The end of easy money for beginners. Sustained interest rate hikes and the uncertainty created by first the conflict in Ukraine and now the escalation in the Gaza Strip have cooled the desire of venture capital funds to dole out large sums to support the growth of emerging companies. If we focus on In the example of Spain, companies will provide financing of approximately 1.5 billion euros what is this year represents a 42% decrease compared to the previous yearAccording to the predictions in the ‘State of European Technology 2023’ report prepared by the Atomico venture capital fund. The data is in line with European figures where there is an “international retreat of investors” having a direct impact on fundraising for start-ups. Forecasts show that the continent’s finances will decrease by 45% to 41,000 euros by 2023, compared to 74,659 million euros recorded in 2022.
“After two turbulent years, the European technology sector has managed to stabilize and begin the recovery process, providing a significant boost to technological entrepreneurship, leading to more startups being founded in Europe than in the United States,” the report authors wrote. The report draws attention. One of the countries where the most investments are made in such companies is Spain: Ranked sixth globally with 4% of all new companies. The country is the fourth country where the most developing companies receive financing and one of the countries with the highest number of startups per capita (60). Spain also has the highest figure in the south of the continent in terms of investment and manages to consolidate its “position on the European technology scene”, leaving behind other neighboring countries such as Italy or Portugal.
For Atomico, the Spanish entrepreneurial spirit is “reaching new heights” thanks to the momentum of success stories and talented operators creating global impact. The report included the vision of Julio Martínez, co-founder and CEO of ‘fintech’ Abacum, in which he explained the keys to the country: Profitable standard of living combined with a deep talent pool from universities around the world, vibrant immigrant community And sound public policy initiativeswith. “This fosters a panorama in which Spanish enterprises not only start but continue to grow,” he argues. And a clear symptom for him is the increase in investments as an indicator of confidence in the Spanish market.
Less capital in Europe
Although the contraction in the capital allocated to startups began to be seen a year ago, the truth is that there was a “significant” decrease in the first half of 2023 compared to last year. Total funds raised amounted to only 6.737 million Euros compared to 21.851 million recorded in the same period the previous year. “Investors are taking a more selective approach, with more modest average amounts. However, it is important to note that this comes after an unprecedented period of fundraising in the ecosystem, with available capital in the European tech space reaching a historical high of $108,000 million (98,330 million euros), referring to the first two years of the pandemic in the document. But do not panic: Although macroeconomic uncertainty does not help, the value of the sector now reaches 2.73 trillion euros worldwide, which is very close to the maximum value reached in 2021.
Of all kinds of initiatives, these those who have the most difficulty in the early stages to raise capital. Venture capital funds prefer to invest in companies with well-established business models and growth potential, rather than nurturing explosive sectors that are still struggling, such as delivery. And although more start-ups are being established in Europe, the reality is that they must overcome more barriers to accessing finance: ‘Although Europe has surpassed the United States in the creation of new start-ups (about 14,000 and 13,000),’ “American tech start-ups are 40% more likely to successfully secure capital within their first five years of founding,” the authors explain in the report.
Is Europe a leader in artificial intelligence?
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Artificial intelligence (AI), omnipresent in all discussions in 2023, could become big business for Europe if it manages to exploit its potential. The Atomico report believes the continent has the potential to become a leader in artificial intelligence as the technology stands out as the “dominant theme in seed-stage funded startups.” Right now, Such companies represent 11% of rounds not exceeding €5 million. If we move the subject to Spain, approximately 9,000 people work in positions related to artificial intelligence, so the possibility that even more people will find jobs with the development of this technology is not excluded.
“Despite the general decline in funding levels, 11 AI-focused companies raised mega rounds of $100 million or more this yearproves the interest of investors. Europe is a world leader in AI capabilities. According to research data, the number of professionals dedicated to this technology has increased tenfold over the past decade and now exceeds the number of qualified professionals residing in the United States.