2024 Venture Debt Market Update in Europe (Houlihan Lokey)

Summary

• European venture debt volumes fell sharply to €12 billion in 2023, down from the record €21 billion reached in 2022.p.2
• Megadeals including Northvolt (€4.5 billion), H2 Green Steel (€4.2 billion) and SumUp (€1.5 billion) drove total deal volumes to c. €17 billion in the first half of 2024.p.2
• Venture debt accounted for approximately 8% to 9% of the European venture capital market between 2014 and 2016, rose to 22% in 2022 and reached 42% in 2024.p.3
• Late-stage and venture-growth deals made up 37% of European venture debt transactions by number of deals in 2014–2016, growing to 49% in 2022–2024.p.4
• Early-stage deals dropped from 46% in 2014–2016 to 30% in 2022–2024 by number of deals, but rose from 36% to 39% by deal volume.p.4
• Claret Capital Partners, a venture debt financier with AUM of €600 million, made deals worth €132 million for 34 companies in 2024.p.4

Key insights

1. Venture debt is non-dilutive, gives more rapid access to capital and can extend cash runways between equity rounds, supporting its resilience.p.2
2. Venture debt let companies raise capital without repricing their valuations in an uncertain market.p.2
3. Equity-based funding stayed highly selective throughout 2024, making venture debt an increasingly vital financing option.p.3
4. The share of venture debt in the European venture capital market rose to 42% in 2024.p.3
5. A maturing European startup ecosystem is pushing more companies into later-growth stages that suit debt financing.p.4
6. Venture debt deal activity in 2025 may not surpass the level seen in 2024 if megadeals remain absent.p.4