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In the first half of 2020, 904 startups raised funding above $2 million. That count is down by 9 percent when compared to the first half of 2019 when 991 startups raised a round of $2 million and over.

Europe鈥檚 venture trends differ from those seen in North America. For the U.S. funding market, 2018 was a peak. For Europe the upward trend in funding continued into 2019.

Quarterly trends

On a quarterly basis, the pullback started in the fourth quarter of 2019 and has continued into 2020. In general, the fourth quarter can be slower due to the end-of-year wind down, but in some years funding matched or outpaced a strong third quarter as venture markets heated up.

The continued downward trend into 2020 for European startups is framed by the pandemic. The second quarter of 2020 tracks at $8.1 billion compared with $11.2 billion for the second quarter of 2019. Year over year, quarterly funding is down 28 percent. Quarter over quarter it鈥檚 down 8 percent.

Increased funding to health care, e-commerce

Sectors that garnered increased funding for both quarter over quarter and year over year include biotechnology, e-commerce and shopping, science and engineering, health care, and privacy and security. Leading sectors that picked up fewer investment dollars this quarter were in transportation and lending, both raising large funding amounts in the first quarter of 2020 as well as the second quarter of 2019.

Supergiant round amounts are down

The reset is far more pronounced at funding rounds above $100 million.

• Year over year we see a 52 percent reduction in amounts above $100 million.
• Funding below $100 million is down 9 percent year over year.
• The majority of funding in the second quarter of 2020 in European companies were rounds below $100 million at 72 percent.

This contrasts with North America, where more funding is going to supergiant rounds at 52 percent of funding.

Notable rounds

Notable Series A funding includes London-based , a virtual events platform, which raised $40 million led by , and Berlin-based , a platform to connect restaurants to the food supply chain, raised a $30.2 million Series A2 led by .

Significant Series B rounds include a $150 million round to London-based , an API platform for the checkout experience, led by Coatue Management. The round values Checkout.com at $5.5 billion. Berlin-based , a mobile-only, commission-free trade broker raised $67 million led by and.

Series C rounds that stand out include an $80 million raise for Zurich-based , a mobile computer vision company for enterprises. , a cloud-based call center technology, raised $65 million led by , the investment platform backed by . And an -led raise of $65 million for , a mobile app that simplifies tax filing.

Leading markets

Investments into the U.K. market are more than double the next leading market, Germany. France rounds out the top three, followed by Sweden and Switzerland.

Leading investors

Leading investors in the quarter for European startups by count include Index Ventures, , 1, and Accel. Active micro-venture firms at the earlier stages include ,, , and . Leading accelerators include , , and . Active government offices include and the .

As venture capital is moving across borders, we also looked at the spread of European investors in 2020 versus those based in North America.

• For rounds between $1 million and $20 million, 83 percent of investors are based in Europe, and 14 percent are headquartered in the U.S.
• For rounds $20 million and above, 60 percent of investors are based out of Europe, and 33 percent are from North America.

As expected, North American investors are investing more at the later stages. However, European venture investing is growing. (It is worth noting that leading investors Index Venture and Accel are headquartered in the U.S., but have a strong team and investment presence in Europe. Were we to attribute their investment to European firms, the impact is a 1 to 2 percentage point difference.)

Three new European unicorns

Three European startups joined the unicorn board this quarter. Berlin-based , an all electric vertical take-off and landing aircraft for regional travel, raised a $240 million Series C led by in March. It raised a $35 million extension in June, adding as an investor. This latest addition to its Series C put them at $1 billion post-money valuation.

The used-car platform , based in the U.K., also joined the unicorn ranks this quarter. It is the fastest European company to become a unicorn by achieving the status within . Cazoo raised $30 million in a round led by with participation by and .

Dublin-based , an internal performance management platform for large companies, raised a secondary market round of $122 million from existing shareholders led by , giving the company a $1.2 billion valuation.

In conclusion

European funding is down in 2020 after a continued annual upward trend since 2016. As of the fourth quarter of 2019, funding has slowed down but less so at the earlier funding stages. This bodes well for the health of the European venture funding ecosystem.

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data.

Data lags are most pronounced at the earliest stages of venture activity with seed funding amounts increasing significantly after the end of a quarter.

Amounts for the most recent quarter will increase over time relative to previous quarters. For funding counts, we notice a strong data lag–especially at the seed and early stages–by as much as 26 percent to 41 percent from a year ago.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding, and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture, and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series,聽 corporate venture, and other rounds above $15 million.

Technology growth is a private equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration:

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Many hypothesized that there would be a slowdown in funding and fewer deals made. The logistics of how firms could invest in a company and teams they鈥檝e never met was a whole new obstacle. Further, how investors commit with confidence amid such uncertainty in the world was (and is) a major challenge.

But investors adapted and deals still happened.

However, with the end-of-quarter data in hand, we see that venture dollars invested in North American startups were down for the first half of the year compared to the first half of last year. The same was true specifically for the second quarter.

In general, funding counts for the most recent quarter will be lower as funding rounds are added after the quarter closes. Typically, the data lag is greater at the seed and early funding stages. Funding amounts are less impacted as larger funding rounds are more likely to be announced in a timely manner. (For more on this, see our Methodology section below).

According to 附近上门 data, $64 billion was invested in North American startups (companies based in Canada and the United States) in the first half of 2020. That鈥檚 down 10 percent compared to the same period in 2019, when $70 billion was invested.

(In the above chart, the actual 1-H 2020 number may shift slightly given reporting delays. See Methodology description below for more details.)

The chaos surrounding COVID-19 in the United States really started in March, basically toward the end of the first quarter. So the reality check came in the second quarter.

The second quarter of 2020 was the first full quarter in the new COVID-19 world, and during that time $29.8 billion was invested in North American startups–18 percent less than the same period last year and 12 percent less than the previous quarter.

The majority of VC funding raised throughout Q2 was in supergiant rounds, or those of $100 million or more. Although supergiant rounds were flat year over year, rounds below $100 million were down 31 percent year over year.

The overall dollar volume for VC funding in North America was down for the second quarter of 2020 compared to the same period last year and the number of deals was also down for companies across all stages.

Funding by stage

A few data points to consider by funding stage:

• Seed and angel investment saw $1.1 billion across 699 deals in the second quarter of 2020, down from $1.7 billion across 1,773 deals in the second quarter of 2019.
• Early-stage investment saw $11.1 billion invested across 555 deals in Q2 2020, down from $12.6 billion across 887 deals in Q2 2019.
• Late-stage saw $15.9 billion invested in Q2 2020 across 191 deals, compared to $20.7 billion across 306 deals in Q2 2019.

Notable large funding rounds include s $750 million raise, 鈥檚 $700 million , and 鈥檚 $600 million . had the largest raise of the quarter for a VC-backed company, taking in $1 billion as the travel industry took a hit due to COVID-19. The round came from private equity firms and .

Exits

Exits also took a hit in Q2. Acquisitions of venture-backed North American companies (that hadn鈥檛 previously gone public) were down significantly in Q2 2020–for acquisitions with disclosed amounts–compared to all of the past year. There were 177 acquisitions totaling $9.7 billion in Q2 2020, down from 278 acquisitions totaling $21.7 billion for the year-ago period.

Among the largest M&A deals were 鈥檚 acquisition of for $1.4 billion, 鈥檚 acquisition of for $1.2 billion, and 鈥檚 acquisition of for $1.2 billion. Quarantine helped boost at-home fitness companies, and athleisure company was able to nab connected fitness startup for $500 million.

In terms of companies going public, there was a lull in the IPO market–at least for tech companies. Only toward the end of Q2 did tech IPOs pick back up. and had notable exits, raising $935 million and $468 million, respectively.

In conclusion

It鈥檚 too early to guess how things will shake out for Q3. The IPO market, at least, seems to be picking up for tech startups, with companies like ZoomInfo, Vroom, and Lemonade being well-received by public investors. As for funding, we鈥檒l be keeping an eye out for the next quarter

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data.

For this quarter we are changing our methodology to report on actual vs. projected funding. We have made this decision as the data lag on funding amounts is less pronounced than earlier funding cycles. With ever-larger funding rounds being raised by private companies and announced in a timely fashion, we found that a year out we see an increase per quarter under 10 percent for funding amounts.

Data lags are most pronounced at the earliest stages of venture activity with seed funding amounts increasing significantly after the end of a quarter.

The most recent quarter will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by聽 as much as 26 percent to 41 percent a year out.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of Funding Terms

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding, and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture, and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series,聽 corporate venture, and other rounds above $15 million.

Technology growth is a private equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

Overall, total global venture dollars for 2020 track at $129 billion for the first half of the year. This includes all funding stages, from seed, venture, corporate venture and private equity rounds in venture-backed companies.听

That $129 billion is down from the peak in 2018, and down 7 percent from the first half of 2019.听

Market predictions

In our first-quarter venture funding report we reported on varying trends across regions with China demonstrating the largest decrease quarter over quarter and year over year. The pandemic hit China earlier than most other parts of the world. We predicted the reckoning would come in the second quarter with founders negotiating funding in a changed market.

Toward the end of the first quarter and into the second quarter of 2020, the pandemic鈥檚 impact was felt across large sections of the globe, resulting in high counts of layoffs by technology startups, shifts to remote work seemingly overnight, and markets shutting down. Industries hit hard were travel, last-mile mobility, restaurants, events and more.听

In NFX’s most recent VC and founder sentiment survey, 60 percent of VCs report that early-stage valuations have dropped by 20 percent to 30 percent. Of the founders surveyed, 30 percent experienced a reduction in revenue. But this is not the full picture, as 23.5 percent of founders reported an increase in revenue.听

Despite the turmoil and revised funding plans for many startups, funding held up. We saw increased funding to biotech specifically, and decreased funding to transportation, and real estate.听

Diving into the second quarter

Of that $129 billion, 附近上门 recorded $69.5 billion invested across all funding stages for the second quarter specifically. This is up 17 percent quarter over quarter and down 2 percent year over year with one notable caveat–a sizable raise by one company that somewhat skews the data.听

For this quarter, 138 funding rounds were raised at above $100 million, which represents 61 percent of all funding raised at $42.1 billion. Rounds below $100 million at $27.3 is the lowest amount recorded since early 2017.听

The largest funding to a single company went to , the largest mobile network operator in India. Reliance Jio has amassed a user base of 400 million in a short time, and has raised multiple billion-dollar rounds this quarter. Led first by at $5.7 billion, the company raised from a range of growth investors and sovereign wealth funds from the U.S. and Asia in the second quarter.听聽聽

Previous rounds above $10 billion were raised by with a $14 billion Series C in the second quarter of 2018, and , which raised $12.8 billion in the last quarter of 2018.听

Should you remove Reliance Jio from the second quarter–given the voluminous amount of funding to one company–the numbers would look vastly different. Funding would be down by 9 percent quarter over quarter and 23 percent year over year.听

For Q2 2020, we are reporting on actual funding vs. projected funding. With the trend toward larger rounds reported in a timely manner, along with the growth in super giant rounds, projecting funding round amounts make less sense. A year out we see an increase per quarter– below 10 percent–for funding amounts.听

For funding counts we notice a strong data lag, especially at the early and seed stages, by as much as 26 percent to 41 percent a year out.听

Funding by stage聽

It is interesting to examine how each stage holds up through the pandemic.听

Based on reported fundings, over $2 billion was invested at the seed stage this quarter. Seed funding data lags the most, as smaller seed fundings are added by founders after the quarter in which they were raised.听聽

Early-stage fundings came in at $19.6 billion for the quarter, up 3 percent quarter over quarter and down year over year by 21 percent. Counts for the two most recent quarters will go up over time.听

Late-stage investments totaled $35.7 billion, flat quarter over quarter and down year over year by 9 percent.听

Some 80 unicorn companies raised funding rounds this quarter. Funding rounds above $500 million went to , , , , and . Google subsidiary , and Didi Chuxing subsidiary also raised large rounds.听

With the $9 billion in private equity rounds to Reliance Jio, technology growth tracks in at $12 billion this quarter.听

Leading M&A

Global M&A for venture-backed companies tracked at $14.8 billion, less than half of Q1 2020. (It is worth noting that the majority of reported acquisitions do not include a price.) For this chart we also exclude acquired technology companies that have previously gone public.听

The largest acquisition this quarter was that of Istanbul-based , a developer of mobile games, which was acquired by for $1.8 billion. Also this quarter, acquired California-based , a developer of autonomous vehicles for $1.2 billion, and in-home fitness provider , based out of New York, was acquired by for $500 million. Also from New York, , the social image and search company was acquired by for $400 million.听

The first quarter of 2020 was strong for M&A with the acquisitions of , and and topping $35.8 billion in deal volume.听

Notable IPOs

The majority of IPOs were clustered in June 2020 as the markets recovered from the initial impact of the pandemic. For venture-backed IPOs, raised the largest amount at $935 million, and , developer of a vaccine for COVID-19 raised close to $250 million. Electric truck maker, , went public via a reverse merger, which valued the company at $12 billion.听

In Conclusion — The reset

There has been a reset in venture this year as we come out of two strong years in funding to technology startups peaking in 2018.听

However the reset is not as dramatic as we might have expected.听

In the past month, the IPO market seems to be opening up with a number of tech companies filing to go public namely , , , and .听 and both went public on July 2 as the third quarter kicked off.听

However the second quarter of 2020 will be remembered for the police killing of George Floyd, the protests across the world angered by the brutal treatment of Black Americans, and the need for America to account for itself when it comes to systemic racism.听

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data.

For this quarter we are changing our methodology to report on actual vs. projected funding. We have made this decision as the data lag on funding amounts is less pronounced than earlier funding cycles. With ever larger funding rounds being raised by private companies and announced in a timely fashion, we found that a year out we see an increase per quarter under 10 percent for funding amounts.听

Data lags are most pronounced at the earliest stages of venture activity with seed funding amounts increasing significantly after the end of a quarter.听

The most recent quarter will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by聽 as much as 26 percent to 41 percent a year out.听

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of Funding Terms

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding, and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture, and other rounds above $3 million, and those less than or equal to $15 million.听

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series,聽 corporate venture, and other rounds above $15 million.

Technology growth is a private equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration: