Venture Capital

Market Study 2023

April 2024
Content PwC & BVA | Venture Capital Market Study 2023 | 1

Introduction

Executive
summary

Market
overview
Introduction
Survey sample
overview We are delighted to introduce this first publication of venture capital landscape and practices, whether they be
PwC’s and BVA’s Belgian Venture Capital Market Study, an investor, entrepreneur, policymaker or enthusiast.
Investment exploring the venture capital investments landscape. This survey was designed to reveal the common market
strategy
Venture capital plays a vital role in fuelling innovation, practices within the ecosystem, and to throw light on
driving economic growth and transforming industries. the current investment climate and investor sentiment.
Valuation It is the lifeblood that empowers visionary entrepreneurs The fact that 35 of the 67 investment managers we
and returns
to turn their ideas into reality, propelling society forward. contacted completed the survey confirms the high level
of interest and the demand for transparency and clear
Legal terms Throughout the growth of a company, startups raise
benchmarking data.
different rounds of venture capital. However, the terms of
these rounds are carried forward to the next round and
Investment
landscape
can be detrimental to the growth and prosperity of the
outlook venture and its founders. All stakeholders, therefore, can continued on next page
benefit from having a comprehensive understanding of the
Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 2

Introduction

Executive
summary

Market
overview
Introduction
Survey sample
overview We extend our warm thanks to all those who have contributed to the survey,
by completing the questionnaires, providing interviews, analysing the data or
Investment producing the report. We hope that it will serve as a catalyst for meaningful
strategy discussions, inspire innovative thinking, and ultimately contribute to the growth
and success of the venture capital ecosystem.
Valuation
and returns

Legal terms Jan Alexander Elise Carton

Secretary General, BVA Senior Manager Venture Deals, PwC
Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 3

Introduction

Executive
summary
Executive summary
Market
overview This report presents the findings of a The survey was sent to Belgian VCs investing The survey revealed several key findings that
comprehensive survey conducted on the in Belgium and abroad. One person per VC shed light on the current state of the Belgian
Survey sample Belgian venture capital market by the Belgian fund was contacted. In total, 67 VCs were VC market, notably:
overview Venture Capital & Private Equity Association contacted, of which 35 filled in the survey. • VC investments have decreased in the past
(BVA) and PwC Belgium. The survey aimed to The 60 questions were designed to gather year in Europe and Belgium, both in deal
Investment provide insights into the current state of the information on investment strategy, valuation value and number of deals.
strategy Belgian venture capital (VC) and corporate and returns and legal terms, as well as the
VC (CVC) market in 2023. • The decrease in Belgium was less
respondent’s perspective on the VC market
Valuation significant compared to the decrease in
The survey employed mixed methods: for 2023 and 2024 regarding deal flow and
and returns Europe.
primary data collected through a survey valuation. Boris Bogaert from Pitchdrive,
combined with structured interviews with Katrin Geyskens from Capricorn Partners,
Legal terms Arne Hautekiet from Astanor Ventures and
venture capitalists (VCs) to receive additional
insights. Secondary data was also gathered Lucas Stoops from 6 Degrees Capital were
Investment from Pitchbook, to capture the general VC interviewed to get their personal insights and continued on next page
landscape perspectives on the results.
market activity by Belgian and European VCs.
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 4

Introduction

Executive
summary
Executive summary
Market
overview • Valuations have decreased in the past year • Early stage VCs expect stronger liquidation • The reliance on self-reported data from
compared to the historical high valuations preferences: most early stage VCs always stakeholders may introduce biases.
Survey sample of 2020 and 2021; many VCs stated that implement a liquidation preference, and the • The survey was only sent to one person per
overview valuations have stabilised and they don’t participating liquidation seems to be more fund, which could result in smaller funds
expect them to further decrease in the common in early stage rounds than in the having the same weight in the results as
Investment coming year. later stage. larger funds.
strategy
• The importance of the management team While the survey provides valuable insights, Nonetheless, the survey can serve as a valuable
throughout the different stages of the it is important to acknowledge its limitations: resource for stakeholders seeking to understand
Valuation
company: VCs consider it as the most • The sample size of the survey may not and navigate the Belgian VC landscape.
and returns
important factor for the valuation across all fully represent the entire VC ecosystem By repeating and extending the survey in the
stages. in Belgium. coming years, we hope to follow the market
Legal terms
trends and allow further comparisons.

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 5

Introduction

Executive
summary

Market
overview
Market overview
Survey sample
overview
x Evolution of the VC landscape in Belgium
Investment
strategy x Comparison of VC deals per stage

Valuation
and returns x Comparison of VC deals per target region

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 6

Introduction
Evolution of the VC landscape in Belgium
Executive
summary VC deal volume VC deal value in €m VC deal volume VC deal value in €m
in deals that Belgian VCs in deals that Belgian VCs in deals that European VCs in deals that European VCs
were involved in were involved in were involved in were involved in
Market
overview
-8% -3% -22% -38%
Survey sample 3,251 97,622
339 311 3,162 12,196
overview
9,489
60,723
Investment
strategy
2022 2023 2022 2023 2022 2023 2022 2023
Valuation Source: Pitchbook Data, Inc., 25th January 2024
and returns Summary
Legal terms Showing deal volume and value in deals that Belgian VCs were
involved in. Note that investment amounts of non-Belgian VCs in
those deals are included in the deal value, and that the included
Investment
landscape deals are not limited to investments in Belgian companies.
outlook In terms of deal volume, Belgian VCs were slightly less active in
2023 compared to 2022, with a decrease of 8%.
Appendix The total known deal value of deals where a Belgian VC was
involved also slightly decreased.
The VC deal volume in deals in which European VCs were
involved dropped by more than 22% from 2022 to 2023, with Belgian VCs were active in fewer deals but the deals they were involved in, had
the deal value dropping by approximately 38% in the same a higher deal value. Overall, Belgian VCs seem to be less hesitant to invest than
time span, showing significantly less activity than Belgian VCs. their European peers.
European VCs were also active in lower-value deals: from 2022
to 2023, the deal value dropped more than deal volume.
Content PwC & BVA | Venture Capital Market Study 2023 | 7

Introduction
Comparison of VC deals per stage
Executive
summary Number of deals that Belgian VCs were involved in, per stage Number of deals that European VCs were involved in, per stage

Market 2022 2023 2022 2023

overview 162 162
(48%) (52%) 4,130 4,184
3,882
Survey sample (33%) (48%) 3,495
113 (19%) 3,281
overview (52%)
(33%) 2,713 (25%)
70 79 (23%)
64
Investment (25%)
(19%) (23%)
strategy

Early Stage Growth Stage Later Stage Early Stage Growth Stage Later Stage
Valuation
and returns
Source: Pitchbook Data, Inc., 25th January 2024. Note (1): Early Stage includes Seed Round investments.
Growth Stage includes Series A and B. Later Stage includes VC investments in companies that are at least five years old or those that have raised a Series C round.
Legal terms

Investment Summary
landscape
outlook In deals that Belgian investors were involved in in 2022 and 2023, Belgian VCs were most “What we saw is that many later stage investors starting
active in later stage deals in both years. investing in earlier stage companies. So the increase in the
Appendix early stage might rather be explained by an increase in VC
Growth stage investments were impacted the most by the slowdown in VC funding: Belgian initiatives then an increase in deal flow. We saw more a
VCs were involved in 79 deals in 2023, compared to 113 deals in 2022. decrease still due to the pandemic where people were more
hesitant to start their own business.”
European VCs were involved in fewer deals in 2023 than in 2022, with the largest drop in
seed stage deals. In both 2022 and 2023, European VCs were involved in later stage deals – Boris Bogaert, Pitchdrive
the most and early stage deals the least.
Content PwC & BVA | Venture Capital Market Study 2023 | 8

Introduction
Comparison of VC deals per target region
Executive
summary Number of deals that Belgian VCs were involved in, per region Median size (€m) of deals that Belgian VCs were involved in, per region

Market 190 18.5

2022 2023 15.5 2022 2023
overview 153
133
9.7
Survey sample 73 7.5 6.3
5.0 5.4 6.2
overview 34 31 2.5 1.6 2.1
11 12 8 3 N.a. 2 N.a.
Investment Belgium Rest of Americas Middle East Asia Oceania Belgium Rest of Americas Middle East Asia Oceania
strategy Europe Europe
Source: Pitchbook Data, Inc., 25th January 2024
Valuation
and returns
Summary
Legal terms
Belgian VCs expanded their geographic investment horizon, executing
Investment fewer deals locally, but increasing their involvement in deals in the rest
landscape of Europe.
outlook
The number of deals that Belgian VCs were involved in dropped
drastically in Belgium, while the median deal size in Belgium also fell.
Appendix
While the number of deals per region is highest in Belgium and the rest
of Europe, the median deal size is higher in the other regions.
The median deal size increased in Europe, the Americas and Asia in
2023 compared to 2022, while the Middle East saw a sharp reduction.
Content PwC & BVA | Venture Capital Market Study 2023 | 9

Introduction

Executive
summary

Market
overview
Survey sample overview
Survey sample
overview x Years of experience in the (C)VC industry

Investment x Launch time and type of the latest fund

strategy
x Size of the fund
Valuation
and returns x Types of venture capitalist in the survey

x Sources of funding
Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 10

Introduction
Years of experience in the (C)VC industry
Executive
summary
Personal years of experience
35 total responses
Market
overview
40.0%
Survey sample
overview
25.7%
Investment 22.9%
strategy

Valuation 2.9% 8.6%

and returns
0 - 4 years 5 - 9 years 10 - 14 years 15 - 19 years > 20 years
Legal terms

Investment
landscape
outlook Summary
Appendix The majority of the investment managers in the VCs surveyed have 5-9 years’
personal experience. Around a quarter of managers have 0-4 or 10–14 years’
experience. A minority have 15-19 or more than 20 years’ experience.
Content PwC & BVA | Venture Capital Market Study 2023 | 11

Introduction
Launch time and type of the latest fund
Executive
summary
When the VC launched their latest fund Closed-end vs open-end funds
35 total responses 35 total responses
Market
overview

60%
Survey sample 34.3%
overview Open-end
40%
Investment 65.7%
strategy Closed-end

Valuation Less than 3 years ago More than 3 years ago

and returns

Legal terms

Investment Summary
landscape
outlook
Most investment managers that participated in this survey are
active at funds that were launched in the last 3 years.
Appendix
Results show a significant preference for setting up funds in a
closed-end structure, compared to evergreen.
Content PwC & BVA | Venture Capital Market Study 2023 | 12

Introduction
Size of the fund
Executive
summary
The size of the VC’s latest fund The VC’s fund’s Total Assets under Management
35 total responses 35 total responses
Market
overview
€251m - 500m 11.4% > €500m 8.6%
Survey sample
overview
€151m - 250m 8.6%
€201m - 500m 11.4%
Investment
€101m - 150m 8.6%
strategy
€61m - 100m 14.3% €101m - 200m 14.3%
Valuation
and returns €31m - 60m 22.9%
€51m - 100m 20.0%
Legal terms €10m - 30m 28.6%

Investment < €10m 5.7% €0m - 50m 45.7%

landscape
outlook

Appendix Summary

The majority of the funds have raised between €10m and €60m. More than a quarter of the funds raised
more than €100m.
Almost half of surveyed VCs had less than €50m of assets under management at the time of the survey.
This should be considered in light of the total fund sizes: most were below €60m.
Content PwC & BVA | Venture Capital Market Study 2023 | 13

Introduction
Types of venture capitalist in the survey
Executive
summary
Types of VCs
35 total responses
Market
overview 5.7%
Public Institution
Survey sample
overview
8.6%
Corporate Venture Capital
Investment 85.7%
strategy Venture Capital Fund

Valuation
and returns

Legal terms

Investment Summary
landscape
outlook
The overwhelming majority of the surveyed VCs are venture capital funds, with
small minorities of corporate venture capital and public institutions.
Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 14

Introduction
Sources of funding
Executive
summary
Sources of funding for VCs’ funds
35 total responses
Market
overview
3.2%
Other
Survey sample
overview
4.3%
Corporate
Investment
strategy 24.7% 43.0%
High Net Worth
Government Funds
Valuation Individuals
& Institutional funds
and returns

Legal terms 24.7%

Family Office
Investment
landscape
outlook Summary
Appendix Half of the investments in VC funds come from private wealth,
balanced between money invested through family offices (25%) or
from high-net-worth individuals (25%).
43% comes from government and institutional capital, making these
an important pillar in the Belgian VC landscape.
A small minority (7%) comes from corporates and other sources.
Content PwC & BVA | Venture Capital Market Study 2023 | 15

Introduction

Investment strategy
Executive
summary

Market
overview

x Where is deal flow coming from? x Number of deals closed per year
Survey sample
overview
x Comparison of industry investment focuses
x Investment scope
Investment x Comparison of investment placement in B2B vs B2C
strategy
x Typical ticket size of the fund per deal business models
Valuation x Type of investment instrument used to finance
and returns x Comparison of initial vs follow-up investments
portfolio companies
Legal terms x Fund’s average investment holding period x Expected target participation stake at initial investment

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 16

Introduction
Where is deal flow coming from?
Executive
summary
Sources of deal flow
35 total responses
Market “The best advice I could give to
overview startups to get on the radar of
3.8% VCs is by getting their name out
Others there. Get it released, get it in one
Survey sample of the databases and the VCs will
overview 6.6% reach out to you. Don’t be afraid
Databases to reach out yourself, but then be
smart about it. Try to get a warm
Investment
28.3% introduction, try to get a very
17.9% Network concise email with your deck.”
strategy
Incubators
– Lucas Stoops, 6 Degrees Capital

Valuation
and returns
18.9% 24.5%
Incoming mails Events
Legal terms

Investment
landscape
outlook

Appendix
Insights
Own network (28%) and events (24%) make up for the majority Entrepreneurs should carefully consider how to get on VCs’ radars well ahead
of deal flow leads, in addition to leads through incubators of their fundraising, as only a small proportion of investments are made
(18%) and searching through databases (7%). Clearly, most following a cold email reach-out when there is need for growth capital.
VCs prefer to hunt for deal flow themselves, rather than relying
on inbound mails (19%).
Content PwC & BVA | Venture Capital Market Study 2023 | 17

Introduction
Investment scope
Executive
summary
Investment scope of interviewed VCs: maturity
32 total responses
Market
overview
Early Stage 40.6% 46.9% 6.3% 6.3%
Survey sample
overview Growth Stage 9.4% 59.4% 21.9% 9.4%
Investment
strategy Later Stage 12.5% 37.5% 50.0%

Valuation
Always Often Rarely Never
and returns

Note (1): Early Stage includes start-ups in the Idea and Seed phases. Growth Stage includes Series A and Series B start-ups.
Legal terms Later Stage represents startups later than Series B.

Investment
landscape
outlook Summary

Appendix The VCs that responded to our survey show a clear preference for It is important to note that the survey results obtained do not fully
early stage investing (87.5% invest always or often in idea and seed reflect the market data shown. This discrepancy suggests that the
phases), while most still have a strong appetite for growth stage later stage VC segment of the population may have been inadvertently
investing (68.8% invest always or often in Series A and B). Later stage excluded from the survey, resulting in a missing population in the
investments are less in scope of our survey audience, with 87.5% survey result.
indicating that they rarely or never invest in rounds beyond Series B.
Content PwC & BVA | Venture Capital Market Study 2023 | 18

Introduction
Typical ticket size of the fund per deal
Executive
summary
Typical ticket size
32 total responses
Market
overview
28.1%

Survey sample
overview

Investment 15.6% 15.6% 15.6%

strategy 12.5%

Valuation 6.3% 6.3%

and returns
0.0%
Legal terms
€0 - 500k €500k - 1m €-1m - 2m €2m - 3m €3m - 5m €5m - 8m €8m - 10m > €10m
Investment
landscape
outlook
Insights
Appendix
Almost half the surveyed VCs indicated a typical ticket size below Only 12.6% of respondents indicated that they would invest in
€1m (43.7%), which can be linked to the strong preference for early tickets of €5m or more, which in turn reconciles with only 12.5% of
stage deals in the previous slide. respondents indicating that they often invest in later stage rounds.
Ticket sizes between €1m and €5m, representing 43.7% of the
respondents’ typical ticket, would be expected in a growth phase
investment round.
Content PwC & BVA | Venture Capital Market Study 2023 | 19

Introduction
Comparison of initial vs follow-up investments
Executive
summary
Average size of an initial and follow-up investment
32 total responses
Market
overview
9.4%
€5m - 15m
Survey sample 9.4%
overview
46.9%
Investment €1m - 5m
50.0%
strategy

43.8%
Valuation < €1m
and returns 40.6%

Legal terms Initial investment Follow up investment

Investment
landscape
outlook Summary

Appendix The data suggest that initial investments are roughly

equal in size to the follow-up investment.
Content PwC & BVA | Venture Capital Market Study 2023 | 20

Introduction
Fund’s average investment holding period
Executive
summary
VC’s average investment holding period
32 total responses
Market “Of course, everybody is in favour of
overview ‘patient capital’, but it isn’t the fundamental
90.6% VC mindset. Typically in a fund with 10 to
15 portfolio companies, you’ll have 2-3 fast
Survey sample exits – could be positive ones or failures.
overview Half of the portfolio will exit in 4-6 years
and the majority still within the 10-year
duration of a traditional VC fund. Then there
Investment are maybe 2 or 3 companies that didn’t do
strategy super well, but by giving them an additional
couple of years to grow to a next inflection
point, you’ll be able to realize a better exit.”
Valuation – Katrin Geyskens, Capricorn Partners
and returns 6.3%
3.1% 0.0%
Legal terms 0 - 5 years 5 - 10 years 10 - 15 years > 15 years

Investment
landscape
outlook
Insights
Appendix Although 5-10 years is a significant time for traditional SaaS companies,
As shown earlier, 66% of VCs surveyed prefer to set up funds in a it might not be enough for innovative hardware and research-intense
closed-end structure. 9 out of 10 of surveyed VCs have an average companies. We believe that there is a large space for ‘patient’ capital to fill
investment holding period of 5-10 years: this has been the typical in Belgium.
closed-end horizon view for many years.
Content PwC & BVA | Venture Capital Market Study 2023 | 21

Introduction
Number of deals closed per year
Executive
summary
Number of deals closed by VC funds per year
32 total responses
Market
overview
1 to 2 12.5%
Survey sample
overview 3 to 4 56.3%

Investment 5 to 6 12.5%
strategy
7 to 8 6.3%
Valuation
and returns 9 to 10 6.3%

Legal terms > 10 6.3%

Investment
landscape
outlook
Summary
Appendix
An overwhelming majority of the surveyed VCs close 3 or 4 deals per year,
with roughly half closing 1or 2, or 5 or 6 deals per year. A minority of the
surveyed VCs closed 7-10 or more deals per year.
Content PwC & BVA | Venture Capital Market Study 2023 | 22

Introduction
Comparison of industry investment focuses
Executive
summary
VCs’ industry investment focuses Summary
32 total responses
Market
overview B2B SaaS 16.0%
B2B SaaS (16.0%) is clearly a top focus for surveyed
Industry 4.0 & Robotics 14.2% VCs, in addition to Industry 4.0 & Robotics (14.2%), and
Survey sample Mobility & Logistics (13.2%).
Mobility & Logistics 13.2%
overview
ClimateTech 7.6% Focus on LegalTech (1.9%), Blockchain &
Cryptocurrency (1.9%) and GovTech (0.9%) is rather
Investment Monitoring & (Cyber) Security 7.6%
limited; these can be considered smaller niche topics.
strategy 4.7%
BioTech
Media & Entertainment (1.9%), HR (1.9%) and New
FinTech 4.7% Materials (1.9%) are also not in the focus scope of
Valuation
and returns Food & agricultural technology 4.7% many VCs.
HealthTech 4.7%
Legal terms E-Commerce 3.8%
MarketTech & AdTech 3.8%
Investment
landscape MidTech 2.8%
outlook New Materials 1.9%
Media & Entertainment 1.9%
Appendix
HR 1.9%
Blockchain and crypto-currency 1.9%
LegalTech 1.9%
GovTech 0.9%
All of the above 1.9%
Content PwC & BVA | Venture Capital Market Study 2023 | 23

Introduction
Comparison of investment placement in B2B vs B2C business models
Executive
summary
Investments in B2B and B2C business models (in %)
“B2C is very marketing driven and it is often difficult to compete with the large marketing
32 total responses
budgets of the big companies, which makes the competitive landscape very tough. But
Market
success stories like Loop or Moonbird could give the Belgian B2C ecosystem a boost.”
overview
40.6% – Katrin Geyskens, Capricorn Partners
100%
Survey sample 0.0%
overview
46.9%
75-99%
Investment
strategy
3.1% Insights
6.3% B2B business models seem to predominate over B2C business models. More
Valuation 50-74%
9.4% than half of the surveyed VCs place (nearly) all their investments in B2B business
and returns models. Most VCs place almost none of their fund investments in B2C models.
3.1%
Legal terms 25-49%
6.3%
Investment
landscape
3.1%
1-24%
outlook 40.6%
In our experience, B2C models often struggle to fit within a VC strategy due to
Appendix 0.0% a scattered consumer market in Belgium, lack of VC knowledge and experience
0% in B2C, and lower scalability. Successful B2C startups turn to other sources of
40.6% funding, such as business angels, corporates or crowdfunding.

B2B B2C
Content PwC & BVA | Venture Capital Market Study 2023 | 24

Introduction
Type of investment instrument used to finance portfolio companies
Executive
summary
Average use of investment instruments
32 total responses
Market “Although we generally invest in equity, we definitely see
overview benefits in investing through convertible loans in some
17.7% cases. Investing with a convertible loan can be a lean
Convertibles and efficient way to provide a company runway without
Survey sample having to put a price on the company at that time.
overview Additionally, it can be a way of pre-empting a potential
lead ticket in a future equity round.”
1.7% – Arne Hautekiet, Astanor Ventures
Investment Regular loans
strategy 80.6% (no equity)
Equity

Valuation
and returns

Legal terms

Investment
Summary
landscape
The surveyed VCs were asked to identify the types of investment
outlook
instruments they use to finance portfolio companies.

Appendix Among the surveyed VCs, all reported using equity as the primary
investment instrument, for 81% of all financing.
Only 18% of financing is provided through convertible loans.
Regular loans (without any conversion trigger) are rarely used. Only
2% of financing was provided through regular debt.
Content PwC & BVA | Venture Capital Market Study 2023 | 25

Introduction
Expected target participation stake at initial investment
Executive
summary
Expected target participation stake at initial investment
32 total responses
Market
overview

Survey sample
>50.0% 0.0%
overview
25.0% - 49.9% 6.3%
Investment
strategy 10.0% - 24.9% 62.5%

Valuation
and returns
<10.0% 21.9%

Legal terms Not specified 9.4%

Investment
landscape
outlook Summary
Appendix For most (62.5%) of the surveyed VCs, the expected target participation stake at initial
investment is between 10% and 25%. Over a fifth of surveyed VCs (21.9%) accept a
participation stake of less than 10%, and only a small minority (6.3%) has an expected target
participation stake of 25–49.9%. None of the VCs expect to have majority ownership in their
portfolio companies.
Content PwC & BVA | Venture Capital Market Study 2023 | 26

Introduction

Valuation and returns

Executive
summary

Market
overview
x Average expected IRR for a single target portfolio x Most commonly applied multiples
Survey sample company per stage
overview x Characteristics considered during the valuation process
x Average expected money multiple for a single
Investment target portfolio company per stage
x Range of years used as a basis to apply the multiples
strategy
x Average IRR of VCs’ funds
Valuation x Determination of the discount rate
x Importance of key factors for the valuation of
and returns
portfolio companies
x Outcomes of exits of the portfolio companies methods
Legal terms x Valuation methods used this year by the fund used this year by the fund

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 27

Introduction
Average expected IRR for a single target portfolio
Executive
summary
company per stage
Expected IRR per individual portfolio company
Market Summary
25 responses for Early Stage
overview
20 responses for Growth Stage
14 responses for Later Stage The surveyed VCs were asked what they consider the average expected
Survey sample internal rate of return (IRR) for a single target portfolio company.
overview Early stage: VCs expect the largest IRRs (reflecting the substantial risks
11% - 20% 31% - 40% > 50% related to early stage investing). Expectations start at 20%, with over 80%
Investment of investors looking for an IRR above 30% and 16% even expecting returns
strategy 21% - 30% 41% - 50% above 50%.
Growth stage: expectations vary significantly ― ranging from 11-50%. Most
Valuation investors (75%) look for a return of 20-40%.
and returns

50.0%
Later stage: half the surveyed VCs expect an IRR of 11-20%, with none of
45.0% them expecting more than 40%.
Legal terms
36.0%

35.7%
Investment
landscape
30.0%
28.0%

outlook
Investors clearly seek a healthy risk-reward balance. Early stage
20.0%

Appendix investors look for higher returns, as the chances of portfolio companies
16.0%

generating zero returns are significant; top performers need to make up

15.0%

14.3%
for those losses. Later stage investors look for solid bets and can’t afford
10.0%

as many failures in their portfolio.

0.0%

0.0%

0.0%

Early Stage Growth Stage Later Stage 0.0%

Content PwC & BVA | Venture Capital Market Study 2023 | 28

Introduction
Average expected money multiple for a single target portfolio
Executive
summary
company per stage
Expected money multiple per individual portfolio company in…
Market Summary
15 responses for Early Stage
overview
16 responses for Growth Stage
14 responses for Later Stage The surveyed VCs were asked what they consider the average expected
Survey sample money multiple (MM) for a single target portfolio company.
overview Early stage: the average expected MM is between 5x and 6x. 40% expect
2x to 3x 4x to 5x 6x to 7x MMs of 3-5x, 40% expect 5-6x and 20% expect multiples as high as 6-8x.
Investment
3x to 4x 5x to 6x 7x to 8x Growth stage: 37.5% VCs expected MMs of 3-4x, while another 37.5%
strategy
seek a return of 5-7x.
Later stage companies: expectations are distributed fairly evenly across the
Valuation
2x to 6x range.
40.0%

and returns
37.5%
Legal terms

28.6%

28.6%
Investment
25.0%

landscape
outlook

21.4%
21.4%
20.0%
20.0%

18.8%

Appendix
13.3%

12.5%
0.0%
0.0%

0.0%
0.0%
6.7%

6.3%

Early Stage Growth Stage Later Stage

Content PwC & BVA | Venture Capital Market Study 2023 | 29

Introduction
Average IRR of VCs’ funds
Executive
summary 23 responses for Early Stage
16 responses for Growth Stage
11 responses for Later Stage
Market
overview
Early Stage Growth Stage Later Stage
Survey sample
overview < 10% 4.3% 19% 18%

Investment 11% - 20% 19% 36%

13%
strategy

Valuation 21% - 30% 61% 50.0% 36%

and returns
31% - 40% 13% 13% 9%
Legal terms

41% - 50% 9%
Investment
landscape
outlook

Appendix
Summary
The surveyed VCs were asked about the average IRR for their fund.
Early stage: IRR outperforms that of growth stage and later stage investors. Most (83%) report a return
of over 20%; 61% report a 20%-30% return.
Growth stage: half the VCs report a 20%-30% IRR, with some outliers (13%) reaching returns above that.
Later stage: most investors (73%) report an IRR of 11-30%.
Content PwC & BVA | Venture Capital Market Study 2023 | 30

Introduction
Importance of key factors for the valuation of portfolio companies
Executive
Importance of…
summary
27 responses
Insights
Market Management team Market The surveyed VCs were asked
overview how important key factors -
Early 74.1% 18.5% 7.4% 7.4% 37.0% 37.0% 18.5%
Management Team, Market,
Survey sample Growth 11.5% Product/Service and Fit - were
69.2% 19.2% 11.5% 3.9% 46.2% 38.5%
overview to their investment decision
Later 42.9% 33.3% 23.8% 14.3% 42.9% 38.1% 4.8% and valuation of the company
(e.g., synergies with the rest of
Investment
the portfolio, leadership style
strategy Stage
Product/Service Fit similar to the VC, …).

Valuation Early 18.5% 37.0% 25.9% 18.5% 7.4% 29.6% 63.0% Surprisingly, the levels of
and returns importance are roughly similar
Growth 26.9% 26.9% 38.5% 7.7% 7.7% 11.5% 80.8% regardless of the maturity
stage. All indicated that the
Legal terms Later 42.9% 19.1% 33.3% 4.8% 4.8% 4.8% 90.5% quality of the team mattered
most, although its importance
Investment Most Important Significantly Important Moderately Important Least Important is clearly higher in an early
landscape stage environment.
outlook
Team is followed by Product/
Service, which is increasingly
Appendix important with maturity.
“You want to find exceptional
founders, both in early and in later Market is significantly to
Strong leadership capabilities, expertise and experience always
trump strong products or big markets that don’t have a convincing stages. Yet the later the stage, the moderately important for most
more we look at the entire team, rather VCs across maturity phases.
management team. Founders must put significant thought into building than only the founders. At some point,
their executive teams and make sure the strength of their team is Fit is considered the least
you can’t run a good business with just
demonstrated as early as possible in conversations with VCs. 3 people.” important factor.
– Lucas Stoops, 6 Degrees Capital
Content PwC & BVA | Venture Capital Market Study 2023 | 31

Introduction
Valuation methods used this year by the fund
Executive
summary Valuation methods used
“We mainly valuate early stage companies by using our experience and
27 responses for Early Stage
market logic. We don’t believe you can make extensive valuation exercises
26 responses for Growth Stage for those companies. They will still pivot so multiples don’t really make
Market 26 responses for Later Stage sense. We mainly look at dilution of founders and how much they raise to
overview
come up with a sound valuation.”
– Boris Bogaert, Pitchdrive
Survey sample Industry
overview multiples 20.2% 25.7% 27.1%
Insights
Investment VC method 22.6% 20.3% 16.7%
strategy Respondents were asked about their preferred valuation methods
Assessment (multiple answers possible).
Valuation
of comparable 20.2% 18.9% 18.8% Overall, industry multiples are considered the preferred method
financing rounds
and returns of valuing a company for growth stage (25.7%) and later stage
Experience 19.0% 16.2% 6.3% (27.1%) companies
Legal terms The VC method is preferred in early stage deals (22.6%).
The DCF method is mainly popular in later stage deals (25%).
DCF method 3.6% 9.5% 25.0%
Investment Market logic and experience are preferred by a minority of the
landscape investors across all maturities, with a stronger preference by early
outlook Market logic* 13.1% 8.1% 6.3% stage investors.

Appendix First Chicago

method
1.2% 1.4%

Early Stage Growth Stage Later Stage With most VCs across stages looking at multiples, founders
should proactively collect relevant data on multiples to put
forward in negotiations.
* Market logic:
investment volume/% of ownership; scoring/rating; liquidation value; book value
Content PwC & BVA | Venture Capital Market Study 2023 | 32

Introduction
Most commonly applied multiples
Executive
Multiples applied per stage
summary
30 responses for Early Stage
Summary
43 responses for Growth Stage
Market 34 responses for Later Stage VCs were asked what types of
overview
multiples they’ve used the most in their
valuations.
76.7%
Survey sample EV /
46.5% The most commonly applied multiple in
overview Sales
32.4% early (77%) and growth stages (47%)
is EV/Sales. It’s also a frequently used
Investment 6.7% multiple in the later stage (32%).
strategy EV /
30.2%
EBITDA EV/EBITDA is slightly more popular in
35.3%
later stage (35%) and also frequently
Valuation
0.0% used in the growth stage (30%). The
and returns EV /
7.0% lack of positive EBITDA in the early
EBIT
11.8% stage makes it virtually irrelevant.
Legal terms
0.0% Early Stage Some growth stage (7%) and later stage
EV /
2.3% (12%) VCs prefer to look at EV/EBIT.
Investment Operative CF Growth Stage
landscape 5.9% In the early stage, 17% of investors
outlook Later Stage reported looking at other key figures
Price / 0.0% rather than multiples.
Earning 4.7%
Appendix to growth 5.9%

16.7%
Other
key figures 9.3%
8.8%

EV: Enterprise value. EV/EBITDA: EV compared to earnings before interest, taxes, depreciation and amortisation.
EV/CFO: EV compared to cash flow from operations.
Content PwC & BVA | Venture Capital Market Study 2023 | 33

Introduction
Characteristics considered during the valuation process
Executive
Characteristics of acquired share class considered, per stage
summary
26 responses for Early Stage
Summary
21 responses for Growth Stage
Market 14 responses for Later Stage VCs were asked how they consider specific
overview
characteristics of the acquired share class
(e.g., liquidation preferences, anti-dilution
Survey sample 38.5% clauses) in the valuation process.
Deriving a fully
overview 38.1%
diluted share price Deriving a fully diluted share price is most
35.7%
frequently considered, in all stages.
Investment Considering share
strategy price premiums for
15.4% In growth and later stages, quantified
investor rights via
28.6% approaches such as a waterfall analysis and
quantitative approaches* 28.6% the option pricing method are considered
Valuation
more than in the early stage.
and returns Considering share
19.2%
price premiums for
9.5%
investors rights
Legal terms based on experience 14.3% Early Stage

Investment Calculating the impact 3.8% Growth Stage

landscape of the strike price paid 0.0%
for executed options Later Stage
outlook 0.0%

Do not consider 23.1%

Appendix
specific characteristics 23.8%
of share classes 21.4%

* Quantitative approaches, e.g. option pricing method, waterfall analysis or Monte Carlo simulation
Content PwC & BVA | Venture Capital Market Study 2023 | 34

Introduction
Range of years used as a basis to apply the multiples
Executive
Years used, per stage
summary
25 responses for Early Stage
Summary
20 responses for Growth Stage
Market 13 responses for Later Stage Respondents were asked what year would preferably be the
overview
reference year to apply multiples on.
For early stage companies, most of the surveyed VCs apply
Survey sample
multiples to the current year (44%). Some of the VCs apply the

46.2%
overview
44.0%

40.0% multiples to 1-2 years (24%) or 3-5 years (24%).

Investment For growth stage companies, the multiples are most

strategy commonly applied to the current year (40%). However, most
VCs in growth stage apply multiples to a future year, 1-2 years
30.8%

30.0%
(25%) or 3-5 years (30%).
Valuation

25.0%
24.0%

24.0%
and returns Not surprisingly, later stage VCs are less likely to look further

23.1%
than 5 years into the future when applying multiples, with 31%
Legal terms
applying them to the current year. However, a fair share of

5.0%
them consider future years, mainly 1-2 years from now (23%)
and 3-5 years from now (46%).

0.0%
8.0%
Investment
landscape
outlook N N < 2 years N = 3 - 5 years N > 6 years

Appendix Early Stage Growth Stage Later Stage

Content PwC & BVA | Venture Capital Market Study 2023 | 35

Introduction
Determination of the discount rate
Executive
Determination per stage
summary
29 responses for Early Stage
Summary
30 responses for Growth Stage
Market 31 responses for Later Stage The VCs were asked how they determine the discount
overview
rate for target investments.
Early stage: 36.8% of the surveyed VCs have no
Survey sample Risk free rate with
21.1% 33.3% 46.7% required yield. An equal number determine the rate
overview surcharges for individual
risk components using a flat‑rate capitalisation interest depending on the
startup phase.
Investment Flat-rate capitalization
strategy interest depending on 36.8% 22.2% 13.3% Growth stage: the risk-free rate with surcharges for
the startup phase individual risk components is the most-used method
(33.3%), while 27.8% have no required yield.
Valuation
CAPM without Later stage: the clearly preferred method is the risk‑free
and returns 5.3% 16.7% 20.0%
further adjustments rate with surcharges for individual risk components
Legal terms
(46.7%)
No required yield 36.8% 27.8% 20.0%
Investment
landscape
outlook Early Stage Growth Stage Later Stage

Appendix CAPM: capital asset pricing model

Content PwC & BVA | Venture Capital Market Study 2023 | 36

Introduction
Outcomes of exits of the portfolio companies
Executive
summary Exit outcomes
“The IPO window is in general quite closed. I think we need a couple of bangers like
29 responses
Stripe or a couple of others that are rumored to go to market. But everything except a
Market couple of billion will remain M&A market and it’s twofold because if you are too large, you
have a lot less buyers. But if you get too big, you have all these M&A rules of becoming
overview
too dominant and so forth. So many companies are trapped a bit in the middle.”
IPO M&A or Trade sale Failure No exit – Lukas Stoops, 6 Degrees Capital
Survey sample
overview 100

90
Investment
80
strategy
70 Summary
Valuation 60
and returns Respondents were asked to identify the different outcomes they have
50 experienced when exiting the portfolio companies they have invested in.
48.4
Legal terms 40 The most common liquidity event is an M&A or a trade sale, which happens
30 24.7 in around 48% of cases.
Investment 20 25% of investments result in failure.
landscape 15.9
outlook 10 4.2 An IPO is quite rare: only 4% of investments resulted in an IPO.
0 Around 16% of investments neither fail nor deliver any type of liquidity.
Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 37

Introduction

Executive
Legal terms
summary
x Flexibility in term sheet items for new investments x Investing through convertible loans
Market
x Liquidation preferences in new portfolio investments x Average discount agreed on convertible loans per stage
overview
per stage
x Additional conversion terms in convertible loans
Survey sample x Priority of last agreed liquidation preference
overview
x Implementation of ESOP1 pools in new investments per
x Average multiple and interest rate applied to liquidation
stage
Investment preferences per stage
strategy x ESOP strike price considerations per stage
x Anti-dilution clauses in new portfolio investments in
Valuation
different stages x Drag-along rights in new portfolio investments in
and returns different stages
x Enforcement frequency of anti-dilution clauses per stage
Legal terms x Vesting clauses against founders in new portfolio x Founder share lock-up and secondary trading in a
investments per stage portfolio company per stage
Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 38

Introduction
Flexibility in term sheet items for new investments
Executive
summary
% of funds flexible in ...
25 responses
Summary
Market
overview Most of the surveyed VCs indicated that
Incentive pool 16.0% 32.0% 48.0% 4.0% there is quite some flexibility on incentive
Target ownership pools, ownership stake and redemption
Survey sample 4.0% 28.0% 48.0% 20.0%
stake rights, while often offering little wiggle
overview
Redemption rights 12.0%
room on pro-rata rights, valuation and
12.0% 56.0% 16.0% 4.0%
investment amount.
Investment
strategy Vesting 4.0% 16.0% 40.0% 36.0% 4.0%

Anti-Dilution 4.0% 16.0% 32.0% 40.0% 8.0%

Valuation
and returns Participation 4.0% 12.0% 44.0% 24.0% 16.0%
Liquidation
Legal terms preferences 4.0% 8.0% 20.0% 52.0% 16.0%
Vetos/protective
Investment provisions 4.0% 24.0% 56.0% 16.0%
landscape
Board seat/control 4.0% 24.0% 56.0% 16.0%
outlook
Pro-rata rights 4.0% 40.0% 36.0% 20.0%
Appendix
Investment amount 68.0% 32.0%

Valuation 56.0% 40.0% 4.0%

Extremely flexible - founder friendly Very Somewhat

Not very Not at all flexible - investor friendly

Content PwC & BVA | Venture Capital Market Study 2023 | 39

Introduction
Liquidation preferences in new portfolio investments per stage
Executive
summary
How often do funds agree on liquidation preferences
“These results around liquidation preference
25 responses
at an early stage are very strange to us as it
Market
should be the other way around. It shows that
overview there is still a gap in early stage funding in
Early stage 68.0% 24.0% 4.0% Belgium compared with the UK and the US.
They have a more entrepreneurial mindset
Survey sample
Growth stage 36.0% 40.0% 24.0% without heavy terms in the term sheet at early
overview stage to get people started. It’s more common
that VCs in a later stage request liquidation
Investment
Later stage 20.0% 20.0% 8.0% 52.0% preferences to cover risks as the amounts are
also much higher.”
strategy
Always Often Rare Not specified – Boris Bogaert, Pitchdrive

Valuation
and returns
Types of liquidation preferences agreement
Summary
Legal terms 24 responses for early stage, 20 responses for growth stage and 12 responses for later stage
A liquidation preference dictates the
payout order in case of a liquidation event.
Investment Early stage 37.5% 62.5% Liquidation preferences are very popular
landscape
outlook amongst the surveyed VCs. Across all
Growth stage 25.0% 75.0% stages, we see that liquidation preferences
are often implemented.
Appendix Later stage 8.3% 91.7% Surveyed VCs responded that the
more founder-friendly preference, non-
Participating liquidation preferences Non-participating liquidation preferences participating liquidation, is most common.
Content PwC & BVA | Venture Capital Market Study 2023 | 40

Introduction
Priority of last agreed liquidation preference
Executive
summary
How often are agreed liquidation preferences senior to previous preferences
25 responses for early stage
Summary
Market 25 responses for growth stage
overview 23 responses for later stage The results suggest that all agreed
liquidation preferences are senior to
Survey sample previous preferences, meaning that the
overview Early stage 64.0% 28.0% 8.0% last agreed preference is given priority.

Investment
Growth stage 48.0% 28.0% 24.0%
strategy
Later stage 34.8% 17.4% 47.8%
Valuation
and returns Always Often Not specified

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 41

Introduction
Average multiple and interest rate applied to liquidation preferences per stage
Executive
summary
Average liquidation preference multiple
23 responses for early stage, 19 responses for growth stage and 11 responses for later stage
Summary
Market
overview Across all phases, most of the
Early stage 73.9% 26.1% surveyed VCs expect a 1x liquidation
Survey sample preference. However, 16-26% of VCs
overview
Growth stage 84.2% 15.8% in each stage expect a liquidation
preference above that.
Later stage 81.8% 18.2% None of the VCs expect a liquidation
Investment
strategy preference above 2x.
1x 1-2x > 2x
For each stage, only 14-22% of
Valuation investors do not (or barely) apply
and returns an interest rate to their liquidation
Average interest rate preference. Moreover, across all
Legal terms 13 responses for early stage, 9 responses for growth stage and 7 responses for later stage stages, a strong majority expects an
interest rate above 6%.
Investment Early stage 15.4% 7.7% 38.5% 30.8% 7.7%
landscape
outlook Growth stage 22.2% 11.1% 22.2% 44.4%

Appendix Later stage 14.3% 57.1% 28.6%

< 1% 2%-3% 4%-5% 6%-7% 8%-9% > 10%

Content PwC & BVA | Venture Capital Market Study 2023 | 42

Introduction
Anti-dilution clauses in new portfolio investments in different stages
Executive
summary
How often do funds negotiate anti-dilution clauses?
25 responses
Summary
Market
overview Anti-dilution clauses allow investors
Early stage 68.0% 28.0% 4.0% the right to maintain their ownership
Survey sample percentages if new shares are issued.
overview Growth stage 48.0% 28.0% 8.0% 16.0% Dilution refers to a shareholder’s
ownership decreasing because of new
Investment
Later stage 16.0% 16.0% 12.0% 56.0% shares being issued.​
strategy
Always Often Rare Not specified In early and growth stages, a vast
majority (96% and 76% respectively)
Valuation
of surveyed VCs reported frequently
and returns
negotiating anti-dilution clauses. For
Which types of anti-dilution are most commonly used?
25 responses
the later stage investors that answered
Legal terms that they negotiate anti-dilution, 72%
reported frequently negotiating anti-
Investment Broad-based dilution clauses.
landscape weighted average 12.0% 68.0% 8.0% 4.0% 8.0%
outlook Narrow-based Broad-based weighted average is the
weigthed average 40.0% 12.0% 28.0% 20.0% most common type of anti-dilution
Appendix used (80%) versus less than 40% of
Full ratchet 8.0% 16.0% 40.0% 28.0% 8.0% narrow-based and full ratchet types of
anti-dilution.
Always Often Rare Never Not specified
Content PwC & BVA | Venture Capital Market Study 2023 | 43

Introduction
Enforcement frequency of anti-dilution clauses per stage
Executive
summary
How often is anti-dilution enforced?
25 responses
Summary
Market
overview Of the surveyed VCs, over 50% always
Early stage 32.0% 24.0% 28.0% 16.0% or often fully enforce their rights under
Survey sample anti-dilution clauses in early stage.
overview
Growth stage 20.0% 12.0% 36.0% 32.0%
The frequency decreases to 41% for
growth stage and 20% for later stage,
Investment
Later stage 8.0% 32.0% 60.0% excluding those that did not specify.
strategy
Always Often Rare Not specified

Valuation
and returns

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 44

Introduction
Vesting clauses against founders in new portfolio investments per stage
Executive
summary
How often do funds negotiate vesting clauses?
25 responses
Summary
Market
overview Vesting clauses refer to the terms and
Early stage 52.0% 28.0% 20.0% conditions that govern how the shares
Survey sample of founders, key employees or other
overview
Growth stage 32.0% 28.0% 20.0% 20.0% stakeholders will be distributed or
‘earned back’ over time.​
Investment
Later stage 8.0% 20.0% 16.0% 56.0% Vesting clauses against founders seem
strategy to be quite standard market practice in
Always Often Rare Not specified the early and growth stages, with most
Valuation surveyed investors negotiating them
and returns ‘always’ or ‘often’ in their deals.

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 45

Introduction
Investing through convertible loans
Executive
summary
In which situations do funds finance companies through convertible loans?
25 responses
Summary
Market
overview Bridge financing Convertible loans agreements (CLAs) are
in existing 8.0% 60.0% 20.0% 12.0% quite popular when it comes to providing
portfolio companies bridge financing to portfolio companies,
Survey sample
overview Financing strategy with 68% of surveyed VCs indicating
(mid term CLAs they have provided CLAs in such cases
Investment to allow value 4.0% 20.0% 36.0% 36.0% 4.0% ‘always’ or ‘often‘.
increase prior to
strategy However, CLAs are apparently not the
equity financing)
most common way of financing a first
Valuation investment: 80% of surveyed VCs report
Initial investment 20.0% 32.0% 48.0%
and returns having rarely or never done so.

Always Often Rare Never Not specified

Legal terms

Investment
landscape
outlook
“We found convertibles a good idea as bridge
financing when the next equity round is almost
Appendix
closed and almost certain to happen, but then
for small amount in the round. In general, we
prefer to bite the bullet, have the valuation
discussions and use equity.”
– Katrin Gesykens, Capricorn
Content PwC & BVA | Venture Capital Market Study 2023 | 46

Introduction
Average discount agreed on convertible loans per stage
Executive
summary
Average discount of convertible loans
22 responses for early stage
Summary
Market 19 responses for growth stage
overview 11 responses for later stage The typical discount applied to convertible
loans ranges from 10–30%, with early stage
Survey sample CLAs being more on the higher side of that
overview Early stage 27.3% 72.7% range, and gradually decreasing by stage.
In later stages, some investors (18%) accept
Investment Growth stage 47.4% 52.6%
discounts below 10%.
strategy
Later stage 18.2% 36.4% 45.5%
Valuation
and returns 0% 1%-10% 11%-20% 21%-30% > 30%

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 47

Introduction
Additional conversion terms in convertible loans
Executive
summary
How often do funds providing a CLA agree to ...
25 responses
Summary
Market
overview Valuation caps and conversion
Conversion obligation
(not only option) in 16.0% 36.0% 28.0% 20.0% obligation in equity financing rounds
Survey sample equity financing round are the most common conversion
overview terms, followed by milestones for
Valuation caps for conversion disbursement and fixed conversion
in equity financing rounds 24.0% 24.0% 32.0% 20.0%
Investment
at maturity.
strategy Milestones or tranches Putting a floor value on conversion
for disbursement
36.0% 40.0% 24.0% terms is not a common practice.
Valuation Almost none of the surveyed VCs
and returns Fixed conversion valuation agrees on withholding taxes/capital
at maturity date 28.0% 36.0% 36.0%
gains owed by the company as an
Legal terms Conversion obligation additional conversion term.
(not only option) 24.0% 48.0% 28.0%
at maturity date
Investment
landscape Extraordinary ("kicker") interest
outlook at exit or maturity date 20.0% 48.0% 32.0%

Appendix Valuation floor (for conversion

in equity financing rounds) 12.0% 52.0% 36.0%
Withholding taxes/capital gains
owed by the company 32.0% 68.0%
(gross net clauses)
Always Often Rare Never
Content PwC & BVA | Venture Capital Market Study 2023 | 48

Introduction
Implementation of ESOP1 pools in new investments per stage
Executive
summary
How often do deals include ESOP pools?
“Stock option pools are to key to stimulate the
25 responses for early stage, 20 responses for growth stage and 11 responses for later stage
entrepreneurial mindset of employees. Many
Market
successful startups in Belgium offered last years
overview option stock to its employees at an early stage.
Early stage 52.0% 44.0% 4.0% This revolutionised the startup scene in cities like
Ghent (cfr. Netlog Mafia where more than 20 other
Survey sample
Growth stage 40.0% 60.0% ventures direct and indirect originated from –
overview Xpenditure/Rydoo, Showpad, Realo Engagor, ...).
Companies without or with limited stock options
Investment
Later stage 25.0% 75.0% are risking to quickly turn into a scale-up without a
‘conquering the world’ mindset.”
strategy
Always Often Rare – Boris Bogaert, Pitchdrive

Valuation
and returns
Summary
Expected pool size per portfolio company ...
Legal terms 25 responses for early stage, 21 responses for growth stage and 12 responses for later stage Incentivisation of key personnel through
ESOP pools is very common: almost all
Investment Early stage 16.0% 68.0% 16.0% surveyed VCs reported ‘always’ or ‘often’ in
landscape all phases.
outlook Growth stage 14.3% 71.4% 14.3% The typical pool size of the surveyed VCs’
funds is 6–10%, with a minority of funds
Appendix Later stage 16.7% 66.7% 16.7% agreeing to a slightly higher or lower stake.
None of the surveyed VCs agreed to a pool
0%-5% 6%-10% 11%-15% > 15% size higher than 15%.
Content PwC & BVA | Venture Capital Market Study 2023 | 49

Introduction
ESOP strike price considerations per stage
Executive
summary
ESOP strike prices are typically based on ...
22 responses for early stage
Market 17 responses for growth stage
overview 10 responses for later stage

Survey sample
Price per share
overview last financing round 40.9% 47.1% 60.0%
minus discount
Investment Assumed current
strategy valuation of 40.9% 35.3% 30.0%
common shares
Valuation
and returns Price per share 11.8%
last financing round 13.6% 10.0%
Legal terms
Nominal value or 4.5%
no strike price 5.9%
Investment
landscape
outlook Early stage Growth stage Later stage

Appendix

Summary

Typically, the strike price of stock option plans is based on the price per share in the last
funding round minus a discount, or on the assumed valuation of common shares.
Content PwC & BVA | Venture Capital Market Study 2023 | 50

Introduction
Drag-along rights in new portfolio investments in different stages
Executive
summary
How often do funds agree to drag-along rights?
25 responses
Summary
Market
overview
A drag-along clause enables a majority
Early stage 64.0% 24.0% 4.0% 8.0%
shareholder to force a minority
Survey sample shareholder to join in the sale of a
overview Growth stage 40.0% 32.0% 4.0% 24.0% company. ​

Investment Later stage 20.0% 24.0% 56.0% Across all stages, drag-along rights
strategy are present in most of the surveyed
Always Often Rare Not specified VCs’ deals.
Valuation Commonly-accepted limitations to
and returns the drag-along rights include majority
What limitations do funds agree to concerning drag-along rights? requirements and, to a lesser extent,
Legal terms 22 responses for early stage, 16 responses for growth stage and 8 responses for later stage minimum valuation.

Investment Requirement of further drag

landscape along majorities (e.g. consent 63.6% 62.5% 75.0%
outlook of founder majority required)

Minimum valuation
Appendix (e.g. applicable for a 31.8% 37.5% 25.0%
certain period)

Continued validity of
pre-emptive rights upon 4.5%
exercise of drag along

Early stage Growth stage Later stage

Content PwC & BVA | Venture Capital Market Study 2023 | 51

Introduction
Founder share lock-up and secondary trading in a portfolio company per stage
Executive
summary
Average % of shares funds agree to be excepted from the lock-up
9 responses for early stage, 9 responses for growth stage and 6 responses for later stage
Summary
Market
overview
Later stage VCs allow higher percentages
Early stage 55.6% 22.2% 11.1% 11.1% of shares to be excepted from the lock-up
Survey sample compared to early and growth stage VCs,
overview Growth stage 44.4% 22.2% 22.2% 11.1% which could be explained by the founders’
growing liquidity need over the lifespan of a
Investment Later stage 33.3% 33.3% 16.7% 16.7% venture.
strategy In most cases, founders’ liquidity potential is
< 2% 3%-5% 6%-10% 11%-15% > 15% limited to a maximum of 5% of the shares.
Valuation
In general, funds are not very willing to
and returns
acquire existing shares in a secondary trade.
Are funds willing to acquire existing shares through a secondary trade?
Legal terms 25 responses

Investment 4.0%
landscape
Early stage 4.0% 48.0% 44.0%
outlook
Growth stage 12.0% 44.0% 24.0% 20.0%
Appendix
Later stage 8.0% 36.0% 56.0%

Often Rare Never Not specified

Content PwC & BVA | Venture Capital Market Study 2023 | 52

Introduction

Executive
summary

Market
overview
Investment landscape outlook
Survey sample
overview
x Deal flow: past and future outlook
Investment
strategy x Valuations: past and future outlook

Valuation
and returns

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 53

Introduction
Deal flow: past and future outlook
Executive
summary
Deal flow in the past years Deal flow in the next 12 months
25 responses 25 responses
Market
overview 8.0% 12.0%
Outperforming Dealflow will go down
20.0%
Survey sample Dealflow will
overview go up
36.0%
56.0% Still very unstable
Investment Stabilised 68.0%
strategy Dealflow will
stay stable
Valuation
and returns

Legal terms

Investment Summary
landscape
outlook
More than half of the surveyed VCs reported that the number of opportunities “Deal flow is picking up again and it’s clear that founders are past the phase
they receive has stabilised in 2023, compared to a volatile period in 2020–2022. where they were looking at internal investors first, before speaking to new
Appendix However, more than a third considers that deal flow in 2023 is still, comparably, investors. More and more people feel comfortable to go out and raise a priced
very unstable. A minority stated that deal flow overperformed in 2023. equity rounds again making our weekly investment team meetings longer and
more interesting than they used to be the last year.”
When asked about their expectations for 2024, most VCs stated that they – Arne Hautekiet, Astanor Ventures
believe deal flow will stay stable, while 20% expect that deal flow will go up.
Content PwC & BVA | Venture Capital Market Study 2023 | 54

Introduction
Valuations: past and future outlook
Executive
summary
Valuations in the past 12 months Valuations in the next 12 months
25 responses 25 responses
Market
overview 4.0% 8.0%
Valuations went up Valuations will go up
Survey sample
overview
20.0% 28.0%
Valuations are Valuations
Investment at same level 76.0% will go down
strategy as 2022 Valuations
went down
64.0%
Valuation Valuations
and returns will stay stable

Legal terms

Investment Summary
landscape
outlook
The majority (76%) of the surveyed VCs stated that valuations went down in 2023
“As a joke people say, a flat round is the new up, but that’s fine. I can live
compared to 2022, with 20% stating that they stayed at the same level, and a
with flat rounds. I’m not too worried about it. If it is still at a reasonable
Appendix small minority stating valuations went up in 2023. price and the founders still have enough shares, it’s okay. We focus on the
As for VCs’ expectations on the future of valuations in 2024, 64% believe that the long term. If the business performs well, we will figure it out.
valuations will stay stable; almost a third predict that valuations will go down and – Lucas Stoops, 6 Degrees Capital
a small minority expect they will go up.
Content PwC & BVA | Venture Capital Market Study 2023 | 55

Introduction

Executive
summary

Market
overview
Appendix
Survey sample
overview
x Abbreviations
Investment x Team
strategy

Valuation
and returns

Legal terms

Investment
landscape
outlook

Appendix
Content PwC & BVA | Venture Capital Market Study 2023 | 56

Introduction
Abbreviations
Executive
summary

Abbreviation Definition Abbreviation Definition

Market
overview
(C)VC (Corporate) Venture Capital EV Enterprise Value
Survey sample
overview TMT Technology, Media, and Telecom EBITDA Earnings Before Interest, Taxes,
Depreciation & Amortization
Investment LOHAS Lifestyles of Health and Sustainability
strategy EBIT Earnings Before Interest & Taxes
AI & ML Artificial Intelligence & Machine Learning
Valuation Operating CF Operating Cash Flow
and returns SaaS Software as a Service
CAPM Capital Asset Pricing Model
Legal terms HR Human Resources
CLA Convertible Loan Agreement
Investment B2B / B2C Business to Business / Business to Client
landscape ESOP Employee Stock Option Plan
outlook
IRR Internal Rate of Return
Appendix
DCF Discounted Cash Flows
Content PwC & BVA | Venture Capital Market Study 2023 | 57

Introduction
Team
Executive
summary

Market
overview

Survey sample
overview
Jan Alexander Elise Carton
Investment Secretary General Senior Manager Venture Deals
strategy PwC Belgium
BVA

Valuation
and returns

Legal terms Glenn Gezels Birgit Everaert

VC Chapter Lead Manager Venture Deals

Investment BVA PwC Belgium

landscape
outlook

Appendix Louise Mertens

Senior Associate Venture Deals
PwC Belgium
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