TLDR:
- European tech startups raised about 50% less funding in 2023 compared to 2021.
- Despite the drop, Europe’s startup scene is still above pre-pandemic levels.
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. 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.
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. 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.
The dip in last year’s funding was expected, of course. Earlier in November, a report released by London-based venture capital firm Atomico estimated the European ecosystem would raise approximately USD $45 billion in 2023. At the time, 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. 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. The outlook for European startups seems positive, with a focus on AI, healthcare, AgroTech, and biotech industries.
