European investment firms see 27% drop in new deals in Q1

SAN FRANCISCO AND LONDON–(BUSINESS WIRE)–Affinitythe relational intelligence platform for negotiatorslaunched today Relationship Intelligence Benchmark Report: Unicorn Editionwhich shares industry trends and analyzes over 390 unicorns across Europe and the UK with a deep dive into the relationship intelligence and deal flow of companies investing in it.

Integrated data from intelligence platforms Affinity and Dealroom.co revealed that Europe has a unicorn growth rate more than twice that of the United States and is home to 65 “unicorn cities”. These unicorn cities consist of London, Berlin, Paris, Stockholm and Amsterdam, with more than half of all European unicorns located in the UK and Germany. Recognizing the international growth, US investors have flocked to join us and now account for 35% of all funding in Europe. This flood of investment has also boosted unicorn valuations which have risen 305% over the past five years.

“The last decade has seen an exponential increase in the volume and diversity of new capital flowing into startups – and is now entering a period of economic turbulence,” said Ray Zhou, co-CEO and co-founder of Affinity. “Our report highlights how Europe has adapted and grown, despite the effects of the pandemic, and shows how relationship intelligence is playing a role in these major industry trends.”

As expected, many companies experienced a period of “rebound” from 2020. In 2021, European unicorns raised more than $45 billion, double the amount raised in 2020. However, these unicorns only represent 14% of new unicorns in the world. This means that competition between VCs is important as they try to choose the right investment. Index Ventures is a unique company responsible for supporting 10 European decacorns on its own. The combination of high valuations and less advanced funding rounds forces VCs to capitalize on their networks, warm pitches and outreach. But as these companies and startups face uncertain economic conditions, it is important to understand the drivers of previous success and how investors are identifying the next generation of high-growth startups in Europe.

Other key points from the report include:

  • unicorns roam: Europe produced 5 times more unicorns in 2021 than in 2020.
  • Germany is now a hotspot: German unicorn funding has increased by more than 300% in the last 5 years. Together with the UK, they funded 2/3 of all unicorns based in Europe.
  • The decacorns are on the rise: Over the past five years, that percentage of multi-billion dollar unicorns has increased by 560%. The total value of decacorns in 2021 was $777.4 billion; to date in 2022 is $718.3 billion, ensuring it will top 2021 numbers.
  • The rebound is over: While businesses saw an increase in transactions, meetings, and email volume in 2021, the start of 2022 tells a different story. In the first quarter of 2022, businesses experienced 27% fewer meetings and transactions, likely due to inflation in Europe and forecasts of an impending recession.

Read the full report here then watch the Affinity webinar “European unicorn trends: How to make unicorn hunting more predictablewhich brings together industry experts to discuss the trends impacting traders in this report as well as the role relationship intelligence is playing in the changing market landscape.

About Affinity

Affinity is a relationship intelligence platform that empowers traders in relationship-oriented industries to find, manage and close more deals. With the most automated insights and technology in relationship intelligence, Affinity empowers executives to drive deals, free themselves from the drudgery of data, and ensure their teams can act with confidence, knowing the context and history of each relationship. The Affinity Platform, including Affinity CRM, is used by over 2,000 relationship-focused organizations worldwide. Founded in 2014, Affinity is headquartered in San Francisco and is backed by leading investors including Menlo Ventures, Advance Venture Partners, 8VC and MassMutual Ventures.