Venture debt has best year on record, Atomico finds

Venture debt has had its best year on record in Europe, according to a new report released by Atomico.

The venture capital group’s State of European Tech survey found that due to the increased cost of fundraising, founders have found debt more attractive for those who do not want to give up equity.

In the first three quarters of the year $4.7bn (£3.7bn) was raised in debt funding by startups, up from around $2.5bn in 2023. This accounts for 14 per cent of all VC funding over the period, a significantly higher proportion compared with previous years. In 2023, debt funding only accounted for about five per cent of debt funding and in 2020 it was only three per cent of total VC investments.

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Stephen Lowery, head of investor coverage and business development at HSBC Innovation Banking UK commented: “European entrepreneurs have demonstrated they have the talent, innovation and ambition to succeed on the global stage. However, all too often these scale-ups have limited choices other than to source overseas capital to build full stack companies at scale.

“Our investment infrastructure in Europe must develop to deliver long-term capital, values aligned capital at scale. The momentum to unlock Europe private assets through pensions and insurers is key to connecting capital to opportunity. This will ensure entrepreneurs can access the type of capital they need and members can reap the rewards of Europe’s invested strengths to gain exposure to and shape industries of the future.”

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