The tech sector is experiencing an unprecedented slowdown, but analysts see immense opportunities forstartupsthat survive the downturn.
But a deeper dive unearths grounds for optimism.
The headwinds remain challenging, but the GSER 2023 notes that recessions are good times to invest in startups.
Historical trends substantiate the theory.
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Lean economic times can produce high-performing startups.
Similar successes emerged after the 2001 dot-com crash.
When the bubble burst, pessimists tolled the death knell for the tech industry.
Within a few years, their prediction was proven entirely wrong.
The spree of mass layoffs is also set to unleash a fresh wave of startups.
A vast pool of elite talent with tech know-how and industry expertise is now looking for new ventures.
Furthermore, the report notes that high-interest rates can actually benefit startups.
They concentrate capital and talent into ventures that create value, weeding out the less competitive ventures.
Indeed, while fewer startups were funded in 2022, they received larger sums.
According to the GSER, the average deal size grew by 2%.
Increasingly, those investments target artificial intelligence.
European prospects
The report highlights numerous positives for European startups.
The continent has also captured more unicorn land.
Among the leading ecosystems, London remains number one in Europe and joint-second globally.
The UK capital has the most companies valued at over $1 billion.
Revolut, one of Europes largest Fintech unicorns, is valued at $33 billion.
In second place is Berlin.
The German capital minted five new unicorns in 2022, increasing its total from 14 to 19.
Banking platform Backbase is the most recent addition, valued at 2.7 billion.
This essential mission cannot be put on hold.
Another ecosystem that deserves special attention is Zurich.
The city rose 10 places to 36th place in the world, marking the biggest year-on-year improvement in Europe.
Zurich offers further evidence that startups can still thrive through a downturn.
JF Gauthier, Founder & CEO of Startup Genome, expects further success stories to emerge.
This essential mission cannot be put on hold while we wait out rocky economic times.
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).
