European Tech Startups Experience Funding Shift in 2023
In a significant shift from the investment fervor of 2021, European tech startups in 2023 raised about 50% of the funding that they raised that year, according to new data from Crunchbase.
European Startups Raise $52 Billion in Funding Last Year
The business intelligence firm reported this week that European startups raised USD $52 billion last year, down from over USD $100 billion in 2021. That year, however, was an anomaly and coincided with astronomical fundraising metrics worldwide following the pandemic.
Europe’s Startup Scene Strong Despite Funding Dip
Despite the drop in funding since 2021, Europe’s startup scene is still well over pre-pandemic fundraising levels. What’s more, Crunchbase reported that Europe captured more share of the global venture capital space than its North American and Asian counterparts.
Late-stage Startups Hit Hardest in Funding Drought
On par with other global ecosystems, Europe’s later stage startups took a harder hit in the funding drought last year, raising less money than in previous years. In fact, Crunchbase said late-stage funding in Q4 reached its lowest point since Q3 2020.
Bright Outlook Ahead for European Startups in 2024
The outlook is looking brighter for European startups, however. Some VCs and analysts are predicting consolidation across the VC industry, which means some investors unable to raise follow-on funds will begin stopping their operations — a move which some say is healthy for the ecosystem overall.
Bridge funding for startups in VC portfolios could also dry up, but this could mean more available capital for early-stage companies, Peter Walker, head of insights at Carta, told Forbes.
And Mike Turner, a partner at law firm Latham & Watkins, told Sifted that investors sitting on piles of dry powder will begin to deploy it in 2024.
After a couple of years of leveling off, it’s still unclear if the startup funding will continue to fall or stabilize in 2024, but European startups are hopeful.
Analyst comment
Positive news: Europe’s startup scene remains strong despite a dip in funding in 2023. European startups captured more share of global venture capital than North American and Asian counterparts.
Analyst’s prediction: The outlook for European startups in 2024 is positive. There could be consolidation in the VC industry, leading to more available capital for early-stage companies. Investors with unused funds are expected to deploy them, potentially stabilizing or increasing startup funding in 2024.
