Venture capital funding in Europe is plummeting as investors shift focus from growth to cutting costs.
The total capital raised in the continent was 8.9 billion.
At the current rate, the full year is on track to pace 37% below 2022 levels.
Analysts blame the decline on surging interest rates, high inflation, fundraising hurdles, anda subdued IPO market.
Theseeconomic headwinds have prompted new investment strategies.
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A gloomy impact of this prudence is mass layoffs and hiring freezes at startups.
British unicorn GoCardless, for instance, is cutting 15% of its global workforce as of June 2023.
More companies are also likely to seek capital despite lower valuations.
This recently occurred atGetir, the Turkish food delivery app.
In April, the company raised 435.5m from Abu Dhabi state fund Mubadala at a valuation of 5.7bn.
Just a year earlier, the sameinvestorhad injected 690.7minto Getir at a valuation of 9.9bn.
The new funding effectively slashed the startups value by 42.4%.
Debt-heavy leveraged buyouts, however, have lost share.
US participation in European deals has also plunged.
To date, American participation in VC deal value in 2023 is down 69% year-on-year.
Thesoftwaresector, which laid the foundations for todays VC industry, has been hit hard by the downturn.
Nonetheless, there are signs of hope.
The generative AI investment boom could spur dealmaking for software startups in the space.
Sectors that are less cyclical in nature, such as biotech and pharma, have also shown resilience.
A notable example of this is Ascend Gene And Cell Therapies.
In May, theLondon-based startupraised 120.3mfor its gene therapy tech.
The findings add further evidence of the current difficulties in securing funding.
But in Europe, high inflation could lengthen thecontractionary cycle.
Story byThomas Macaulay
Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he e(show all)Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he enjoys playing chess (badly) and the guitar (even worse).
