Sifted - H2 in data — where did VCs invest most?

Good morning there,

While we’d love to say 2024 ended on a high note, it really didn’t. A strong first half of the year (H1) built up hype that wasn’t carried forward in H2. Europe saw debt and equity financing drop, fewer funding rounds and megarounds, fewer M&As and fewer newly minted unicorns. Oh, and the region’s best-funded startup Northvolt went bankrupt.

Bottom line: it’s been a year of two halves, and as 2024 has marched on, VCs have become more hesitant to bet big on late-stage companies. We’re here to make sense of it all. Our H2 2024 review, published today, is a quick read full of charts and 100-words-or-less nuggets covering the why, the how and notable exceptions to the trends. 

Elsewhere today:

• Europe's fastest-growing healthtechs
• French dealmaking set to drop 50% in H2

— Becca Lipman, intelligence editor

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🇬🇧 London-founded coworking company Second Home has filed for administration two weeks after announcing its intention to appoint administrators to the UK courts.

• The move comes just over two years on from Silicon Valley billionaire Riaz Valani purchasing a controlling stake in the business in a cut price rescue deal, following years of overrunning costs made worse by Covid.

H2 dealmaking in data

As 2024 draws to a close Sifted's pulled the data on the second half of the year to find out where the money's going, where it isn't and the trends shaping the ecosystem. The headline: following a bumper H1, momentum slowed, a lot. 

Number of deals

Sifted tracked 1,629 deals in the second half of the year, a 29% drop from H1 and the lowest number of deals announced since H2 2012. That includes 52% fewer late-stage deals — together late-stage deals represented 16% of the funds injected in the ecosystem. Most H2 equity rounds were early stage (87%). 

Value of deals

H2 also saw 32% less funding than H1. Most of that drop is attributed to growth (-29%) and late stage (-55%) deals. But the tightening hands of investors had a soft spot for early stage, which only saw funding drop 21% — in all, early-stage deals accounted for as much as 38% of H2 funding.

Meanwhile, venture debt accounted for 36% of European funding this year — slightly less than hoped after a big H1. But its prominence amid an overall funding dip signals that this “anti-dilution tool” is still gaining momentum. “At a time when valuations are considered to be under pressure, it's more attractive to entrepreneurs and earlier-stage investors to make use of venture debt than to make use of equity,” David Bateman, managing partner of Claret Capital Partners, tells Sifted.

Megarounds

While H1 was all about the megarounds (92 in total), H2 said “no more” to that, and only recorded 45. The biggest in the second half of the year was Poolside’s €460m Series B in July; Myricx Bio’s €105m Series A was the most raised at early stage. 

Verticals

B2B SaaS had a steady H2, outperforming its H1 total (€4.9bn v €4.8bn); that took it above climate tech, which has been the best-performing vertical in recent times. Climate tech and deeptech saw funding fall by 47%, while fintech funding was just behind, dropping 43%. Consumer tech’s median deal size soared 97% from €1.17m in H1 to €2.3m in H2.

Sectors

Across the 98 sectors tracked by Sifted, we found energy software and wellbeing startups were the belles of the ball in H2. Their respective change in deal count: 217% and 73%. 

Median deal sizes also revealed some surprise stories: insurtech rose 229% in H2 and water & maritime tech by 202%. There was also a surge in climate intelligence (160%), proptech (157%), dev tools (145%) and construction tech (124%). Digital banking (-72%) and CFO tech startups (-69%) were the biggest losers.

Countries

Four countries surpassed €1bn in equity funding in H2: UK (€5.5bn), Germany (€3.1bn), France (€2.6bn) and Switzerland (€1bn). All of them recorded a minimum 30% drop in funding from H1 except Germany, which has benefitted from momentum in Munich. At this moment in time, it has nudged ahead of Berlin for VC funding in 2024.  

Download the full report here.

— Becca Lipman, intelligence editor

🇫🇷 As 2024 draws to a close it’s becoming clear that French tech is going through a lull. Sifted data shows that in the second half of the year, French startups have raised just under €3bn — half as much as the €5.9bn they raised in the first six months of 2024. 

• The drop is visible at all stages, with early-stage and growth-stage funding down 44% in the second half of 2024 compared to the first half; funding for Series D deals and beyond dropped by 66% in the same period. French tech reporter Daphné Leprince-Ringuet breaks down what’s going on. 

🏥 The 10 fastest-growing healthtechs in Europe.

💰 A record year: will the venture debt boom continue into 2025? (Sponsored by Claret Capital Partners)

🇯🇵 Is it time to move your fintech to Tokyo? (Sponsored by FinCity Tokyo)

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📊 How to get value out of data. The world is drowning in data, but many startups miss the mark on underutilising it in business decisions — here's how to use it. Download it here.

🚀 B2B SaaS Rising 100. From soonicorn to unicorn, we’ve ranked the ultimate list of B2B SaaS startups that we believe will someday join the ranks of the $1bn-plus valuations. Download it here. 

🔥 Europe's 250 fastest-growing startups in 2024. We ventured through 2024 to rank the region’s most innovative high-growth startups in fintech, green energy, healthtech and many other sectors. Download it here. 

Barcelona, Spain-based Bsport, which develops software to manage boutique wellness studios, raised €30m in Series B funding from investors including Base10 Partners, Octopus Ventures, Stanford University, Seventure Partners and Seed4Soft.

Osijek, Croatia-based Orqa, which specialises in drone manufacturing, raised €5.8m in seed funding. Lightspeed Venture Partners led the round and was joined by investors including Radius Capital, Decisive Point and Day One Capital.

Lugano, Switzerland-based Hive Power, which develops software for smart grids, raised €3.5m in seed funding from investors including Axpo, Creadd Ventures and Swiss Technology Fund.

London-based Refute, which specialises in disinformation refuting, raised £2.3m in pre-seed funding. Playfair and Episode 1 led the round and were joined by investors including Notion Capital, Amadeus Capital Partners, Ventures Together, Charlie Songhurst, Carlos Espinal, James Chappell and Alastair Paterson.

If you’d like to submit a deal, get in touch. 

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