecting to close more deals in 2025 than they did last year. 

With ongoing volatility, firms will need to stay grounded in the fundamentals of venture capital—prioritizing meaningful relationships and sound decision-making—while embracing the tools that make them faster and sharper. 

That means using data to guide strategy, leveraging technology to streamline deal sourcing and management, and investing in systems that help firms adapt with the market.