US investors pare back exposure to European VC deals

US investors have significantly reduced their involvement in European venture capital deals as they refocus on core markets.

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Last year, US-based venture investors took part in 1,863 European rounds, according to PitchBook’s Q3 Annual European Venture Report—a nearly 40% decline from 2022. This represents about 20% of the overall deal count, down from 23% the previous year.

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US VCs have shown less appetite for cross-border deals over the last year as they seek to reduce risk and provide more funding to support their local portfolio companies. Some investors including Coatue Management have pulled out completely from Europe this year.

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Although US participation in Europe’s VC deals declined in 2023, it was still the third-highest annual total for US involvement. Over the past decade, investors from across the pond went from participating in 11% of European VC rounds to about 20% last year, underscoring the long-term structural growth of Europe’s VC scene.

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Many US VCs have recently been pushing to expand their European activities despite the VC downturn. In October, General Catalyst acquired German early-stage firm La Famiglia to bolster its regional presence. Both Andreessen Horowitz and IVPannounced earlier in the year that they were opening London offices.

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A large number of Europe’s biggest VC rounds in 2023 included US investors. A16z and Lightspeed Venture Partners were among investors in AI company Mistral AI’s €385 million round in December. Personal lending platform Abound’s £500 million fundraise in March came from firms including Californian VC GSR Ventures.

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Reference: https://pitchbook.com/news/articles/europe-vc-us-investors-2023