The index that Venionaire Capital uses for its venture capitalInvestors and published for the first time during the coronavirus crisis, fell from 5.26 points in the first quarter of 2020 to 4.62 points in Q2. Despite the significant decline, it is still above the initially forecast 4.29 points. For comparison: In the last quarter of 2019, the index was at 5.6 points.
"Almost all investors stated that they are currently focusing on supporting their existing portfolio companies rather than actively seeking new investment opportunities. This is understandable, of course, although very painful for the European venture capital market from the perspective of startups,"
explained Berthold Baurek-Karlic, Managing Director of Venionaire Capital.
Not much is expected to change in the coming quarter either: The index forecast continues to fall to 4.53 points. According to Venionaire Capital, it can be assumed that most investors will be even more selective during this period and carefully consider which startups they invest in. Therefore, new investments are expected to decline significantly during this period. Furthermore, the investors surveyed stated that startup valuations for new or follow-on investments will fall dramatically, as raising capital for startups is currently difficult and a buyer's market prevails. Furthermore, they assume that investments in some regions could even become impossible due to measures to contain the pandemic. Venionaire Capital estimates the write-down risk by the end of 2020 at up to 30 percent.
About the study
The survey was conducted in June 2020 by analysts at Venionaire Capital using computer-assisted personal interviews. The analysis draws on the responses of a total of seventy business angels, family office, and corporate venture fund managers from ten European countries. The survey's indices for current sentiment and forecast outlook are weighted indices, focusing on investors' ability and willingness to invest, perceptions of startup valuations, and deal flow quality. Based on a quarterly survey, Venionaire Capital collects responses from cluster focus groups and a control group to compare the indices. “European Venture Sentiment Index” was collected for the first time in mid-2019.
