Venture capital activity in Europe has faced a cooling period, with a notable drop in volume across the continent. By mid-year, industry data from SpainCap indicated a sharp reduction in investment activity, tallying roughly 3 billion euros for the semester and marking a 46% decline from a previous period. This downturn is not isolated to Spain; it reflects a broader European trend as market participants adjust to tighter financing conditions. During a CAPCorp session, Oriol Pinya, president of SpainCap and co-founder of Abac Capital, described the year as satisfactory but below the pace of 2024. He noted that mergers and acquisitions decreased by about half in 2020, with Europe and Spain showing a smaller but persistent level of deal activity. While the market is in a trough, the overall trajectory remains positive and the Spanish market is progressing steadily, albeit from a softer base than last year.
On the same panel, Ignacio Hornedo, a lawyer with Allen & Overy and leader of the M&A practice, observed that deal flow has reduced globally, not just regionally. He highlighted that financing has become harder to secure, particularly for large-scale transactions. Even when sponsors are required to contribute more equity, deals continue to close in many cases, underscoring a cautious but ongoing appetite for investment.
Borja Cuellar of Tresmares Capital added that many corporate leaders are revisiting strategic plans in light of tighter markets. Some buyers and sellers find that their expectations are misaligned, which explains a rise in organized sales processes that often fail to convert. Yet there is growing interest in debt refinancing, liquidity release, and organic expansion. Taken together, these dynamics indicate that while activity has slowed, it is reorienting toward more selective and strategic opportunities, with a gradual return of closed transactions.
Raising capital for new funds remains challenging
The fundraising machinery behind private equity is undergoing a difficult period. Juan Luis Ramírez, partner and founder of Portobello Capital, explained that the market has cooled. Allocators are leaning toward other asset classes, and investment timelines have lengthened. The result is slower recycling of capital and longer cycles for new funds. Ramírez suggested that sentiment should begin to improve in the latter half of 2024 as fundraising momentum recovers.
Ricardo Miró-Quesada, head of private equity at Arcano Partners, reassured attendees that Spain’s activity tracks global patterns. He cautioned that 2021 and 2022 stood out as exceptional years, and that today’s environment is more normal, with steady underlying momentum.
Private debt funds have emerged as a prominent alternative funding source in recent months. Rather than relying solely on bank debt, many companies turn to private debt to finance projects that would have struggled to secure traditional bank financing. Leaders in the field noted that these funds offer greater flexibility, particularly for mid-sized operations, and can facilitate leverage where banks cannot. Returns on private debt typically range from 9% to 9.5%, making it an attractive risk-adjusted option. Yet investors remain selective, and the most disciplined managers tend to capture the largest share of capital allocations.
As the market seeks stability, the appeal of private debt continues to grow. Market observers described a potential golden age for private debt, driven by a blend of liquidity from specialized managers and the persistent need for financing with precise risk controls. The challenge remains to attract quality commitments in an environment where investors are cautious and performance-driven.
The secure future for venture capital
Industry experts at the CAPCorp congress agreed that overall sentiment is improving, with buyers and sellers gradually aligning on value expectations to resume activity. New capital sources are entering the scene, including family offices, private banks, and institutions that did not previously participate at this scale. A notable example is a major sovereign fund committing substantial capital to European ventures, signaling renewed confidence in long-term equity investments. Support from public financing bodies is also viewed as a constructive force, helping channel capital toward growth-focused companies and reinforcing the broader economy.
On an international level, Spain remains an attractive destination for venture investment. Despite political noise, the country continues to attract capital and demonstrate resilient growth. Its competitive advantages include a robust export capability and a strong pool of skilled professionals, which position Spain favorably relative to other European economies. The Spanish market is seen as a compelling hub for technology investments, with a wealth of talent and innovative services that promise ongoing opportunities for investors across Europe.
In this environment, Spain’s venture capital scene benefits from international collaboration and cross-border activity. The market’s resilience is linked to a steady pipeline of technology-driven ventures and management teams capable of scaling operations. As market participants navigate a nuanced landscape of regulation, funding cycles, and strategic consolidation, the focus remains on disciplined execution, strong governance, and prudent capital deployment to sustain long-term growth.