{"id":23432,"date":"2023-07-17T12:15:44","date_gmt":"2023-07-17T12:15:44","guid":{"rendered":"https:\/\/espa.io\/startups-39-drop-in-funding-expected-in-europe\/"},"modified":"2023-07-17T12:15:44","modified_gmt":"2023-07-17T12:15:44","slug":"startups-39-drop-in-funding-expected-in-europe","status":"publish","type":"post","link":"https:\/\/espa.io\/en\/startups-39-drop-in-funding-expected-in-europe\/","title":{"rendered":"Startups: 39% drop in funding expected in Europe"},"content":{"rendered":"\n
\"\"<\/figure>\n\n

Investment in European tech startups<\/strong> is expected to shrink<\/strong> by a further 39%<\/strong> this year as the global tech ecosystem continues to take a hit.<\/p>\n\n

According to a report by Atomico, venture capital<\/a><\/strong> funding<\/strong> of European startups<\/strong> is expected to decline from 83 billion. dollars last year<\/strong> at 51 billion. dollars in 2023<\/strong>. American investors<\/strong> are primarily responsible for<\/strong> this slide. In particular, US<\/strong> funds<\/strong> have been a major source of financing in Europe<\/strong> in recent years, with some of them setting up offices<\/strong> in the bloc in order to increase their activity in the region.<\/p>\n\n

But last year the tech industry was hit hard<\/strong>, with European start-up funding<\/strong> being declines by 22% to 83 billion. dollars from 106 billion. in 2021<\/strong>, according to data from Atomico.<\/p>\n\n

Of course, the report also identifies signs of resilience in this European sector. Among other things, the overall valuation of<\/strong> public and private enterprises<\/strong> in the sector exceeded again the 3 trillion euro mark. dollars<\/strong>, a milestone that was reached in 2021.<\/p>\n\n

However, funding to new companies was less affected, according to the Atomico report. On the contrary, 93% of the total losses of 28 billion Dollars<\/strong> between 2022 and 2023 affects companies<\/strong> at an advanced stage of development<\/strong>.<\/p>\n\n

Shrinking funding is finally forcing technology companies to focus on profitability over growth<\/strong> as investors reassess their attitude towards the industry. Businesses that a few years ago were highly valued are under strong pressure from international factors<\/strong>, such as the Russian invasion of Ukraine and the tightening of monetary policy.<\/p>\n\n

The US Federal<\/a><\/strong> Reserve (Fed) and other central banks around the world raised<\/strong> lending rates<\/strong> and reduced the stimulus measures injected during the pandemic in order to reduce inflation. This has forced investors to reassess their positions in loss-making technology companies<\/strong>, whose valuation usually depends on expectations of future funding.<\/p>\n\n

Artificial intelligence is a bright exception<\/strong> of Startups<\/strong><\/h2>\n\n

Despite the significant pressures on the industry, the AI sector has been growing rapidly over the last year<\/strong>. Those startups<\/strong> that are involved in AI and specifically in production AI have benefited significantly from the investment frenzy.<\/p>\n\n

In particular, 35% of the total funding<\/strong> channelled towards AI was channelled towards productive AIstart-ups<\/a><\/strong>. This is the highest percentage ever achieved<\/strong> and a leap from previous years.<\/p>\n\n

“We are at the beginning of the so-called new AI technology super cycle,” Tom Wehmeier, partner at Atomico, told CNBC. He added that productive AI is driving “a large degree of innovation” and that Europe “has a seat at the table”. “It is crucial to create the kind of environment that allows European talent to realise the aspirations of the next super cycle<\/strong>,” added Wehmeier.<\/p>\n","protected":false},"excerpt":{"rendered":"

Investment in European tech startups is expected to shrink by a further 39% this year as the global tech ecosystem continues to take a hit. According to a report by Atomico, venture capital funding of European startups is expected to decline from 83 billion. dollars last year at 51 billion. dollars in 2023. American investors 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