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VC-backed companies rise in value in Q1

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Research by Pitchbook found that later-stage deals in European companies have increased valuations across the board.

Despite continued economic uncertainty stemming from the pandemic, valuations of VC-backed companies in Europe rose in the first three months of 2021.

This is according to a report by Pitchbook that examined venture capital activity in the first quarter of the year. The report analyzed valuations of companies at different stages of investment.

While isolated lockdown measures, stammering unemployment rates and vaccine roll-outs hit Europe’s economic recovery, money continues to pour in for both new companies and established players.

In the first quarter of 2021 there were 23 deals involving so-called ‘unicorns’ – those worth $1bn or more – compared to a total of 38 in 2020.

Deal-making at a later stage is responsible for the steep rise in valuations seen with bumpers so far this year $1bn of Klarna . like getting the most headlines glovos, volte and hop in All rounds raised above $400m.

“Late-stage valuation growth is driven by companies maximizing their investment runway in the ecosystem by closing record rounds,” the report said. “As a result, these rounds, which have a rich diversity of investors, have further increased valuations at the late stage.”

But investors have continued to put money in seed and early-stage companies as well, driving up valuations.

Pitchbook attributes this to the willingness among investors to take back the early winners in a post-Covid paradigm, where models such as remote work and consumer trends like e-commerce and delivery persist.

Pitchbook Research notes that early-stage capital has rapidly moved into new areas where demand has increased rapidly. On-demand grocery delivery is one area Pitchbook points to Berlin’s gorillas, who $292m raised on $1bn valuation in less than a year.

Irish Venture Capital Association also reported speeding In early stage deals in Ireland after a year’s decline.

Pitchbook found that increased activity from international and non-traditional investors in Europe played a role in rising valuations. Increasingly, private equity firms, hedge funds, pension funds, sovereign wealth funds and investment banks are joining the game.

“VCs belonging to non-traditional partnerships reached €14.7bn in the first quarter of 2021, certainly easily surpassing the record €33.6bn in 2020,” the report said.

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