Belgian venture capital increases in declining European market

Diegem – 3 April 2025 - The venture capital market in our country has continued to grow, as revealed by a study conducted by professional services provider PwC Belgium and industry association Private Capital Belgium. Although the number of capital injections decreased, more venture capital was provided. Notably, at the European level, both the number of investments and the capital invested are significantly declining. "This seems to indicate that the Belgian venture capital market has matured. It is noticeable that investors are making targeted investments with a preference for B2B and SoftTech companies, which can scale up more quickly," says Pascal Janssens, Partner at PwC Belgium. Despite the increase in venture capital invested and higher interest rates, there is still a significant amount of capital available for investment in the coming years. "Two out of three funds have invested between 20% and 60% of their resources. Additionally, we observe positive prospects for 2025 among capital funds. However, payouts to fund shareholders have reached a record low, which could hinder growth in the long term," adds Jan Alexander, Secretary General of Private Capital Belgium.

For the second consecutive year, PwC Belgium and Private Capital Belgium (formerly BVA) conducted a survey among Belgian venture capital companies. The findings, complemented by market figures, provide a comprehensive overview of venture capital funds in Belgium. A notable trend is that Belgian venture capital funds closed fewer deals for the second year in a row in 2024 (-15% since 2022), but the amount invested increased (+37% since 2022) to nearly 4.45 billion euros. This stands in stark contrast to the European trend, where not only did the number of deals drop significantly (-33%), but the invested amount also decreased even more sharply (-43%, to 56.7 billion euros).

Due to the increased venture capital in our country and the decline at the European level, the share of Belgian venture capital in the invested capital in Europe grew from 3.2% to 7.8%. This demonstrates that the Belgian market has matured over the years. Investments were made in larger deals, particularly in companies in the later stages of growth (57% of deals). Although nearly half of the respondents indicated that early stage startups are a regular part of their investment portfolio (47.8%), the figures show that investments are more targeted. This translated into a 36% decrease in the number of investments in early stage startups since 2022. Increased interest rates are likely to contribute to a more cautious investment approach towards companies that still need to prove themselves – and thus entail more risk.

Despite this, there are still significant opportunities in the market. The survey indicates that two out of three funds have invested between 20% and 60% of their resources. According to the market study, there is still at least €1.1 billion in 'dry powder' available. "It's encouraging to see that more and more venture capital is being invested in Belgium to help our companies grow. Investors may be taking fewer risks due to higher interest rates but continue to make targeted investments. Startups seeking growth capital will therefore need to substantiate their case even better. Lastly, it is crucial for startups to remain on the radar of investors," comments Pascal Janssens, Partner at PwC Belgium.

To get on that radar screen, it's best to build a good network. More than a quarter (26.8%) of fund managers indicated this as a source for leads. Events (23.2%) and incubators (19.5%) are also frequently mentioned. Notably, there has been an increase in database scouting (19.5% in 2024 compared to 6.6% in 2023), while fewer leads came from incoming emails (11.0% in 2024 vs. 18.9% in 2023).

Preference for Belgian, B2B, and SoftTech companies

Most respondents invested in Belgian companies (60.5%), with more than three-quarters of these located in Flanders (76.6%), followed by Brussels (13.2%) and Wallonia (10.2%). The Netherlands (8.5%) and the DACH countries (Germany, Austria, Switzerland – 8.3%) complete the top 3 investment regions for Belgian venture capital funds. It is noteworthy that the US has a very limited share with 4.6% of the investments, but those who invest there do so in capital rounds with higher amounts. The median of deals involving Belgian companies in the US was €10 million, while for both Belgian and European deals, it was only €3 million.

Funds also show a strong preference for SoftTech companies (software-driven solutions and applications, 66.7%). Thanks to their scalability, they have an advantage over HardTech (physical hardware and applications, 16.7%) and DeepTech companies (more complex, scientific applications, 16.7%). Companies developing services or products for other businesses also have better chances. 56.5% of capital funds place all their eggs in the B2B company basket, while a large majority of funds eschew companies with a B2C (73.9%) or B2B2C (69.6%) focus.

An overwhelming majority of the venture capital funds surveyed see the management team of a company as the most crucial factor when considering an investment. This applies to startups in the early stage (87%), growth companies in an expansion phase (68%), and more established companies (50%). The quality of the management team is thus considered more important than the company's product or service, the market in which it operates, or the traction that the product or service already has.

Sustainability pays off, but shareholder payouts hit rock bottom

80% of venture capital funds follow a sustainable or responsible investment policy. Another 10% are considering such a policy. When venture capital funds request ESG information from growth companies in the context of a potential investment, it is primarily because stakeholders and limited partners demand it (83%), because it is part of the policy (78%), or to contribute to the fund's reputation (61%). Regulation (44%), risk management (28%), and investment performance (28%) were less important drivers. ESG factors seem to play a more significant role during the pre-investment phase than afterward.

Although there are positive expectations about the expected deal flow for 2025, Jan Alexander of Private Capital Belgium warns of a challenging fundraising climate for venture capital funds. "In the past 10 years, the ratio of distributions to investors compared to the net asset value of funds averaged 17%. Today, that figure has fallen to just 7%. This is the result of a significantly reduced number of exits in recent years, combined with a sharp increase in investments and fundraisings in the years 2019-2022. Shareholders of funds now want to see cash flow back before they will provide new funds for venture capital. For some venture capital funds – and by extension, growth companies in our country – this threatens to become a major issue for future investment."

About the 2025 Venture Capital Study by PwC Belgium and Private Capital Belgium

For this study, data was combined from a survey answered by 26 out of 189 venture capital funds from Belgium, in-depth interviews with venture capital funds, and data from sources such as Pitchbook. It is the second time PwC Belgium and Private Capital Belgium have conducted this study, allowing for comparisons with the survey from the year 2023.

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About Private Capital Belgium

Private Capital Belgium is the new name for what was previously The Belgian Venture Capital & Private Equity Association ("BVA"), founded in 1986 as a professional association representing the venture capital (VC) and private equity (PE) community in Belgium. BVA members are investment fund managers and professionals who deliver services to the community. All members agree to strictly respect our code of conduct.