Its been a tough start to the year for tech investments.
According to a new report, European VC fundraising is on pace for its lowest annual total since 2015.
Deal count, meanwhile, dropped 19%.
Pitchbook called the quarter the first substantial decline from the pace set in the past four years.
The VC ecosystem could finally be displaying the effects of the challenging fundraising conditions, the study authors wrote.
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The analysts found that exit activity had also plummeted.
Amid adverse macroeconomic conditions and weaker valuations, substantial VC exits effectively ceased in Q1.
Pitchbook expects the activity to remain quiet for the next few quarters.
In Q1, the preferred route to exit was via mergers and acquisitions (M&A).
Four out of the five largest exits in the quarter were through M&A.
Public listings, meanwhile, have lost appeal due to the dangers of choppy markets.
In these challenging economic times,investorsand operators are prioritising capital efficiency and robust paths to profitability.
With focuses shifting from growth to cost bases, layoffs became extensive in Q1.
Pitchbook expects this trend to continue as companies seek to extend runways during 2023.
Despite the gloom, there are signs of hope in emerging areas of tech.
Pitchbook is also confident about the prospects for the resurgent energy sector.
Near-term interest and long-term climate targets in Europe are creating new opportunities for backers and startups in the industry.
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).
