Europe's venture exits slump as zombie sales surge

More than one in five disclosed European venture capital-backed exits are now being completed at less than 1x revenue, according to analysis by ScaleX Invest. The share of these so-called zombie exits has more than tripled in three years.

The research covered about 9,700 disclosed transactions involving more than 8,000 European tech companies through the end of June 2026. It found that 22% of disclosed sales in the latest 18-month period were struck at less than one year's revenue, up from 7% in 2021-22.

The figures point to a sharp reset in exit conditions for European start-ups and scale-ups after the high valuations of the pandemic period. They also suggest venture investors are struggling to realise returns close to the prices they paid when entering deals.

The median price investors paid to buy into a European VC-backed company was 9.3x revenue in 2021-22 and 8.7x revenue in 2025-26, the data showed. Over the same period, the median exit multiple fell from 5.8x revenue to 2.4x revenue.

That widened the gap between entry and exit valuations from -38% to -72%. More than half of VC-backed exits since the start of 2025 were completed at less than 3x revenue, compared with 28% in 2021-22.

Premium exits

The pressure was not limited to weaker assets. ScaleX found that the top-quartile exit price fell from 19x revenue in 2021-22 to 5.2x revenue in 2025-26, indicating a marked decline even at the upper end of the market.

The composition of those premium exits has also changed. The UK accounted for 61% of top-quartile exits in 2021-22, but 29% in 2025 to date, while France's share rose from 11% to 28% and Germany's from 0% to 14%.

By sector, AI represented 29% of premium exits in 2025 to date, up from 11% in 2021-22. SaaS, which made up 39% of premium exits in 2021-22, accounted for 29% in the more recent period.

"This isn't a case of VCs flushing out fundamentally bad businesses. A lot of dry powder accumulated during Covid and was deployed rapidly after global lockdowns were lifted. Investors piled in and backed good companies at prices that were too high. Now, the glut of zombie sales points to a necessary recalibration. These companies have to be revalued through a more rational lens, and VCs are becoming more pragmatic.

"The rising tide of zombie sales is a troubling signal of a market-wide repricing across European venture. More than one in five VC exits since the start of 2025 was a zombie, and more than half went for less than 3x revenue - a proportion that has doubled from 28% in 2021-22," said Sébastien Paillet, Chief Executive Officer of ScaleX Invest.

Backlog grows

The slowdown in exits has added to a growing backlog across the European venture market. The number of disclosed sales of VC-backed companies fell 68% between 2021-22 and 2025-26, according to ScaleX.

For every 10 companies financed in 2025-26, one was sold, the data showed. At the average exit pace recorded between 2020 and 2025, it would take 64 years to clear the current backlog of financed companies. Using the 2025 pace alone would stretch that to 120 years.

Country-level data showed sharp differences across Europe. In Germany, zombie exits rose to 50% of the country's total exits in 2025-26 from 25% in 2021-22. In France, the proportion increased from 20% to 25%, while in the UK it climbed from 4% to 14%.

Sector data suggested some areas have held up better than others. AI, fintech, cleantech and energy recorded no zombie exits in the latest period in the disclosed sample, while SaaS rose to 25% from 4% and e-health climbed to 33% from 0%.

Paillet said AI was helping to support exit valuations at a time when much of the rest of the market was under strain. The data showed AI companies sold since the start of 2025 achieved a median exit valuation of 5.7x revenue, more than twice the broader market level.

Without AI deals, the top-quartile exit price would have fallen to 4.3x revenue rather than 5.2x, ScaleX said. By contrast, SaaS companies now sell for a median 2.4x revenue.

"There's a strong case that AI is keeping VC exit prices afloat. AI companies sold since the start of 2025 fetched a median exit valuation of 5.7x revenue - more than twice the market level - and without them the top-quartile exit price would have fallen further, from 5.2x to 4.3x. SaaS, which supplied close to 40% of the premium exits in 2021-22, now sells for a median 2.4x," said Paillet.

"VCs are walking a fine line between holding out for an industry-wide valuation recovery and satisfying LPs with sufficient IRR. Many of the funds raised immediately after the pandemic are approaching the twilight years of their lifespan. Sadly, this pressure is bearing down on many of Europe's high-quality founders and companies, who will be encouraged to start sale processes sooner than they would like, at valuations lower than they hope for or feel they deserve," he said.