The 2024 INVESTMENT BENCHMARK REPORT:
EUROPEAN EDITION

Engagement faltered in 2023

All firms showed inconsistent engagement. They were historically quiet mid-year, with 25% fewer emails sent and received QoQ in Q2, followed by a large (+57% QoQ) rebound in Q4.

While top firms followed a similar trend—with less drastic swings—they generated higher overall levels of engagement, sending and receiving 30% more emails than all firms in Q4.

Why did we see this?

All firms appeared to work harder in Q4 to engage with their connections in the hopes of sourcing new deals after a slow year.

For top firms, engagement closely tracked changes in deal flow—which slowed mid-year but picked up in Q4. Top firms also generated more engagement by virtue of working on more deals throughout the year.

Engagement is on the rise for all firms in 2024

With a 15% QoQ increase in emails in Q1 2024, all firms are working harder this quarter than in any previous period over the last two years to generate deals.

Engagement for top firms trended down in Q1 2024—with 4% fewer emails sent and received QoQ—partly driven by a decrease in new deals at the start of the year. With fewer deals (and slower network growth), top firms had fewer contacts to engage with.

Network growth was inconsistent in 2023

Similar to engagement trends, all firms had large dips in network growth mid-year—25% fewer contacts were added QoQ in Q2. This was followed by a significant (+72% QoQ) rebound in Q4.

Top firms followed a similar trend, but their network growth picked up again in Q4, which saw a 7% increase in new contacts compared to Q1 and a 52% increase compared to Q3.

Why did we see this?

Given both network growth and engagement fell mid-year, all firms and top firms likely prioritized existing deal work—as opposed to growing or nurturing their connections. 

With the uptick in network growth and deal flow in Q4, top firms appeared to source deals from new connections instead of their existing network.

All firms are focusing more on outreach in 2024

All firms grew their networks slightly more than top firms in Q1 2024, adding 3% more contacts—appearing to gear up for a more active year.

With an uptick in network growth in Q4 2023 followed by a decrease in growth in Q1 2024, top firms likely shifted their focus to maintaining and strengthening these new network additions as their deal flow picked up in Q4 2023.

Top firms held the lion's share of deals in 2023

Deal volume consistently decreased for both all firms and top firms from Q1 - Q3, with a rebound in Q4.

While deal volume didn’t fully recover for all firms in Q4, top firms saw a sharp (+86% QoQ) uptick in new deals. Top firms also worked on substantially more deals than all firms throughout the year.

Why did we see this?

While European VC investment fell 18% QoQ in Q4, deal count increased for top firms. Given valuations are decreasing, top firms are likely working on a greater number of smaller sized deals and/or focusing on earlier stage deals, which were smaller in 2023.

Challenging market conditions coupled with the shrinking number of European VCs suggests that investments are getting concentrated with larger, more established firms.

Deal volume for 2024 reveals an uncertain picture

With all firms increasing their engagement and outreach in Q4 2023, we may see an uptick in deal volume later this year—73% of firms expected to see more deals in 2024¹—and there was a sizeable increase of 13% more active founders in Europe in Q1 2024 compared to the year prior ².

In Q1 2024, deal volume for top firms fell back in line with early 2023 levels (down 22% both YoY and QoQ) after its 2023 year-end peak—making it unclear whether deal volume more broadly will increase the rest of the year.

¹ Affinity Survey for the 2024 Private capital investment predictions report

² Live Data Technologies, Data refers to EMEA-based founders only, from Live Data Technologies's sample of 3.4M+ EMEA-based white-collar professionals 

Affinity platform data presents a mixed outlook for venture capital.

Despite a deal surge for top firms at the end of last year, deal flow across the board has been trending down since 2022. It appears that even top firms are struggling to reach median deal volumes from before 2021.

To navigate uncertain macroeconomic conditions, VCs will have to adhere to the fundamentals of the relationship-driven industry and using data to understand where and how to course correct when existing strategies aren’t paying off. It will also be crucial to take whatever downtime is offered to invest and innovate in technologies that make them more efficient and agile.

About our data

The top firms cited in this report are defined by Dealroom in their EMEA rankings as:

“A ranking of venture capital investors, based anywhere, investing in companies anywhere, and at any stage.

The ranking looks at how successful investors are at picking startups that go on to big outcomes – primarily looking at unicorns and future unicorns (companies valued $250M-$1B). Investments are weighted by the stage at which firms invest in the most successful companies, with the aim of creating insights from a level playing field, e.g. most points for backing a unicorn at Seed, then Series A and so on.”

For analysis purposes, we have extracted the list’s top 20 Affinity customers from our data set of more than 450 European VC firm customers, and we refer to these as “top firms.”

The platform data displayed in this report represents dealmaking trends across the top 20 compared with all firms. The data is aggregated and anonymized and we have used median figures to provide an accurate picture of how the market has evolved on a quarterly basis from the beginning of 2022 until the end of the first quarter of 2024.