Investors Flock to European Venture Funds

Growth and venture funds targeting Europe are on track to set fundraising records this year, according to Preqin data.

Frankfurt, Germany. (Alex Kraus/Bloomberg)

Frankfurt, Germany.

(Alex Kraus/Bloomberg)

After years of stagnant fundraising, European growth and venture capital funds are bringing in record levels of cash.

This year, VC and growth funds targeting the continent are already on track to surpass last year’s haul, having raised more than €11 billion ($12.7 billion) through July, according to research firm Preqin.

Investor interest in the market has grown sharply over the last few years, with growth and venture funds raising a combined €15 billion in 2016 and another €12 billion last year, the firm’s data show. By comparison, European funds never raised more than €10 billion in any year from 2008 to 2015.

“Clearly [the European market] is in good health,” Christopher Elvin, Preqin’s head of private equity products, said in a company statement Thursday. “Deal activity is similarly on course to reach an all-time high.”

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The largest fund closed so far this year, according to Preqin, is London-based Inflexion Private Equity Partners’ growth vehicle Inflexion Partnership Capital II, which closed in May with €1 billion in investor commitments – above its €700 million target. Investors in the fund included the New York State Teachers’ Retirement System and the Illinois Municipal Retirement Fund, Preqin said.

In private equity, investors have pointed to Europe as the region presenting the second-most opportunities after North America, according to a Preqin survey in June. Within venture capital and growth investing, however, Europe has been “perhaps somewhat overshadowed” by Asia’s booming technology industry, Elvin said.

According to Preqin, venture capital managers had invested in 1,403 European deals valued at a total €11 billion this year through July. With five months left to go, deal-making could surpass the record €16 billion set last year.

Within Europe, VC deals have been primarily concentrated in the U.K. and Germany. The former has accounted for 32 percent of all deals since 2013, representing 36 percent of deal value, while the latter has been the location of 14 percent of deals in that time period, making up 18 percent of deal value.