The gold rush mood in the start-up scene is over for now. After the record year 2021, the total value of investments in Austrian start-ups fell by 18 percent this year to 1.0 billion euros, according to the start-up barometer of management consultant EY.
“Many financiers are nervous, the willingness to take risks is decreasing, as is the willingness to invest,” says EY expert Florian Haas. Many companies in the industry are currently facing layoffs.
GoStudent is cutting hundreds of jobs
Hundreds of jobs are currently at risk at Viennese tutoring start-up GoStudent. GoStudent had skyrocketed in the corona pandemic with online tutoring and was valued at 1.4 billion euros in June 2021 when investors Softbank and Tencent entered the company. In January 2022, a new financing round increased the value to three billion euros. Austria’s first “unicorn”, the crypto exchange Bitpanda, is currently struggling and had to lay off hundreds of employees.
Rising interest rates, economic uncertainties, inflation and a looming recession have seriously clouded the market environment in the start-up scene and are making venture capital financiers more cautious. After a very strong first half of the year with a total of 881 million euros in investments, the market in Austria collapsed sharply in the second half of the year, according to EY in its analysis. According to Haas, how sustainable the crisis mode is depends mainly on interest rate policy, the level of inflation and the size of the approaching recession.
In 2022, about half of the total investment capital fell on the two major financing rounds of GoStudent with 300 million euros and TTTech Auto with 250 million euros. Waterdrop and PlanRadar also made it to the top 5 in terms of volume, each with 60 million euros, and the logistics specialist byrd with 53 million euros.
Major financing rounds
The trend towards larger financing rounds in Austria continued in 2022, albeit with a slight decrease compared to the record year 2021. The number of large deals with volumes exceeding EUR 10 million fell from 16 to ten. The deals with a volume of more than one million euros remained the same with 45 each in 2022 and 2021. For financing rounds of less than one million euros, there was an increase from 61 to 80.
Most funding rounds were in the software and technology area. According to EY, 39 financing rounds were counted here, eight more than last year. The federal capital of Vienna remains a start-up hotspot. The dominant topics of the coming years will be sustainability and digitization.
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.
