with the support of eif venture capital survey 2021

EIF Venture Capital Survey 2021:

Market sentiment

Antonia Botsari, Kilian Kiefer, Frank Lang, Davide Legnani

Working Paper 2021/74

With the support of

2

Antonia Botsari

is Research Officer in the EIF’s Research & Market Analysis division.

Contact:

[email protected]

Tel.: +352 248581 546

Kilian Kiefer

is Research Consultant in the EIF’s Research & Market Analysis division.

Contact:

[email protected]

Tel.: +352 248581 322

Frank Lang

is Senior Manager in the EIF’s Research & Market Analysis division.

Contact:

[email protected]

Tel.: +352 248581 278We would like to thank the respondents to the EIF surveys. Without

their support and valuable replies, this project would not have beenpossible. This paper benefited from comments and inputs by many EIF

colleagues, for which we are very grateful; we would like to expressparticular thanks to Oscar Farres and our Research & Market Analysis

colleagues. We would also like to thank colleagues from the TrierUniversity for their continuous support. Moreover, we would like to

express our gratitude for fruitful collaboration, support and advice to

our Invest Europe colleagues Julien Krantz and Sofian Giuroiu. Allerrors are attributable to the authors.

With the support of

Davide Legnani

is Trainee in the EIF’s Research & Market Analysis division.

Contact:

[email protected]

Tel.: +352 248581 121

EIF Research & Market Analysis

Authors

3

Editor:

Helmut Kraemer-Eis,

Head of the EIF’s Research & Market Analysis, Chief Economist

Contact:

European Investment Fund

37B, avenue J.F. Kennedy, L-2968 Luxembourg

Tel.: +352 248581 394

http://www.eif.org/news_centre/research/index.htm

Luxembourg, October 2021

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Disclaimer:

This Working Paper should not be referred to as representing the views of the European Investment Fund (EIF) or of the European Investment Bank

Group (EIB Group). Any views expressed herein, including interpretation(s) of regulations, reflect the current views of the author(s), which do not

necessarily correspond to the views of EIF or of the EIB Group. Views expressed herein may differ from views set out in other documents, including

similar research papers, published by EIF or by the EIB Group. Contents of this Working Paper, including views expressed, are current at the date of

publication set out above, and may change without notice. No representation or warranty, express or implied, is or will be made and no liability or

responsibility is or will be accepted by EIF or by the EIB Group in respect of the accuracy or completeness of the information contained herein and

any such liability is expressly disclaimed. Nothing in this Working Paper constitutes investment, legal, or tax advice, nor shall be relied upon as such

advice. Specific professional advice should always be sought separately before taking any action based on this Working Paper. Reproduction,

publication and reprint are subject to prior written authorisation.

http://www.eif.org/news_centre/research/index.htm

4

PrefaceDear Reader,

The European PE/VC ecosystem has survived the COVID-19 crisis

without major damage so far. In particular in the case of European VC,

this reveals a newfound resilience. The VC industry’s activity did not

show signs of “long COVID” and quickly bounced back from the

measurable harm of the first wave of lockdowns across Europe. The

series of swift COVID-19 public support measures, including many

deployed by the EIF, played an instrumental role in the bounce-back of

the European VC industry. That is not to say, however, that the VC

ecosystem is set to face a smooth road ahead: for example, structural

issues surrounding the European VC exit and scale-up markets have been

further exacerbated by the COVID-19 recession. New and creative policy

solutions, making the best of digital technologies, will be pivotal in

developing an increasingly interconnected and thriving European VC

ecosystem, capable of nurturing the tech champions of tomorrow.

EIF’s Research & Market Analysis strives to support this process by

improving the availability of information for evidence-based policy

interventions, which are needed especially during and in the aftermath of

crises. With three regular equity surveys, the EIF VC Survey, the EIF

Private Equity Mid-Market Survey, and the EIF Business Angels Survey,

the EIF’s Research & Market Analysis team provides unique market

insight, typically on an annual basis. The EIF Surveys provide a detailed

overview of the respondents’ state of business, market activity and their

general perception of the current market situation.

The study at hand looks at the current situation, developments in the

recent past, and expectations for the future. In this publication, the

main results are summarised and compared over time. It provides a

unique picture of the developments and the market sentiment in 2021.

Despite a strong recovery of the VC market and a mixed, but limited

impact of the COVID-19 crisis, our survey results show that several

challenges continue to weigh on the VC market and ultimately hinder

a stronger push for young innovative enterprises with high growth

potential. We as EIF continue to work on further developing the

ecosystem and on mitigating market weaknesses.

I thank Invest Europe for their support. I also thank all contributors a

lot for this insightful project and analysis. In order to facilitate the

reading, we offer a hybrid slide document instead of a traditional

Working Paper style. I hope you will enjoy it.

Kind regards,

Helmut Kraemer-Eis

EIF Chief Economist and Head

of Research & Market Analysis

5

Table of contents

1 Executive summary

2 Market sentiment

3 Concludingremarks

4 Information about this study

5 Respondents’ profile and VC firm characteristics

6 Annex

Investments

Portfolio

Exits

COVID-19 impact

Challenges

Prospects

6

EIF VC Survey

Executive summary


Survey wave 2021

7

The EIF VC Survey

Executive summary

Source: EIF VC Survey 2021; published by EIF’s Research & Market Analysis in the EIF Working Paper series, available at https://www.eif.org/news_centre/research/index.htm

14%

31%

37%

19%

Pre-seed Seed Early Later stage /

Growth

479

Number of respondents Stage Top sectors

35%ICT

25%Biotech & healthcare

7%Energy &

environment

https://www.eif.org/news_centre/research/index.htm

8Executive summary

Key EIF survey topics 2021

Marketsentiment

Impact of COVID-19

Environment and Climate

Gender diversity

Forthcomingsoon

This paper

9


• In 2021, the European VC market

activity has recovered from its COVID-

19 crisis slump. According to the EIF VC

Survey, a survey of VC General Partners

investing in European ventures, VC fund

managers have become very optimistic

again. The current market situation is

perceived even better than before the

crisis. Expectations for the period until

mid-2022 are very positive across several

categories, displaying the highest values

since the EIF VC Survey launch in 2018.

• After a strong decline in Autumn 2020,

VC fund managers’ perception of their

state of business is back to the levels

reached in the preceding 4 survey waves.

The expectations regarding the state of

business in the next 12 months are

generally positive.

• The percentage of respondents reporting

an increase in their number of new

investments is larger than before the

COVID-19 crisis. During the COVID-

19 crisis, investment expectations had

undergone only a small slump. In 2021,

expectations for the next 12 months

even reached record high levels.

• Following a slump in the COVID-19

crisis in 2020, valuations and exit prices

have increased again, on average. A vast

majority of VC fund managers expects

a further increase in exit prices for the

next 12 months.

• The crisis had a heterogeneous

impact on VC-supported companies,

with the direction depending, for

example, on the activity sector of the

portfolio company.

• The largest share of respondents view

the impact of COVID-19 on the current

performance of their fund(s) / portfolio

as neutral. When looking at the impact

of COVID-19 on the expected final

performance of their fund(s) / portfolio,

respondents are more positive.

Expected NAV development was

more positive in 2021 than in 2020.

• In general, VCs are confident in the

long-term growth prospects of the

VC industry in Europe and in their

own market.

Mixed impact of COVID-19Strong recovery in 2021 Even record highs in some areas

Executive summary

European VC in 2021 and beyond: Key survey highlights


10


• The perception of the fundraising

environment reached an all-time high.

Expectations for the future fundraising

environment are more optimistic in 2021

than they were in Autumn 2020.

• Most respondents reported more

investments, and a further increase is

expected. VCs can select from an

increased number of incoming

investment proposals, which is even

expected to accumulate further.

• Less VC fund managers invested

exclusively in follow-ons in portfolio

companies.

• Finding co-investors has become less

difficult, and most VCs are expecting no

change over the coming months.

• Exit prices have developed upwards

and are expected to increase further.

• Portfolio company valuations increased

after the crisis year 2020. Most

respondents expect a further increase.

• Entry prices have rebounded upwards;

VCs expect even higher entry prices for

the near future.

• VCs report increased competition for

investee companies in the recent past and

expect this development to continue.

• The exit environment has recovered

since last year. Expectations have

improved, but are below 2018 levels.

• In 2021, the relative importance of

insolvencies/liquidations decreased,

while IPOs have become more

relevant.

• A large part of exits happened outside

the EU, in particular in the case of

IPOs / sale of listed stocks.

Exit environment recovered, while the share of non-EU buyers is high

Improved environment for fundraising and investment

Increased transaction prices, valuations and competition

Executive summary

EIF VC Survey results: A more detailed summary (i/ii)


11


• Portfolio companies developed better

than expected for most VCs. A large

majority of respondents expects further

improvement.

• Portfolio companies’ access to finance is

at a record high and expected to (at least)

stay similar in the near future.

• “Recruiting high quality professionals”

has remained the biggest challenge

faced by portfolio companies

throughout the years, except in Autumn

2020, when more immediate challenges

became more prevalent due to the COVID

crisis.

Portfolio companies developed better, but challenges remain

Executive summary

EIF VC Survey results: A more detailed summary (ii/ii)Challenges in VC business do not weigh on long term growth prospects

• “Fundraising”, “high investee

company valuations” and “number of

high quality entrepreneurs” have

consistently been among the most

important challenges in the VC business.

• In 2021, “high investee company

valuations” has become the most

important challenge currently seen in VC

business.

• VCs are confident in the long-term

growth prospects of the VC industry in

their own market and in Europe.

• The majority of VCs does not expect

any insolvencies due to the impact of

COVID-19. This respondent category

was slightly bigger in the 2021 survey

wave than during autumn 2020.

• The median respondent views the

impact of COVID-19 on the current

performance of their fund(s) /

portfolio as neutral. When looking at

the impact of COVID-19 on the

expected final performance of their

fund(s) / portfolio, respondents are

even more positive.

• VCs are also optimistic about the

NAV evolution. The optimism has even

increased, compared to autumn 2020.

Expected NAV development was more

positive in 2021 than in 2020.

Optimism prevailsdespite COVID-19 impact


12

Exceptional times require unique market insight

Executive summary


• The EIF concentrates on supporting the

necessary private sector VC

infrastructure to address market gaps

and challenges as well as to support

opportunities with the aim to further

enhance the attractiveness of

European VC as an alternative asset

class.

• In order to improve the availability of

information for evidence-based policy

interventions, the EIF performs, on a

regular basis, the EIF VC Survey, the

EIF Private Equity Mid-Market Survey

and the EIF Business Angels Survey. In

addition, a new EIF Private Debt Survey

has recently been launched.

Results disseminationEvidence-based policy intervention to address challenges and opportunities

A unique source of information

• In addition to the sections on market

sentiment and the impact of

COVID-19, the 2021 wave of the

EIF VC Survey and the EIF PE

MM Survey allowed us to look into

recent changes with respect to

gender diversity and considerations

related to climate and the

environment. Several related

publications are under preparation.

Additional analyses will look at ESG

considerations in the European

PE/VC market, based on our survey

results. A new wave of the EIF BA

Survey is also under preparation.

• The EIF survey results are published

in the EIF Working Paper series:

https://www.eif.org/news_centre/rese

arch/index.htm

• The EIF VC Survey, the EIF Private

Equity Mid-Market Survey, and the EIF

Business Angels Survey provide the

opportunity to retrieve unique market

insight. To the best of our knowledge,

the combined EIF PE MM Survey and

EIF VC Survey currently represent the

largest regular survey exercise among

GPs in Europe.

• The already large outreach of the EIF

surveys, which are coordinated by EIF’s

Research & Market Analysis (RMA),

and the high relevance of the

questionnaire topics for both market

participants and policy makers have

further increased through cooperations

with Invest Europe and the Joint

Research Center (JRC) of the

European Commission.



13

EIF VC Survey

Market sentiment


Survey wave 2021

14

• After a strong decline in Autumn 2020, VC fund managers’ perception of

their state of business is back to the levels reached in the preceding 4

survey waves.

• The “net balance” increased strongly by 20 percentage points. (See the

Annex for an explanation of the term “net balance” here.)

Q: “How would you assess the current state of your business?”

Expectations for the next 12 months

• Expectations forthe next 12 months have become very optimistic again.

• The percentage of respondents that have a negative vision for the next 12

months is back to their lowest levels reached in 2018.

Current situation

Q: “Over the next 12 months, how do you expect the state of your business to develop?”

Market sentiment

State of business


VC fund managers’ perception of their state of business is

back to pre-crisis levels.

4%12% 14% 14% 12%

26%

13%

86% 86% 84% 86% 69% 86%

85% 85% 83% 84%

65%

85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Bad/Very bad Average Good/Very good Net balance

5% 10% 6% 10% 13%5%

25%27% 35% 29%

32%

28%

69%

63%58%

61%

56%

67%

64%

52% 52% 51%

43%

62%

0%

10%

20%

30%

40%

50%

60%

70%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021N

et b

ala

nce

Perc

en

tage

of re

spo

ndents

Slightly/Strongly deteriorate Stay the same Slightly/Strongly improve Net balance


15

• The pessimistic picture observed in Autumn 2020 has been replaced by a

positive market perception in 2021.

• The share of respondents rating the current fundraising environment

as (very) good reached a record high in 2021. At the same time, the

share of negative perceptions decreased strongly.

Market sentiment

• Respondents’ expectations for the future fundraising environment are more

optimistic in 2021 than they were in Autumn 2020.

• While the share of optimistic respondents reached a record high in the

history of the EIF VC Survey waves, the share of pessimistic respondents

fell to an all-time low.


The perception of the fundraising environment reached an

all-time high.

Q: “Over the next 12 months, how do you expect the fundraising environment todevelop?”

Q: “How would you rate the current fundraising environment?”


Current situation

13% 15% 13% 9%

34%

9%

38% 34% 33% 41%

39%

28%

49% 51%54% 50%

27%

63%36% 36%

41% 41%

-7%

55%

-10%

0%

10%

20%

30%

40%

50%

60%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents


17%

35%

20%

37%

28%14%

48%

44%

56%

44% 44%

48%

35%

20% 24% 19%

27%38%

19%

-15%

4%

-18%

-1%

24%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021N

et b

ala

nce

Perc

en

tage

of re

spo

ndents


Fundraising Environment


16

• After becoming considerably more difficult for many respondents

between March 2020 and October 2020, finding co-investors has

become less difficult in 2021.

• The share of respondents that did not look for co-investors to syndicate

decreased to a record low.

Market sentiment

Easiness in finding co-investors

29% 31%22%

44%

9%

7% 6%

5%

8%

4%

39%

65%63%

73%

47% 47%

36%32%

51%

3%

38%

0%

10%

20%

30%

40%

50%

60%

0%

20%

40%

60%

80%

100%

2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Very difficult / difficult I did not look for co-investors to syndicate

Average Very easy / easy

Net balance

• While the expectations of VC fund managers regarding the future

easiness in finding co-investors had become more optimistic before the

crisis, the sentiment deteriorated between March and October 2020,

due to the impact of the COVID-19 crisis.

• The expectations have strongly recovered in 2021, with 35% expecting

it to become easier to find co-investors over the next 12 months and only

6% expecting it to become more difficult. A majority of 56% are

expecting the situation to stay the same.


Q: “Over the next 12 months, how do you expect finding co-investors to become?”

Q: “How easy/difficult is it currently to find co-investors to syndicate?”

Note: The “Average” response option was only provided in the 2021 Survey wave.

Current situation


Finding co-investors has become less difficult, and most

VCs are expecting no change over the coming months.

10% 11% 7% 11%

19%

6%3%

73%70%

71%64%

60%

56%

17% 20%22% 25%

21%35%

7%9%

14% 14%

1%

29%

0%

5%

10%

15%

20%

25%

30%

35%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Much / Slightly more difficult I do not intend to look for co-investorsStay the same Much / Slightly easierNet balance


17

• Despite the already positive current situation, most fund managers expect a

further increase in the number of investment proposals to their VC firm.

• These perceptions confirm a high demand forVC investments.

• However, a high number of incoming investment proposals does not

necessarily mean that these proposals are of sufficient quality for VCs to

invest.

Number of investment proposals receivedMarket sentiment – Investments

• The number of investment proposals received increased for almost two

thirds of responding VC fund managers.

• Only a small share of respondents perceived a drop in the number of

investment proposals.


Q: “Over the next 12 months, how do you expect the number of investment proposals to you/yourfirm to develop?”

Q: “Over the last 12 months, how has the number of venture investment proposals to you/yourfirm developed?”


Current situation

VCs can select from an increased number of incoming investment

proposals, which is even expected to accumulate further.

3% 3%24%

6%

36% 30%

40%

30%

61% 67%

36%

64%

58%

64%

12%

59%

0%

10%

20%

30%

40%

50%

60%

70%

0%

20%

40%

60%

80%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Strongly / Slightly decreased Stayed the same

Strongly / Slightly increased Net balance

3% 6% 3% 3% 9%3%

42%

40%

36%30%

37%

33%

54% 55%61% 67%

55%

64%51% 49%

58%

64%

46%

62%

0%

10%

20%

30%

40%

50%

60%

70%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net B

ala

nce

Perc

en

tage

of re

spo

ndents

Strongly / Slightly decrease Stay the same

Strongly / Slightly increase Net balance


18

Number of new investments

• During the COVID-19 crisis, investment expectations had

undergone only a small slump.

• In 2021, expectations for the next 12 months even reached record high

levels.

Current situation

Market sentiment – Investments

Q: “Over the next 12 months, how do you expect the number of your new investments todevelop?”



• The percentage of respondents reporting an increase in their number

of new investments is larger than before the COVID-19 crisis.

• The share of respondents reporting a decrease in the number of new

investments undertaken in the last twelve months is at a record low.

Q: “Over the last 12 months, how has the number of your new investments developed?”

Most respondents reported more investments,

and a further increase is expected.

8% 9% 12% 17%10% 6%

42% 39% 38% 31%39%

32%

50% 52%50%

52%

51%

61%42% 43%

38%35%

41%

55%

0%

10%

20%

30%

40%

50%

60%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Strongly / Slightly decrease Stay the same

Strongly / Slightly increase Net balance

13% 15% 21%7%

44% 43%

45%

35%

43%42%

33%

58%

30%27%

12%

51%

0%

10%

20%

30%

40%

50%

60%

0%

20%

40%

60%

80%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Strongly / Slightly decreased Stayed the same

Strongly / Slightly increased Net balance


19Market sentiment – Investments

Competition among investors for potential investee companies

• Alongside with an increase of entry prices, competition among

investors forpotential investee companies increased as well.

• The share of respondents indicating increased competition reached its

highest level since this survey question is presented to VCs (Feb 2020).

• Respondents expect, on average, a further increase in competition

among investors for potential investee companies over the next 12

months.

• The percentage of VCs expecting less competition is at its minimum

(1%) since the start of the survey early 2020.



Current situationVCs report increased competition for investee companies

in the recent past and expect this development to continue.

Q: “Over the past months, how have the following items developed?” Graph shows theresponses for “Competition among investors for potential investee companies”

Q: “When you consider your market over the next 12 months, how do you expect thefollowing items to develop?” Graph shows the responses for “Competition amonginvestors for potential investee companies“

3% 4%

23%

3%

28%34%

45%

19%

2% 2%

2%

3%

68%

60%30%

76%

65%

56%

7%

73%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decreased Stayed the sameDon't know Slightly/Strongly increasedNet balance

6%15% 12% 1%

36%

39% 42%

29%

2%1% 2%

4%

55%

45% 44%

66%48%

30%33%

65%

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decrease Stay the sameDon't know Slightly/Strongly increaseNet balance


20Market sentiment – Investments

Entry prices

• Following a slump in the COVID-19 crisis in 2020, entry prices

have increased again, according to three quarters of respondingVCs.

• While the upward trend in prices is visible overall, the share of VC

fund managers reporting increased entry prices (76%) is higher than for

increased exit prices (62%).

• Entry prices are expected, on average, to further increase.

• After decreasing from March 2020 to October 2020, the entry price

expectations rebounded strongly in 2021. Two thirds of our survey

participants expect increasing entry prices over the subsequent months.

• The percentage of VC managers expecting a decrease in entry prices is

at a record low (4%). The net balance reached a record level of 62%.

Q: “Over the past months, how have the following items developed?” Graph shows theresponses for “Entry prices of portfolio companies”

Q: “When you consider your market over the next 12 months, how do you expect thefollowing items to develop?” Graph shows the responses for “Entry prices“


Entry prices have rebounded upwards;

VCs expect even higher entry prices for the near future.


Current situation

4% 8%

38%

5%

28%25%

41%

16%

2% 3%

4%

3%

67% 64%

18%

76%

63%56%

-20%

71%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decreased Stayed the same Don't know

Slightly/Strongly increased Net balance

12%

32%30%

4%

37%

30%41%

29%

2%

3%

2%

3%

50%35%

27%

65%

38%

3%

-4%

62%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decrease Stay the same Don't know Slightly/Strongly increase Net balance


21

Investment strategyMarket sentiment – Investments

• In 2020, many respondents did not invest at all (8%) or limited themselves to follow-on investments in portfolio

companies (17%). In 2021, these categories decreased to 5% and 9%, respectively.

• In 2021, almost 80% of respondents invested in both new deals and follow-ons in portfolio companies over the past 12

months.

9%

17%

66%

8%

Since March, have you...

...invested in new deals only?

...invested in follow-ons in portfolio companies only?

…invested in both new deals and follow-ons in portfolio companies?

…not invested?

7%

9%

79%

5%

Over the last 12 months, have you...

...invested in new deals only?

...invested in follow-ons in portfolio companies only?

…invested in both new deals and follow-ons in portfolio companies?

…not invested?

October 2020 2021


Fewer VC fund managers invested exclusively in follow-ons in portfolio companies.


22

• Portfolio development significantly deteriorated from the beginning of

the COVID-19 crisis until Autumn 2020.

• In 2021, portfolio development recovered substantially, reaching a

record-high, with portfolio companies developing above expectations for

over half of respondents.

Market sentiment – Portfolio

9% 13% 11% 15%

43%

12%

46% 43%53% 50%

28%

35%

44% 44% 36%35%

29%

52%35%

31%

25%

20%

-15%

40%

-20%

-10%

0%

10%

20%

30%

40%

50%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Significantly / Slightly below expectations As expected

Significantly / Slightly above expectations Net balance

6%12%

14% 18%25%

29%25%

19%

85%80%

73%

65%

63%

79%

85%

78%72%

59%

51%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents

Significantly / Slightly deteriorate Stay the same

Significantly / Slightly improve Net balance

• Expectations for future portfolio development gradually decreased

between 2018 and 2020, although they remained very positive throughout

that period.

• 2021 saw a significant improvement in sentiment compared with 2020,

with almost 8 in 10 respondents expecting an improvement over the next

12 months and only 1% expecting a deterioration.

Portfolio development

Q: “Over the past months, how did your portfolio companies develop?”Note: The 2020 Autumn wave asked about developments since March 2020, while theother waves asked about developments over the last 12 months.

Q: “Over the next 12 months, how do you expect your portfolio to develop?”


Current situation


Portfolio companies developed better than expected for

most VCs; a large majority expects further improvement.


23

NAV of fund(s) / value of portfolio: Q4 2021 vs. Q4 2020

• The median category of respondents

expects a positive NAV impact of

10% to 25% (33% of respondents).

• In 2021, only 4% of respondents

expect a reduction in the NAV of the

portfolio. In 2020 the number was

consistently higher (24.6%)

Q: “How do you expect the NAV (Net Asset Value) of your fund(s) to evolve until the end of Q4 2021 compared to theNAV as of Q4 2020? (measured as % change from Q4 2020 to expected NAV in Q4 2021)”



VC respondents are optimistic about

the NAV evolution. Optimism has

increased, compared to October 2020.

10.4%

8.0%

6.2%7.1%

8.2%

13.6%

27.4%

12.3%

6.7%

1.1%0.4%

2.4%

4.4%

6.6%

16.3%

32.7%

23.3%

12.7%

0%

5%

10%

15%

20%

25%

30%

35%

–10% or worse –5% to –10% 0% to –5% 0% 0% to +5% +5% to +10% +10% to +25% +25% to +50% +50% or better

Perc

en

tage o

f re

spo

ndents

% change from NAV in Q4 2020 to expected NAV in Q4 2021

2020 Oct 2021


24

• Overall, VC respondents are positive regarding access to external

finance of their portfolio companies, after a deterioration in

respondents’ perception of access to external finance in the October

2020 Survey wave, in 2021 the perception reaches record levels.

• The share of respondents who see the access to finance as (very) bad is

at its lowest level since the survey has been performed the first time.

Access to external finance of portfolio companiesMarket sentiment – Portfolio

53%

9% 8% 5% 10% 4%

21%

28% 34% 35%

40%

25%

26%

64%58% 60%

50%

71%

-27%

55%50%

55%

40%

67%

-40%

-20%

0%

20%

40%

60%

80%

0%

20%

40%

60%

80%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents


13%23%

29%

9%

50%

46%45%

46%

37% 31% 26%

45%

24%

8%

-2%

36%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0%

20%

40%

60%

80%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage

of re

spo

ndents


• After a constant deterioration in 2020, survey participants expect the

access to external finance of their portfolio companies to either stay

the same (46%) or even improve (45%) in the next 12 months.

• Expectations are even more optimistic than respondents’ perception

reported before the crisis in February 2020.



Current situationPortfolio companies’ access to finance is at a record high

and expected to (at least) stay similar in the near future.

Q: “How would you rate the access to external finance of your portfolio companies?”

Q: “Over the next 12 months, how do you expect the access to external finance of yourportfolio companies to develop?”


25

• The valuations of portfolio companies increased for four fifths of

VC fund managers, which denotes a record share since the first EIF VC

Survey wave.

• At the same time, the net balance reached its pre-crisis level again,

following slumps in March and in October.


Valuations of portfolio companies

• The valuations of portfolio companies are expected, on average, to

further increase.

• More than three quarters of respondents expect an increase in

valuations over the subsequent 12 months.

• Only a tiny fraction (2%) of VCs expects lower valuations in the near

future.

Q: “Over the past months, how have the following items developed?” Graph shows theresponses for “Current valuations of portfolio companies”

Q: “Over the next 12 months, how do you expect the valuation of portfolio companies todevelop?”

Portfolio company valuations increased after the crisis

year 2020. Most respondents expect a further increase.



Current situation

7%

28%

20%2%

35%

32%

30%

20%

1%

1%

56%

40%49%

77%49%

12%

29%

75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decrease Stay the same Don't know

Slightly/Strongly increase Net balance

2% 9%

29%

8%

21%

29%

36%

10%

1%

1%

1%

76%

61%

35%

81%

74%

52%

6%

74%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decreased Stayed the same Don't know

Slightly/Strongly increased Net balance


26

• After reaching a record high of 30% in our March 2020 survey wave, the percentage of total exits composed of insolvencies/liquidations

has steadily decreased, falling to 15% in 2021.

• The percentage of totals exits made up of IPOs reached a record-high of 18% in 2021, compared with 10% in early 2020.

• Trade sales are still the most frequent exit route. Sales to financial investors, secondary sales to third parties and MBOs have remained

relatively stable over the past years. The share of management/owner buybacks has decreased since early 2020.

Market sentiment – Exits

Exit routes

In 2021, the relative

importance of

insolvencies/liquidations

decreased, while IPOs

have become more

relevant.


Q: “Over the last 12 months, howmany of your portfolio companiesexited via the following exit routes?”

Note: The graph reports the resultingpercentages of the respective exitroutes, excluding the “no exit” option.The 2020 October wave asked aboutdevelopments since March 2020.

40%34%

39%44%

10%

10%

13%

18%

23%30%

22%

15%

6%10% 9% 6%

10%7%

6% 8%

10% 7%7% 6%

1%2%

4% 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Perc

en

tage o

f to

tal e

xits

Trade sale to strategic buyer IPO / Sale of listed stocks Insolvency / Liquidation Secondary sale to 3rd party

Sale to PE / VC / Financial investor Management / Owner buyback Others


27

• Of the strategic sales in 2021, 55% were to buyers located

outside the EU, while 70% of the IPOs in 2021 were listed

outside the EU.

• When asked about the main challenges regarding the exit

environment, many respondents report that the European

IPO and M&A markets remain underdeveloped and that

they face difficulties finding potential European buyers.

• Some of these respondents report that there are too few

potential buyers in Europe overall, some report that there are

too few in their local markets or their sectors, while others

report that there are too few large-ticket buyers.

• Overall, this makes it increasingly difficult to achieve the

required investment returns when exiting in Europe,

especially in the context of rising entry prices, which show

that the share of respondents reporting increased entry prices

is higher than for increased exit prices, both for the past

months and expectations for the coming months (see page 20

and page 29), which forces investors to consider exit options

outside the EU.

• This shows an important need for public policy to provide

increased support for European buyers targeting these

gaps and forthe public markets.


Exit routes – within or outside the EU?

31%

45%

53%

56%

69%

55%

47%

44%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

IPO / Sale of listed stocks

Trade sale to strategic buyer

Sale to PE / VC / Financial investor

Secondary sale to 3rd party

Percentage of each respective exit route located…

...in the EU …outside the EU

A large part of exits is outside the EU, in particular

in the case of IPOs / sale of listed stocks

Q: “Please tell us, if your trade sales (sales to financial investors; secondary sales) have been to strategicbuyers (investors; 3rd parties) headquartered within or outside the EU”

Q: "Please tell us, if your IPOs / sales of listed stocks have been with primary listing within or outside the EU“

Q: “What are the main challenges regarding the exit environment?”



28

• After deteriorating significantly in between March and October 2020, the

exit environmenthas recovered strongly since then.

• In 2021, almost 6 in 10 respondents perceived an improvement in the exit

environment, while only 12% perceived a deterioration. Last year in

contrast, only 15% had experienced an improvement while over 50%

experienced a deterioration.


• Expectations for future exit opportunities gradually deteriorated

between 2018 and 2020, reaching their lowest point in October 2020,

with the net balance dropping to 13%.

• In 2021, expectations have significantly improved, with almost 6 in 10

respondents expecting an improvement and only 7% expecting a

deterioration.

• Despite the more optimistic sentiment, expectations for an improvement

are, on balance, still belowtheir 2018 levels.

7% 6%

53%

12%

62% 59%

32%

31%

31% 35% 15%

57%24%29%

-38%

46%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Significantly deteriorated Stayed the same

Slightly/Significantly improved Net balance

4% 10% 9%25% 26% 7%

32%

38% 46%

35% 35%

34%

64%52%

45% 40% 39%

59%

60%

42%36%

15%13%

53%

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021N

et b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Significantly deteriorate Stay the same

Slightly/Significantly improve Net balance

Exit environment



Current situation

Q: “Over the last 12 months, how has the exit environment for your venture portfoliocompanies developed?” Note: The 2020 October wave asked about developments sinceMarch 2020, while the other waves asked about developments over the last 12 months.

Q: “Over the next 12 months, how do you expect the exit opportunities of your ventureportfolio companies to develop?”

The exit environment has recovered since last year.

Expectations have improved, but are below 2018 levels.


29

Exit prices

• Following a slump in the COVID-19 crisis in 2020, exit prices have

increased again, on average.

• In 2021, a vast majority of VC fund managers report that exit prices

have increased. At the same time, only a small fraction (5%) of VCs

observed decreasing exit prices.

• The exit price perspective forthe next 12 months is very positive.

• More than half of the VC fund managers expect an increase in exit

prices.

• The net balance in 2021 reached 49%, a percentage that is more than

twice as high as before the crisis (February 2020: 20%).


Current situation

Q: “Over the past months, how have the following items developed?” Graph shows theresponses for “Exit prices of portfolio companies”

Q: “When you consider your market over the next 12 months, how do you expect thefollowing items to develop?” Graph shows the responses for “Exit prices”



Exit prices have developed upwards

and are expected to increase further.

13%23%

26%

6%

44% 44% 36%

29%

10%

10%8%

9%

33%23%

30%

56%

20%

0%

5%

49%

0%

10%

20%

30%

40%

50%

60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decrease Stay the same Don't know Slightly/Strongly increase Net balance

5% 8%

35%

5%

38%42%

33%

21%

15% 13%

17%

13%

42% 37%

15%

62%37%

29%

-19%

57%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2020 Feb 2020 Mar 2020 Oct 2021

Net b

ala

nce

Perc

en

tage o

f re

spo

ndents

Slightly/Strongly decreased Stayed the same Don't know Slightly/Strongly increased Net balance


30

Relevance of SPACs for VCs

• Half of our VC respondents have

considered using a SPAC as an exit

route for their portfolio companies.

• At the same time, only 1 in 5 VCs

have considered setting up a SPAC.



Half of VC respondents have

considered SPACs as an exit route.

Q: “Have you considered … setting up a special purpose acquisition company (SPAC)? / … using aSPAC as an exit route for your portfolio companies?”

21%

71%

8%

50%

39%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No I don't know / Prefer not to say

Perc

en

tage o

f re

spo

ndents

Considered setting up a SPAC Consider using a SPAC as an exit route


31Market sentiment – Exits

Advantages of SPACs as an exit route

VCs mainly consider the quicker and simpler path to a public listing to be an advantage of SPACs as an exit route.

• “Quicker and simpler path to a public listing” and “bridging the gap between private and public equity” are the main advantages of having SPAC

as exit route

• “De-risking of the IPO process” in terms of the acquisition price and “useful alternative to a traditional IPO, which could increase returns’’

ranked in the third and fourth place of VCs’ perception of SPAC advantages.

Q: “Which advantages would you consider SPACs having as an exit route?”. Note: Multiple selection possible. The diagram does not show the percentages for the response options“I don’t know/ prefer not to say” (21%), “None of the above” (7%) and “Others” (1%).


42%

31%

23% 23%

20%19% 18%

16% 15%

12%

9%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Quicker and

simpler path to a

public listing

Bridging the gap

between private and

public equity

markets

De-risking of the

IPO process

Useful alternative

to a traditional IPO,

which could

increase returns

Viable alternative

to traditional IPO

during periods of

market uncertainty

Improved access to

public equity for

SMEs

Flexibility in

negotiating a SPAC

merger

Lower perceived

cost compared with

a traditional IPO

Higher certainty in

valuations than in a

traditional IPO

Ability to raise

funds at multiple

points in the SPAC

process

Ability to retain a

substantial stake in

the portfolio

company

Possibility of

disclosing financial

projections of

portfolio companies


32

Additional investment in portfolio companies due to COVID-19

• Looking ahead, respondents are equally split between a large

share of respondents planning to provide additional

investment to portfolio companies due to COVID-19 until

the end of 2022 and a large share without such plans.

Market sentiment – COVID-19 impact

42%

41%

17%

Yes

No

I don't know


Q:“Are you planning to provide additional investment to portfolio companies due toCOVID-19 until the end of 2022”

COVID-19 forces a large share of VCs to provide additional investment to their portfolio companies.

• In the autumn 2020 survey, the majority of VCs stated that

they had to provide additional investment to portfolio

companies due to COVID-19.

Q: “Have you provided additional investment to portfolio companies due to COVID-19,where such investment was not foreseen at the start of 2020?”

October 2020 2021

56%

44%

Yes

No


33

Insolvencies due to impact of COVID-19

• Almost 3 in 5 VC managers do not

expect any COVID-induced

insolvencies. At the same time, 32%

of GPs expected that between 1%

and 10% of their portfolio

companies might file for insolvency

due to the impact of COVID-19,

while 8% of respondents expected a

share of 11% to 20% of their

portfolio companies.

• Only 1% of VCs expect that more

than 20% of their portfolio

companies might file for insolvency.


55%

17% 17%

3%5%

3%

59%

19%

13%

5%3%

1%

0%

10%

20%

30%

40%

50%

60%

70%

0 1-5 6-10 11-15 16-20 >20

Percentage of portfolio companies which might file for insolvency due to Covid-19, by percentage of respondents

2020 2021


The majority of VCs does not expect

any insolvencies due to the impact of

COVID-19. This respondent category

was slightly bigger in the 2021 survey

wave than during autumn 2020.

Q: “Please indicate the expected % of your active portfolio companies that might file for insolvencydue to the impact of COVID-19”. Note: The diagram is based on the responses from 67% of all surveyrespondents, as 33% had selected the “I don’t know / Prefer not to say” response option.


34

Impact of COVID-19 on fund / portfolio performance

• A large share of 41% of VCs considers the impact of COVID-19

on the current performance of their fund(s) to be neutral. The

remaining respondents are almost equally split into a group of

respondents stating a negative impact (27%) and another group

assuming a positive impact (30%).

• When looking at the impact of COVID-19 on the expected final

performance of their fund(s) / portfolio, respondents are more

positive: 36% expect the COVID impact on the final performance to

be as positive or very positive, while 12 % view it as negative or

very negative.

• Among respondents, 49% view the impact on the expected final

performance as neutral.Q: “How do you assess the impact of COVID-19 on the … current … expected finalperformance of your fund(s) / portfolio?”



The median respondent views the impact of COVID-19

on the current performance of their fund(s) / portfolio as

neutral.

Impact of COVID-19 on current performance of fund(s) / portfolio

Impact of COVID-19 on expected final performance of fund(s) / portfolio

2%

21%

50%

24%

4%1%

11%

49%

29%

7%3%

0%

10%

20%

30%

40%

50%

60%

Very negative Negative Neutral Positive Very Positive I don’t know / Prefer not to say

Perc

en

tage o

f re

spo

ndents 2020 2021

3%

42%

36%

17%

2%2%

25%

41%

25%

5%1%

0%

10%

20%

30%

40%

50%

Very negative Negative Neutral Positive Very positive I don’t know / Prefer not to say

Perc

en

tage o

f re

spo

ndents 2020 2021


35

1%

4%

5%

11%

12%

13%

14%

16%

27%

30%

30%

36%

69%

0% 10% 20% 30% 40% 50% 60% 70%

Accessing research infrastructures* [N/A]

Accessing public funding measures [9]

Securing debt financing [N/A]

Supply chain [7]

Securing liquidity [N/A]

Costs of production and labour [11]

Regulation [6]

Strong competition [8]

Internationalisation [5]

COVID-related disruptions of business activity [4]

Securing equity financing [N/A]

Customer acquisition and retention [1]

Recruiting high-quality professionals [3]

Percentage of respondents

Most important

2nd most important

3rd most important

Market sentiment – Challenges

Biggest challenges faced by portfolio companies

In 2021, “recruiting high quality

professionals” has again become the

first most important challenge for the

highest percentage of respondents.

• “Recruiting high-quality professionals” is

by far the most important challenge for

portfolio companies in 2021.

• “Disruption of business activity due to

COVID-related restrictions” was the

second most frequently selected by VCs as

the first most important challenge faced by

their portfolio companies.

• When adding also the items selected by VCs

as the 2nd and 3rd most important challenge

of portfolio companies, “Customer

acquisition and retention” ranks in the

second place.

Q: “Please select the biggest challenges currently faced by your portfolio companies.” The graphshows the total percentage of responses with respect to the three most important challenges.


Note: The number in brackets [ ] corresponds

to the ranking of the respective challenge in

the EIF VC Autumn Survey 2020. The

second biggest challenge in that survey wave

was “Securing financing / liquidity”.

*E.g. technology parks, incubators.


36

• “Recruiting high quality professionals” has remained the biggest challenge faced by portfolio companies throughout the years, except in October

2020, when more immediate challenges become more prevalent due to the COVID crisis, including securing financing / liquidity, customer acquisition

and retention and the business disruption due to COVID-19 related restrictions.

• In 2021, “recruiting high-quality professionals” has again become the most important challenge, although business disruption remains a challenge for

many VC portfolio companies.


Biggest challenges faced by portfolio companies over time

30

%

22

%

19

%

16

%

8%

6%

42

%

24

%

20

%

7%

2%

4%

1%

45

%

21

%

18

%

8%

4%

2%

1%

45

%

17

%

21

%

8%

6%

1%

0%

15

%

22

%

19

%

24

%

7%

2% 3%

1%

1%

37

%

16

%

14

%

14

%

6%

3% 4%

3%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Recruiting high-quality

professionals

Securing financing /

liquidity

Disruption of business

activity due to COVID-

related restrictions

Customer acquisition

and retention

Internationalisation Regulation Strong competition Supply chain Costs of production and

labour

Perc

en

tage o

f re

spo

ndents

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Q: “Please select the biggest challenges currently faced by your portfolio companies.” Note: The number in brackets [ ] corresponds to the ranking of the respective challenge in theEIF VC October Survey 2020. Please note that, contrary to recent survey waves, the 2018 survey offered respondents a multiple choice approach to select responses. The graphshows the percentage of respondents that selected the respective challenge as the first most important in each survey wave.


“Recruiting high quality professionals” has remained the

biggest challenge faced by portfolio companies throughout

the years, except in October 2020.


37

3%

5%

5%

7%

8%

12%

17%

17%

18%

18%

19%

26%

33%

34%

45%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Brexit [12]

Fee pressure [15]

Political uncertainty [7]

Cross-border market fragmentation [10]

IPO market [13]

Market volatility [4]

COVID-related disruptions of business activity [N/A]

Investee company performance [3]

Regulation [11]

Small fund sizes [8]

Exit environment [2]

Number of high quality entrepreneurs [6]

Fundraising [1]

Competition from other investors [9]

High investee company valuations [5]


Most important

2nd most important

3rd most important


Biggest challenges currently seen in VC business

“High investee company valuations”

has become the most important

challenge currently seen in VC

business.

• “High investee company valuations” and

“Competition from other investors” have

become more important as a challenge

compared with the previous EIF VC Survey

wave.

• “Fundraising” ranked in the first place of

challenges in VC business during the

October 2020 survey wave. In 2021,

“Fundraising” ranks second (when

considering only those items that VCs

selected as the first most important

challenge) and third (when considering the

items selected by VCs as the three most

important challenges), respectively.

Q: “Please select the biggest challenges you currently see in the venture capital business.” The graphshows the total percentage of responses with respect to the three most important challenges.


Note: The number in brackets [ ] corresponds

to the ranking of the respective challenge in

the EIF VC October Survey 2020.


38

• In October 2020 “high investee company valuations” “number of high quality entrepreneurs” became considerably less important as a challenge, while

“fundraising”, “investee company performance” and “market volatility” became a more immediate concern during the early stages of the crisis.

• In 2021, the “exit environment” became considerably less important as a challenge, compared with previous years declining from 17% last year to 4%. At the

same time, “competition from other investors” and “high investee company valuations” increased in importance.


Biggest challenges currently seen in VC business over time8

%

12%

10%

4%

7%

5%

10

%

4%

12%

4%

11%

3%

5% 6%

15%

18% 19%

4%

6%

8%

4%

3%

15%

1%

3%

0%

1%

3%

15%

19

% 20%

3%

7%

6%

2%

5%

16%

1%

3%

0%

2%

1%

15%

23%

17%

5%

4%

4%

1%

5%

15%

1% 2

%

0%

3%

1%

6%

27%

5%

3%

3%

14%

3%

10%

17%

3%

1%

0%

2%

1%

21

%

16%

13%

10%

6%

6%

6%

5%

5%

4%

3%

1%

1%

1%

1%

0%

5%

10%

15%

20%

25%

30%

High investee

company

valuations

Fundraising Number of high

quality

entrepreneurs

Competition

from other

investors

Disruption of

business activity

due to COVID-

related

restrictions

Regulation Investee

company

performance

Small fund sizes Market volatility Exit environment Cross-border

market

fragmentation

IPO market Fee pressure Political

uncertainty

Brexit

Per

cen

tag

e o

f re

spon

den

ts

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

“Fundraising”, “high investee company valuations” and

“number of high quality entrepreneurs” have consistently been

among the most important challenges in the VC business.

Q: “Please select the biggest challenges you currently see in the venture capital business.” Note: Please note that, contrary to recent survey waves, the 2018 survey offered respondents amultiple choice approach to select responses. The graph shows the percentage of respondents that selected the respective challenge as the first most important in each survey wave.



39

Factors explaining the European scale-up gap

• Apart from the underdeveloped IPO market, VCs mainly considered the smaller European VC industry / shorter track record, lower

average fund sizes and fewer late stage VC funds as important factors explaining the European scale-up gap compared to the US.

• Among those fund managers who selected the “Other/s” response option, many stated taxes, regulation/administrative burden and market

fragmentation in Europe to be a main factor that explains the scale-up gap.

Market sentiment – Challenges: Scale-up gap


VCs most frequently stated the underdeveloped IPO market to be an important factor explaining the European scale-up gap compared to the US.

Q: “Which factors would you consider most important in explaining the European scale-up gap compared to the US?” Note:Multiple selection possible.

Most important factors in explaining the gap with the US

9%

12%

20%

26%

27%

35%

45%

46%

50%

61%

0% 10% 20% 30% 40% 50% 60% 70%

Other/s

Underdeveloped market for venture debt

Limited awareness about the importance of scale-ups

Lack of cross-over funds

entrepreneurial ecosystem not centred around scale-ups

Insufficient follow-on financing options leading to sell earlier

Fewer large late-stage VC funds in Europe

Lower average fund sizes

Smaller European VC industry / Shorter track record

Underdeveloped IPO market



40

Bridging the European scale-up gap

• Apart from increased engagement by large institutional investors, public support for late stage VC and cross-over funds was also

highlighted as effective factor in bridging the late stage financing gap for scale-ups.

• Among those fund managers who selected the “Other/s” response option, many explained that the development of a strong IPO market and a

Nasdaq-like stock exchange in Europe could contribute to bridge the gap.

Market sentiment – Challenges: Scale-up gap


More engagement by large institutional investors is most often stated

to be an effective factor in bridging the late stage funding gap for European scale-ups.

Q: “Which factors would be most effective in bridging the late stage financing gap for European scale-ups?” Note:Multiple selection possible.

Most effective factors in bridging the late stage financing gap

53%

46%

30%

24%

8%

14%

0%

10%

20%

30%

40%

50%

60%

Increased engagement

by other large

institutional investors

Public support for late-

stage VC funds

Public support for

cross-over funds

Developing a

European Sovereign

Wealth Fund

Other/s I don't know / Prefer

not to say

Perc

enta

ge o

f re

spondents


41Market sentiment – Prospects

Most promising countries for VC investments – next 12 months

Q: “According to your expectation, please rank those European countries that will be most promising for VC investments over the next 12 months, in order of importance.” Note: thegraph shows the percentage of respondents ranking the respective countries in the top-three places.


VCs expect Germany, the UK and

France to be the most promising

countries for VC investments in the

coming months

• Germany, the UK and France have

remained on top of VCs’ ranking of the most

promising countries in the next 12 months.

• The Netherlands have surpassed Sweden as

well as Spain and are now in the fourth place

on the list of countries that VCs stated most

frequently as their expected top 3 promising

countries in the near future.

48

%

35

%

27

%

13

%

13

%

14

%

11

%

10

%

7% 9

%

6% 8

%

6%

5%

6%

2% 3%

2% 3%

50

%

38

%

27

%

16

%

14

%

14

%

13

%

8%

8%

7%

7%

7%

6%

6%

6%

3%

3%

3%

3%

0%

10%

20%

30%

40%

50%

60%

Perc

en

tage o

f re

spo

ndents

Autumn 2020 2021


42

• Size of market

• Technological innovation

• Availability of entrepreneurial talent

• Strength in technology sector, includingBiotech, MedTech and Deep tech

• Strong VC ecosystem


Germany

UK

France • Strong government/public support

• Entrepreneurship and founder talent

• Strong VC ecosystem and largestart-up / scale-up scene

• Good access to funding

• Low entry prices

• Significant growth potential for start-ups

• Mature VC and start-up ecosystem

• Entrepreneurship and founder talent

• Size of market and access to financing

• Strong pipeline of potential investments


• High quality start-up community

• Strength in technology sector

Market sentiment – Prospects

Most promising countries for VC investments – reasons

Netherlands

Spain

Sweden


Q: “Why do you consider this/these country/countries promising?” Note:We provide reasons only for those six countries considered most promising in the previous question.


43

Most promising sectors/industries in the near futureMarket sentiment – Prospects


Healthcare, Digitisation & Sustainability

are the areas with the greatest

investment potential.

• Amid the pandemic, the investment potential in thehealthcare / life sciences sector continues to increase;with Biotech, Healthtech and Digital health featuringprominently.

• This is in line with a pattern towards the use oftechnology applications to enable greater digitisationof businesses and processes.

• Sustainability (including transition to greener energyand climate change-related investments) are also onthe rise.Q: “What sector/industry would you consider as the most promising for venture capital

investments in the near future?” Note: The graph was generated using Wordcloud wherebythe bigger the font size the more frequently the respective answer was mentioned in thefree-text field.

AI: Artificial Intelligence; B2B: Business-to-Business;

IoT: Internet of Things; SaaS: Software as a Service.


44

Venture Capital industry growth prospects

On a scale of 1 to

10, how confident

are you in the long-

term growth

prospects of the

Venture Capital

industry in your

market?• With regard to the VC industry in their own

markets, the majority of respondents is

confident in the long-term growth prospects.

Market sentiment – Prospects

• When looking at the confidence on the

long-term growth of the European VC

Industry, the value reached a record high

since the first EIF VC Survey publication

in 2018.

On a scale of 1 to

10, how confident

are you in the long-

term growth

prospects of the

European Venture

Capital industry?

7.8

7.7 7.7

8.0

7.98.0

7.5

7.6

7.7

7.8

7.9

8.0

8.1

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Mean

valu

e a

cro

ss s

am

ple

Average confidence

7.57.5 7.5

7.5

7.3

7.7

7.1

7.2

7.3

7.4

7.5

7.6

7.7

2018 2019 2020 Feb 2020 Mar 2020 Oct 2021

Mean

valu

e a

cro

ss s

am

ple

Average confidence


VCs are confident in the long-term

growth prospects of the VC industry

in their own market and in Europe.


45

EIF VC Survey

Concluding remarks


Survey wave 2021

46


• In 2021, the European VC market

activity has recovered from its COVID-

19 crisis slump. According to the EIF VC

Survey, a survey of VC General Partners

investing in European ventures, VC fund

managers have become very optimistic

again. The current market situation is

perceived even better than before the

crisis. Expectations for the period until

mid-2022 are very positive.

• The perception of the fundraising

environment reached an all-time high and

the exit environment has recovered. The

percentage of respondents reporting an

increase in their number of new

investments is larger than before the

COVID-19 crisis. Following a slump in

the COVID-19 crisis in 2020, valuations

and exit prices have increased again, on

average, which is expected to continue.

• The crisis had a heterogeneous impact

on VC-supported companies, with the

direction depending, for example, on the

activity sector of the portfolio company.

• The largest share of respondents view the

impact of COVID-19 on the current

performance of their fund(s) / portfolio

as neutral. When looking at the impact of

COVID-19 on the expected final

performance of their fund(s) / portfolio,

respondents are more positive. Expected

NAV development was more positive in

2021 than in 2020.

• In general, VCs are confident in the

long-term growth prospects of the VC

industry in Europe and in their own

market.

Challenges remainStrong recovery in 2021 Mixed, but limited, COVID-19 impact

Concluding remarks

European VC market recovered, but challenges remain

• Despite the improved exit

environment and the increased

importance of IPOs in 2021, a large

part of exits happened outside the

EU, in particular in the case of

IPOs / sale of listed stocks.

• “Fundraising”, “high investee

company valuations” and “number

of high quality entrepreneurs” have

consistently been among the most

important challenges in the VC

business.

• “Recruiting high quality

professionals” has remained the

biggest challenge faced by portfolio

companies throughout the years,

except in Autumn 2020, when more

immediate challenges became more

prevalent due to the COVID crisis.


47


• In the aftermath of the COVID-19 crisis in

autumn 2020, VC fund managers

participating in the EIF VC Survey stated

several positive developments. In

particular, the acceleration of digitisation

resulting from the crisis is seen as a

substantial opportunity.

• COVID-19 accelerated the adoption of

new technological solutions and business

models, which benefitted portfolio

companies across a wide range of

industries offering such solutions.

• The EIF VC Survey results support the

notion that there exists an

unprecedented opportunity to benefit

from some of the strong tailwinds

created by the crisis, for example in the

digital transformation across sectors.

• These opportunities might not always

be supported by the sufficient

availability of financing sources.

Previous survey results suggest that this

is particularly relevant in the very

initial stages and in the growth stage

segment and financing of “scale-ups”.

This creates a need for policy measures

that appropriately ensure that companies

which are implementing new

opportunities will have sufficient access

to finance.

A crisis is also an opportunity Support through appropriate instruments

Concluding remarks

Policy implications

• New and creative policy solutions,

making the best of digital

technologies, will be pivotal in

developing an increasingly

interconnected and thriving

European VC ecosystem, capable of

nurturing the tech champions of

tomorrow.

• Moreover, policy responses should

entails a combination of new and

existing measures. In the case of

financial instruments, these should

support both existing and new

financing channels and market

players.

Existing and new policy solutions


48

Exceptional times require unique market insight

Concluding remarks


• The EIF concentrates on supporting the

necessary private sector VC

infrastructure to address market gaps

and challenges as well as to support

opportunities with the aim to further

enhance the attractiveness of

European VC as an alternative asset

class.

• In order to improve the availability of

information for evidence-based policy

interventions, the EIF performs, on a

regular basis, the EIF VC Survey, the

EIF Private Equity Mid-Market Survey

and the EIF Business Angels Survey. In

addition, a new EIF Private Debt Survey

has recently been launched.

Results disseminationEvidence-based policy intervention to address challenges and opportunities

A unique source of information

• In addition to the sections on market

sentiment and the impact of

COVID-19, the 2021 wave of the

EIF VC Survey and the EIF PE

MM Survey allowed us to look into

recent changes with respect to

gender diversity and considerations

related to climate and the

environment. Several related

publications are under preparation.

Additional analyses will look at ESG

considerations in the European

PE/VC market, based on our survey

results. A new wave of the EIF BA

Survey is also under preparation.

• The EIF survey results are published

in the EIF Working Paper series:

https://www.eif.org/news_centre/rese

arch/index.htm

• The EIF VC Survey, the EIF Private

Equity Mid-Market Survey, and the EIF

Business Angels Survey provide the

opportunity to retrieve unique market

insight. To the best of our knowledge,

the combined EIF PE MM Survey and

EIF VC Survey currently represent the

largest regular survey exercise among

GPs in Europe.

• The already large outreach of the EIF

surveys, which are coordinated by EIF’s

Research & Market Analysis (RMA),

and the high relevance of the

questionnaire topics for both market

participants and policy makers have

further increased through cooperations






49

EIF VC Survey

Information about this study


Survey wave 2021

50

The EIF VC Survey



• The EIF Venture Capital Survey, the

EIF Private Equity Mid-Market

Survey, and the EIF Business Angels

Survey provide the opportunity to

retrieve unique market insight.

• To the best of our knowledge, the

combined EIF PE MM Survey and

EIF VC Survey currently represent

the largest regular survey exercise

among GPs in Europe.

• The EIF BA Survey is unique in its

pan-European coverage and multi-

country approach.

• The EIF equity surveys are online

surveys of VC and Private Equity (PE)

Mid-Market (MM) fund managers as

well as of Business Angels (BAs)

investing in Europe.

• Our surveys target both EIF-supported

as well as non-EIF supported fund

managers and BAs.

• The vast majority of the respondents in

the VC and PE MM surveys hold the

position of CEO or Managing/General

Partner, suggesting that their responses

reflect the views of the decision-

makers in the respective VC/PE firms.

Cooperation partnersA unique source of information General survey approach

• The already large outreach of the

EIF surveys, which are

coordinated by EIF’s Research &

Market Analysis (RMA), and the

high relevance of the questionnaire

topics for both market participants

and policy makers have further

increased through cooperations




• A part of the sample for the EIF

VC Survey 2021 comprises Invest

Europe members.


51

This study and beyond



• The main topics covered in the 2021

survey are market sentiment, the impact

of COVID-19, environment & climate,

and gender diversity.

• The focus of this study is on the survey

results for the topics market sentiment and

the impact of COVID-19.

• Since the market sentiment topic was also

covered in all previous survey waves, we

compare the results using a time series.

ForthcomingRespondents and survey period Topics

• This study is based on the EIF VC

Survey.

• The 2021 wave of the EIF VC

Survey includes anonymised

responses from 479 VC fund

managers (from 379 VC firms).

• Responses were received between 2

July and 4 August 2021.

• Further results of the 2021 EIF

equity survey waves are currently

being analysed and will be

published in the EIF Working

Paper series over the coming

months. The EIF Working Papers

are available here:

https://www.eif.org/news_centre/re

searc/index.htm

• These forthcoming publications

will be based on the EIF VC

Survey and the EIF PE MM

Survey and cover the topics

Gender diversity and Investing in

Environment & Climate. A

publication about the market

sentiment in the private equity

mid-market is also in preparation.



52

How to read the results



Terminology: “net balances”General information Terminology: Survey waves

• The following analyses also use results from the

previous EIF VC Survey waves:

“2021”: 2 July – 4 August 2021

“2020 Oct”: 7 October – 3 November 2020

“2020 Mar”: 1 March – 10 March 2020

“2020 Feb”: 29 January – 28 February 2020

“2019”: 7 February – 18 March 2019

“2018”: 7 November – 18 December 2017

Please note that the survey results for “2020 Feb” and

“2020 Mar” are based on the first 2020 EIF VC Survey

wave, which was performed between 29 January and

10 March. In order to analyse the immediate effects of

the COVID-19 crisis, the results of that survey wave

were split into two response sets: (i) responses received

in (January/)February, and (ii) responses received in

March. See EIF Working Paper 2020/064 for details.

• The “net balances” shown in graphs

refer to the percentage of

respondents reporting a positive

response minus the percentage of

respondents reporting a negative

response. (For example: In the

question “Over the next 12 months,

how do you expect the number of

your new investments to develop?”,

the net balance refers to the %age of

respondents expecting the number of

their new investments to

slightly/strongly increase minus the

%age of respondents expecting the

number of their new investments to

slightly/strongly decrease.)

Some results shown in this publication

are based on a number of respondents

that is smaller than the overall number of

EIF VC Survey 2021 respondents, either

because the other respondents selected

the “I don’t know / Prefer not to say”

response option or because a filter

question preceded the question under

consideration. Further details are

available upon request.


53Information about this study

List of acronyms• AUM: Assets Under Management

• BA(s): Business Angel(s)

• bn: billion

• CEO: Chief Executive Officer

• COVID(-19): Coronavirus disease pandemic

• EIB: European Investment Bank

• EIF: European Investment Fund

• ESG: Environmental, Social, Governance

• EU: European Union

• EUR: Euro

• Feb: February

• GP(s): General Partner(s)

• HQ: Headquarters

• ICT: Information and Communications Technologies

• IPO: Initial Public Offering

• JRC: Joint Research Center of the European Commission

• LP(s): Limited Partner(s)

• m: million

• M&A: Mergers and acquisitions

• Mar: March

• MBO: Management Buy-Out

• NAV: Net asset value

• Oct: October

• PE MM: Private Equity Mid-Market

• Q: Question

• Q4: Fourth quarter of a year

• RMA: Research & Market Analysis

• SME: Small and Medium-sized Enterprise

• SPAC: Special purpose acquisition company

• UK: United Kingdom

• USA: United States of America

• VC: Venture Capital

• VCs: Venture Capital fund managers

54

EIF VC Survey

Respondents’ profile and VC firm characteristics


Survey wave 2021

55Respondents’ profile and VC firm characteristics

EIF relationshipAmong respondents,

61% are EIF-supported,

while 39% have never

received EIF funding.

Q: “Has your investment firm ever appliedto the EIF for funding for one of yourventure capital funds?”

Q: “Are you familiar with the EIF and itsactivities?”

Q: “Did any of these applications result inEIF funding?”


479

respondents

Applied for

EIF fundingNever applied

for EIF

funding

110

23%

369

77%

Successful

application

Unsuccessful

application293

61%

76

16%Familiar

with EIF

Unfamiliar

with EIF

89

19%

21

4%


56

• Approximately 4 in 10 VC fund managers come from VCfirms headquartered in Germany, the UK, the Netherlands andFrance.

• Overall, the frequency with which a country is selected as thefirst most important country is closely correlated with theHQ country.

• Germany is mentioned far more frequently as the first mostimportant country, than would be expected from the frequencywith which it is mentioned as a HQ country.

HQ & investment location / investment stage focusDistribution of respondents by HQ country of VC firm

Most important investment stage


12%11%

9%8%

8%

5%4% 4%

3% 3% 3% 3% 3%

10%

17%

7%8%

8%

4% 4%4%

1%3%

0%

3% 3%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Perc

en

tage o

f re

spo

ndents HQ country

First most important country for

investments

14%

31%

37%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Pre-seed Seed Early Later stage / Growth

Perc

en

tage o

f re

spo

ndents

Approximately 7 in 10 VCs invest in

seed (31%) or early stage (37%)

companies.




Most important industry in which VCs invest The most important industries in which responding VCs invest are ICT and Biotech,

the less important ones are Chemicals/ materials and Consumer Goods.


35%

25%

7% 7% 6% 5% 4% 2% 2%

7%

22%

24%

21%

28%

24%

18% 19%

11% 10%3%

58%

49%

28%

35%

30%

23% 22%

13% 12%10%

0%

10%

20%

30%

40%

50%

60%

ICT (communications,

computer and

electronics)

Biotech and healthcare Energy and

environment

Business services Financial and insurance

services

Business products Consumer services Consumer goods Chemicals and

materials

No clear sector focus

Perc

en

tage o

f re

spo

ndents

First most important Second, Third….most important

Q: “Please select the most important industries in which your firm invest in venture capital”

Note: Percentages in black font on top of the bars show the aggregate percentage of respondents.



Respondents’ VC firm

0%

2%

13% 13%

16%

27%

28%

0%

5%

10%

15%

20%

25%

30%

1970-1980 1981-1990 1991-2000 2001-2005 2006-2010 2011-2015 2016-2021

Perc

en

tage o

f re

spo

ndents

Over half of VC fund managers come from VC firms

established over the last decade.


Q: “In what year was your firm established?” Q: “What are your firm’s total approximate assets under management?”

Two thirds of respondents’ VC firms have AUM between

EUR 50m and EUR 499m.

Year of establishment Assets under management

5%

10% 10%

21%

22%

20%

8%

5%

0%

5%

10%

15%

20%

25%

< 10 10 – 29 30 – 49 50 – 99 100 – 199 200 – 499 500 – 999 ≥ 1,000

Perc

en

tage o

f re

spo

ndents

Values in million Euro


59

Fund-related information

2%

27%

21% 21%

8% 9%10%

2%

0%

5%

10%

15%

20%

25%

30%

0 1 2 3 4 5 6 to 10 More than

10

Q: “What is your firm’s latest VC fund size”Q: “Was your firm’s most recent fund also the first time that your team raised a

fund?”

38%

30%

19%

6% 7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

0-50 50-100 100-200 200-300 more than 300

Q: “In total, how many venture capital funds has your firm raised to date? ”

Almost one third of the VC teams raised

only 1 fund up to date

For one third of the firm the

most recent fund was also

the only one raised

7 out of 10 funds raised an amount

between EUR 0 and 100m.

31%

67%

2%

Yes

No

I don't know

Team Experience Latest VC fund size VC fund raised up to date




60

EIF VC Survey

Annex


Survey wave 2021

61

Regional

analysis

Regional

differences

to be

considered

in the design

of VC policy

programs.

COVID-19

impact &

policy

measures

A crisis is also

an

opportunity,

which needs

appropriate

policy

instruments.

Scale-up

financing &

IPOs

Low scale-up

focus of funds

in Europe is one

of the biggest

challenges for

VC/PE fund

managers &

BAs

Market

sentiment*

Unique insights

into the impact

of the COVID-

19 crisis on the

European PE

and VC

ecosystem

ESG

First ever

testimony on

the integration

of ESG

considerations

and

impact

investing in VC

& BA

Annex

Survey publications and highlights

Apr 2018 Sep 2018 Sep 2019 Nov 2019Jun 2020

Jul 2020 Jan 2021

Public

intervention in

VC

Fund managers

more satisfied

with European

programs than

with national or

regional ones

EIF’s value

added, products

and processes

EIF’s presence

has high value-

added and helps

to crowd-in

private investors,

but red tape

should be

reduced

Policy

suggestions

Tax

harmonisation,

regulatory

simplification

and

overcoming

cross-border

market

fragmentation

Business Angels

Public

programmes for

BAs also foster

VC ecosystem;

European Angels

Fund procedures

are appropriate

and help increase

BA reputation

*Latest market sentiment is published in the EIF Working Paper series; see also “Measuring Venture Capital Sentiment in Europe”, https://doi.org/10.1007/978-3-030-17612-9_6, for methodological notes.

EIF Working Paper series, available at https://www.eif.org/news_centre/research/index.htm


62Annex

This page is intentionally left blank.

63Annex

About …… the European Investment Fund

The European Investment Fund (EIF) is Europe’s leading risk finance provider for small andmedium sized enterprises (SMEs) and mid-caps, with a central mission to facilitate their access tofinance. As part of the European Investment Bank (EIB) Group, EIF designs, promotes andimplements equity and debt financial instruments which specifically target the needs of thesemarket segments.

In this role, EIF fosters EU objectives in support of innovation, research and development,entrepreneurship, growth, and employment. EIF manages resources on behalf of the EIB, theEuropean Commission, national and regional authorities and other third parties. EIF support toenterprises is provided through a wide range of selected financial intermediaries across Europe.EIF is a public-private partnership whose tripartite shareholding structure includes the EIB, theEuropean Union represented by the European Commission and various public and private financialinstitutions from European Union Member States, the United Kingdom and Turkey. For furtherinformation, please visit www.eif.org.

… Invest Europe

Invest Europe (www.investeurope.eu) is the association representing Europe’s private equity,

venture capital and infrastructure sectors, as well as their investors. The Invest Europe members

take a long-term approach to investing in privately held companies, from start-ups to established

firms. They inject not only capital but dynamism, innovation, and expertise. This commitment

helps deliver strong and sustainable growth, resulting in healthy returns for Europe’s leading

pension funds and insurers, to the benefit of the millions of European citizens who depend on

them. Invest Europe aims to make a constructive contribution to policy affecting private capital

investment in Europe. Invest Europe provides information to the public on its members’ role in the

economy. The Invest Europe research provides the most authoritative source of data on trends and

developments in our industry. Invest Europe is the guardian of the industry’s professional

standards, demanding accountability, good governance and transparency from our members. Invest

Europe is a non-profit organisation with 25 employees in Brussels, Belgium.

… EIF’s Research & Market Analysis

Research & Market Analysis (RMA) supports EIF’s strategic decision-making,product development and mandate management processes through appliedresearch and market analyses. RMA works as internal advisor, participates ininternational fora and maintains liaison with many organisations and institutions.

… this Working Paper series

The EIF Working Papers are designed to make available to a wider readershipselected topics and studies in relation to EIF s business. The Working Papers areedited by EIF s Research & Market Analysis and are typically authored or co-authored by EIF staff, or written in cooperation with EIF. The Working Papersare usually available only in English and distributed in electronic form (pdf).

The EIF Working Paper series is available at


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