Deal Flow 2.0: European Venture Capital Deal Term Review 2021

Investors poured more than $100B into European tech last year, a staggering sum more than triple the size of investments made the previous year, according to Atomico’s 2021 State of European Tech report.

Our Deal Flow 2.0 report shares insights gleaned from an analysis of nearly 500 venture financing deals that we closed across Europe in 2021, with an aggregate deal value more than $20B.

As the law firm that has closed more than twice as many deals as any other firm in Europe in the last several years, we have unique insights for investors and high-growth companies into typical deal terms. Deal Flow 2.0 places those insights in the broader context of market trends unfolding across Europe.

Key takeaways:

• It was a record year for mega rounds, with almost 20% of our European VC deals at a value of $100M+ and almost half of those at $250M+.
• Record levels of investment are leading to huge spikes in company valuation, with the number of tech companies scaling to unicorn ($1B+) in Europe ballooning by 44%. Our European teams acted for or on behalf of the investors in 20% of these newly recorded unicorns.

• Greater competition among investors for the best deals favoured founder control and yielded more company and founder-friendly terms, including:
  • A 10-40% founder veto and 40-100% drag-along rights across all deal stages.
  • A 12%+ increase in founder and Board appointment rights, with founders protecting their positions and bargaining power for future rounds.

• Strong focus on investments in fintech (25% market share) and significant growth in Marketplaces, SaaS & Platforms, and Energy investments—fuelled by a growing online consumer economy, new virtual solutions and a focus on sustainability.
  • Investments in Technology—concentrated largely across AI, DeepTech and Quantum Tech—have also led to increased regulatory scrutiny in various European jurisdictions, such as under the UK National Security and Investment Act 2021.
• Greater access to capital and increased investor interest in later-stage companies has enabled startups to accelerate towards IPO or a liquidation event faster than ever before. Record exit value across Europe in 2021 now exceeds $275B.

Several of our findings on broader market trends parallel conclusions in The State of European Tech, the most comprehensive data-driven analysis of tech in Europe, produced by Atomico and supported by Orrick. Our report was featured in FT’s Sifted.

We hope Deal Flow 2.0 proves a valuable supplement to that important work by offering investors and tech companies actionable insights based on a review of real-world deals.