More than one in five European venture-backed startups that have been sold with a disclosed price since the start of 2025 went for less than one year of their revenue. ScaleX Invest, a valuation and data company based in London and Paris, calls these “zombie exits”, because such a price often returns little to the investors who backed the company.
The figures, reported by Tech Funding News, also show the gap between what investors pay when they back a startup and what buyers later pay to acquire one widening by 72%. Put simply, startups are still raising money at prices that buyers will not match when the time comes to sell. The figures come after a sharp fall in European deal activity, with exits in short supply. Exits are the stock market listings and sales that let a venture capital (VC) fund cash in its stakes.
What A Zombie Exit Looks Like
Startups are usually valued as a multiple of their yearly revenue. A company with €10M of annual sales that raises money at 9x revenue is valued at €90M on paper. If the same company is later sold for €8M, less than a single year of sales, founders and employees may receive little or nothing. Investors holding preference shares are usually paid back first, and even they may not recover what they put in.
In August, ScaleX put zombie sales at about 11% of European VC exits in 2025, up from roughly 3% in 2022 and 2023, CFOtech reported. ScaleX also found that distressed sales, in which a loss-making company is sold for less than 1.5x revenue, made up 5.6% of VC-backed exits between 2022 and 2025, against just 1.8% of funding rounds over the same period. The newer 22% reading covers a different window, all priced sales from the start of 2025 onwards, but both measures point the same way.
An analysis of ScaleX’s first-half 2026 data found that startups whose rounds had been priced at 20x to 50x revenue gave back 28% of that value at their next raise. For founders, a zombie sale ends a company’s independent life, and for investors, it closes the position, often at a loss.
Buyers And Backers Disagree On Price
In the second half of 2025, VC-backed companies that generated revenue were raising money at about 9.3x revenue, while those that were sold cleared at about 2.7x, a gap of roughly 70% in that earlier reading of ScaleX’s index. In the first half of 2024, the two prices had been almost level.
Private equity (PE) firms, which buy more mature companies largely with borrowed money, have closed their own gap. Over two years, the price they paid fell from 14.3x to 11.3x earnings before interest, tax, depreciation and amortisation (EBITDA), a common measure of operating profit, while the price at which they sold rose from 8.4x to 11.6x. That left entry and exit almost matched by late 2025. Venture investors have not made the same adjustment: their entry prices edged up from 7.8x to 8.1x revenue, while exit prices fell from 7.7x to 2.5x.
“For tech companies, their last funding rounds now represent an operating commitment, not a true valuation,” said Sébastien Paillet, ScaleX’s chief executive. In other words, the price on a company’s last round sets the growth it has promised to deliver, rather than what someone would pay for it today.
Profit Alone Does Not Rescue The Price
ScaleX’s data also shows how buyers treat companies near break-even. Loss-making companies averaged about 15.6x revenue in 2025. Companies with EBITDA margins between zero and 20% averaged about 2.4x, while those with margins above 20% averaged about 4.6x.
“Break-even is no longer the safe harbour – it is the valley,” Paillet said. On those averages, a startup that cuts spending to reach thin profits can end up valued lower than one still losing money, unless it pushes on to strong margins.
Artificial intelligence (AI) is the main exception. Companies building AI were priced at about 13.1x revenue in ScaleX’s first-half 2026 data, and AI-enabled software at 9.7x, with the AI infrastructure layer the only part of the market that avoided the correction. Outside ScaleX’s European data, the same appetite shows in deals such as TypeSafe AI’s $870M raise at a $7.5B valuation, 24 days after a $40M seed round.
Fewer Deals, Slow Thaw
Deal activity remains far below its peak. ScaleX recorded 2,783 priced private tech transactions in Europe in 2021 and 751 in 2025, and the median revenue multiple across European private tech has fallen from 7.9x in early 2022 to around 5.0x. Its index draws on about 9,700 transactions involving more than 8,000 European tech companies between 2020 and 2025. ScaleX, which grew out of the startup rating agency Early Metrics, says on its website that it tracks over 50,000 startups and scale-ups for clients including Bpifrance and Natixis.
The firm’s own data points to a slow recovery. Listed European tech shares have risen for three straight half-years and entry prices have steadied. ScaleX expects exit prices to start rising in the second half of 2026, led by disruptive AI, profitable software and larger buyout targets. It expects France to recover first, because the gap between private and public prices is narrowest there, with the United Kingdom next and Germany possibly taking longer.
The Price Of A Late Exit
For founders raising money today, the data suggests a round’s headline valuation and the price a buyer will later pay can be very different numbers. For investors, the growing share of zombie exits shows how often positions are being closed at prices well below the last round.
Paillet has described the market as one where “the laggard will catch up”, with exit prices following entry prices higher after a delay. Until that happens, the distance between the price of a startup’s last round and the price a buyer will pay is likely to shape the way many European venture deals end.
