To state that 2020 so far has been difficult would be an understatement but it is, nevertheless, true. VC exits had a slow start this year in Europe but they recovered commendably later on. The private equity and venture capital database PitchBook has now published its new European Venture report for Q2 2020. This report sheds light on the VC ecosystem in Europe, deal activity, fundraising activity, exit activity and more.
This year in Q2, some sectors such as video conferencing and healthcare did notably better than others and observed a surge in demand by investors and companies While the exit value in Q2 was below expectations at around €2.7 billion, the report suggests that the exit value in 2020 is still on track to register the lowest figure since 2012. Things are looking for the better after the first coronavirus wave is under control in Europe. Exit outlooks could brighten up towards the latter half of 2020 as investor demands peak again.
The report doesn’t expect several highly valued startups to rush for an exit. Late-stage and nontraditional capital is being attributed as the cause as it has alleviated the pressure to exit in the maturing European ecosystem. The report also gives us an inside look into the top exits that happened across Europe this year. Here’s all you need to know.
The biggest exits of 2020
The Switzerland-based biotech company ADC Therapeutics made the largest exit in Q2 2020 with its IPO. The company exited at a €989.9 million pre-money valuation. It was listed back in May 2020 with its share price steadily increasing since then, which could influence other VC-backed companies to be bullish in the current market and press ahead with an IPO.
However, the PitchBook report notes that there might be a disconnect between public equity rebound in recent months and the underlying financial health of companies and economies. The complete ramifications of COVID-19 are expected to emerge during H2 2020 as furlough schemes come to an end, businesses reopen, earnings during lockdowns are reported and revised valuations are calculated. Therefore, IPOs are believed to remain a risky option.
Taking the third spot on the top exits of 2020 is the Norway-based video-conferencing startup Pexip. The company exited at a €350.5 million pre-money valuation as demand for its services surged during the coronavirus pandemic. The exit timing was also designed to take advantage of increased attention.Pexip’s IPO was conducted virtually using its own software across multiple countries, while also demonstrating functionality of the underlying product, which was a novel approach.
Pexip’s CEO estimated that the process saved 1,700 hours of travel time and over 80 tonnes of CO2 emissions. Other companies should definitely take a page out of Pexip’s book, especially those who can transition to work from-home arrangements and operate businesses with video conferencing.
Israeli startups on the rise
The report doesn’t expect several highly valued startups to rush for an exit. Late-stage and nontraditional capital is being attributed as the cause as it has alleviated pressure to exit in the maturing European ecosystem. The report also gives us an inside look into the top exits that happened across Europe this year. Here’s all you need to know. The PitchBook report reveals that Israel-based startups exiting the ecosystem generated €1.2 billion in H1 2020. They accounted for 31.8 percent of the overall exit value. One of the major contributors to the jump in Israel exit value is Mobility-as-a-Service (MaaS) startup Moovit, which Intel acquired for a whopping €826.9 million. The company’s exit also coincided with recent rumours of London-based Citymapper being in talks for a possible acquisition.
Moovit will join Intel’s Israel-based Mobileye business, which specialises in advanced driver-assistance systems, including robotaxi services, a market that Germany-based Lilium is also looking to break into. Enabling multimodal journey planning for its users, Moovit’s urban mobility app links public transport, bicycles, scooters, ride hailing and car-sharing. PitchBook experts believe acquisitions and consolidation in mobility will persist.
Pharma and biotech was the only sector that crossed €1 billion in exit value through H1 2020, as per DealRoom’s report. A collection of pharma and biotech exits occurred in Q2. This includes the IPO of Israel-based PolyPid, acquisitions of Ireland-based PrecisionBiotics by Novozymes for €80.0 million, and UK-based Nanna Therapeutics by Astellas Pharma for €78.4 million happened in Q2 this year.
While startups in other sectors struggle, PitchBook experts expect investors to be combing through pharma and biotech startups due to COVID-19, which has placed emphasis on broader hygiene, healthcare and personal well-being initiatives. The impact of COVID-19 could lead individuals to become more health-conscious, and knock-on effects might affect other medical fields, enabling investments and resulting in exit opportunities in the long term.
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