PitchBook: the UK and Ireland accounted for <28% of VC deals in Europe and Israel in Q1 2023, down from 34%+ in 2018, as deals in France and the Nordics rose
Mark Bergen / Bloomberg :
Context & Ripple Effects
London's grip on European venture has been eroding across cycles, not just this one: PitchBook already logged a UK-led drop in European VC investment back in 2016, and Dow Jones VentureSource caught the UK falling again during the late-2018 funding squeeze. The new Q1 2023 figure — under 28% of Europe-and-Israel deals for the UK and Ireland combined, versus 34%+ in 2018 — turns those episodic dips into a structural share shift, with France and the Nordics absorbing deal volume instead.
The timing matters because it lands mid-downturn: PitchBook separately counted US VC investment halving year-over-year in Q2 2023, so the geography of who still gets funded when capital is scarce is being set now. Later coverage shows what the stakes are — by 2024 nearly two-thirds of European VC funding came from abroad, and the 2025 AI-led rebound to €66B rewarded whichever hubs had built deal pipelines during the lean years.
First-order effects
- UK and Irish founders face a thinner domestic deal market exactly when cross-border capital is contracting, while Irish startups carry extra weight given that more than 6% of the country's workforce sits in tech and its ecosystem is heavily exposed to US companies.
- French and Nordic startups gain relative bargaining power: with more deals flowing their way, they compete against a smaller effective pool of local rivals rather than against London-priced rounds.
Second-order effects
- US funds pulling back on European deployment must choose among hubs, and the shift gives Paris and Nordic ecosystems a stronger claim as second bases — deepening competition between national governments pitching to be the alternative to London.
- Investors dependent on UK deal flow — accelerators, seed funds, professional-services firms clustered around London — see their addressable market shrink proportionally, pressuring them to open continental offices or lose allocation.
Third-order effects
- If the share drift holds through the recovery, European venture consolidates around a multi-hub structure rather than a London center of gravity, with the AI-heavy 2025 rebound deciding which secondary hubs convert share into durable ecosystems.
- With most European funding sourced from abroad regardless of host city, national ecosystems compete less against each other than for the same external capital pool — making policy tools like visa access and sovereign programs decisive in where deals land.
The trend: European venture capital is dispersing from a London-centered market toward a multi-hub geography, with downturns accelerating the redistribution and AI-era funding determining which new hubs keep it.