After a record year, investment in European technology companies has collapsed. According to calculations by venture capitalist Atomico, cash injections this year will amount to almost $85 billion (80.83 billion euros) – 18 percent less than the peak of about $104 billion in 2021. However, the amount is still the second highest of all time.
Presenting the annual industry report, Atomico partner Tom Wehmeier spoke of the “toughest economic climate since the global financial crisis”. Measured against this, the result is remarkable. The German market in particular was hit hard by the crisis, with investments falling from nearly 19 to around 11 billion euros. That was also due to the exorbitant previous year, explains Wehmeier. The industry has developed strongly since 2015 and is increasingly successful in attracting foreign tech talent.
Startups have boomed during the pandemic. They benefited from the boost of digitization – for example in financial transactions, online shopping or food delivery. With the low interest rates, making money with investors was easy, which led to numerous lavish financing rounds. But with the war in Ukraine, the weakening economy and the rise in interest rates, the market has turned. Investors held back. Ratings of major start-ups, including payment service Klarna, collapsed and companies such as Berlin e-scooter provider Tier cut jobs.
The number of “unicorns” is falling sharply
According to Atomico, the number of large financing rounds in Europe collapsed by more than $ 100 million due to the bad mood. There was also a sharp drop in “unicorns” – start-ups with a valuation of more than a billion dollars: while there were 105 new unicorns on the market in 2021, there were only 31 at the end of October this year. four German ones: the tax startup Taxfix, the sports app OneFootball, the company Grover, which offers electronic equipment for rent, and the gastro app Choco.
Overall, the harsh industrial environment has cost at least 14,000 people their jobs at European tech companies and wiped out more than $400 billion in valuations, the study said. Nevertheless, the industry appears to be robust. In a poll, 77 percent said they were more or just as optimistic about the future and 23 percent more pessimistic than a year ago.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
