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Today: May 22, 2024
January 12, 2024
1 min read

Europe’s Venture Capital Tumbles Down 50%: Crunchbase Reveals Shocking Plunge

TLDR:

  • European tech startups in 2023 raised about 50% of the funding that they raised in 2021, according to new data from Crunchbase.
  • Despite the drop in funding, Europe’s startup scene is still well above pre-pandemic levels.
  • Late-stage startups in Europe took a harder hit in funding last year, with Q4 reaching its lowest point since Q3 2020.

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.

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. 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.

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.

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