rise interest rates It had an expected side effect on the victims in the entrepreneurial universe. Study prepared by ‘venture capital’ investment fund atomic He points out that Spain is the fourth country in Europe in the number of emerging companies receiving financing in 2022, but Funds collected dropped by 42%. Investment in technology in Europe fell 45%, from $82 billion in 2022 to $45 billion that year. Investments raised by Spanish start-ups reached $1.6 billion, 18% higher than in 2020, but remained far from expectations as a result of investors’ prudence in the face of the sudden rise in interest rates and problems in the financial and cryptocurrency universe.
Report ‘The State of European Technology 2023’A survey prepared every year by the venture capital company Atomico, based on quantitative and qualitative data and in which thousands of European entrepreneurs, operators and investors participated, reveals interesting results to evaluate the situation. The authors conclude: “After two turbulent years, the European technology sector has managed to stabilize and begin the recovery process, with a notable increase in technological entrepreneurship, leading to more startups being founded in Europe than in the United States. Global macroeconomic Due to the impact of the recession, the sector is now worth $3 trillion, with the maximum reached in 2021. Europe has surpassed the US in creating new startups (about 14,000 and 13,000), but American tech startups are unlikely to be successful within the first five years of their founding. They are 40% more likely to raise capital in this way.Worldwide, Spain ranks sixth in the creation of start-ups, contributing to 4% of all new companies.
The report’s conclusions show that investors are becoming more selective, but there are still some alternatives. plenty of capital available. The first half of 2023 saw a significant year-on-year decline in total funds raised, reaching just $7.4 billion compared to $24 billion in 2022. Investors responded to the uncertainties with more selective investment approaches and more modest average amounts. invested. According to the calculations of the authors of the report, the capital available in the European technology field has reached the highest level in history, reaching 108 billion dollars.
However, investors tend to be more selective about the companies to which they allocate resources. 80% of entrepreneurs interviewed confirm that it has been more difficult for them to obtain capital and that they have had to adjust their expectations regarding funding rounds. In fact, there has been a notable decrease in the number of tours in Europe starting at $100 million; This number was 36, which was 163 in 2022 and 200 in 2021. Only seven new companies in the region were able to achieve a $1,000 million valuation; these include the following names: DeepL, Helsing.ai, Synthesia or Quantexa.
The stock market will come to the fore
Atomico experts believe that the stock market can stand out in the universe of new companies. After six consecutive quarters of declining activity, they believe “ARM’s IPO in September 2022, together with listings like that of German cloud infrastructure provider IONOS Group, opens the IPO window slightly in the European tech sector.”
Technology continues to be a major driver of the entrepreneurial universe. Over the last five years, the technology sector workforce in Europe has seen significant growth, from 750,000 employees to over 2.3 million today. In the case of Spain, the total figure exceeds 126,000 employees; That’s 25,000 more people than a year ago. On the downside, there was a peak in layoffs on the Continent in May 2023. The situation subsequently stabilized, but further personnel adjustments are expected in 2024.
Artificial intelligence is at the heart of the objectives of the majority of investors in early life seed companies, representing 11% of rounds under €5 million. A total of 11 AI-focused companies have raised $100 million or more, evidence of investor interest.
The sector around ‘climate technology’ has become the leading category in terms of capital raised, ahead of even ‘fintech’ and ‘software’, representing 27% of all capital invested in European technology in 2023, tripling its share compared to 2021. . Additionally, sustainability and climate ranked second as the most recurring topics in funding rounds under $5 million.