According to a research from venture capital firm Atomico, the European IT sector lost $400 billion in value this year and experienced an 18% decrease in venture capital funding.
Public and private tech companies in Europe are now valued at $2.7 trillion as opposed to $3.1 trillion in late 2021. The Ukraine conflict, high interest rates, and a talent shortage were a few of the factors given for the decline.
A number of the most well-known corporations in Europe were pushed by market pressure to raise money at a price below their previous, exorbitant valuations. For instance, the Swedish payments company Klarna Bank AB raised $800 million at a $6.7 billion value, an 85% decrease from its $46 billion price tag for 2021.
Tom Wehmeier, partner at Atomico, told Reuters that “the European IT ecosystem is suffering the most difficult macroeconomic environment since the global financial crisis.”
Based on data gathered across 41 nations, venture capital funding in Europe decreased by 18% from the $100 billion raised in 2021 to $85 billion for the year.
This year saw a decrease in the number of new “unicorns”—companies valued at $1 billion or more—from 105 to just 31 in 2022.
Atomico discovered that experts in the field are still optimistic despite these difficulties. 77% of innovators and investors surveyed on the continent expressed either the same or greater optimism for the future of the European IT industry than they did in 2021.
This is a brand-new reality, said Wehmier. “The financial markets have changed, and with that, everyone working in the European technology industry needs to alter their expectations.”