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Europe's CVC wave continues in 2019

Europe's biggest corporate VC-backed deal in the first half of 2019 also created a unicorn. The recipient of the $484 million Series E led by the 

SoftBank Vision Fund was Berlin-based

GetYourGuide, which operates a travel guide booking platform. The May round also featured backers including 

Zürcher

Kantonalbank's investment arm

Swisscanto and Singaporean sovereign wealth fund

Temasek.



The deal is set to be one of the highlights in a bumper year of corporate VC investing. This wave of corporate activity seen in Europe has been growing for the best part of a decade and, according to PitchBook's

2Q 2019 European Venture Report, it is yet to reach its crest.



In the second quarter of 2019 alone, CVC-backed deals were worth a combined €3.6 billion (around $3.96 billion). The first six months of the year overall saw 426 deals worth a total of €6.1 billion. At this pace, the deal value for such transactions could reach a new high by the year's end. This continues a trend that has seen CVC activity grow every year since 2011, bar a slight dip in deal count in 2018:


 


As corporations continue to target startups and scale businesses to drive growth, the European ecosystem will benefit. The share of overall European deals involving CVC participation was already at a historic high in the first half of the year, representing 18.3% of the continent's VC deal activity.



The nature of these deals is changing and rounds are getting bigger, as exemplified by GetYourGuide's fundraise. In the largest category (representing deals worth over €25 million), a massive €4.4 billion has been raised across 64 transactions. This category is well on track to top the €5.2 billion record it achieved in 2017:


 


On the other hand, the largest deal of 1H 2019 did not reflect the most active sector. Software companies have attracted the most CVC investment this year, and CVC-backed deals pulled in €2.5 billion over the period. The largest deal was for another German company, mobile business intelligence platform developer

Adjust, which raised $227 million in June in a round co-led by

Eurazeo and others.



The corporate VC trend is yet to peak and is unlikely to abate in Europe. This is particularly the case when one considers the competitive advantage obtained through strategic investment and the protection offered against the evolving threat of new competition by backing disrupters early.



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