There is a significant amount of caution for the European VC market heading into Q3’20. Investors have slowed the pace of deal-making considerably, taking more time to conduct due diligence and commit funds — which will likely have an impact on both the number of VC deals and the level of investment in the region. Given current challenges, there is expected to be continued downward pressure on valuations — which could prompt some opportunistic investors to look for good deals.
Over the next quarter, VC investors in Europe will continue to assess how consumer behaviours are changing and how these changes will affect the viability of different products, services, and business models in the future. Some sectors could see a fall in investment or significant consolidation as a result.
Looking ahead, big bets in Europe will continue to revolve around healthtech, biotech, fintech, and B2B solutions. Cybersecurity and data analytics are also expected to see additional VC investment, in part due to the rapid increase in remote work. Corporate investment will be an area to watch as European companies that have not emphasised innovation in the past move to accelerate their digital capabilities.