A slowdown in tech investment has been experienced across Europe, with France and Germany seeing declines of 55 per cent and 44 per cent year-on-year, respectively.
According to further figures from Dealroom, UK tech companies raised the most across Europe in 2022, securing $17.3bn in the first half of the year before the sector achieved combined market value of $1tn — meaning the UK had the most ground to lose.
In the UK, a downward trend for tech IPOs continued, with volumes falling to their lowest level last year in a decade.
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One in five global venture rounds during Q1 2023 were down rounds, according to the report from European venture capitalists Atomico — almost four times higher than the same period in 2022.
Across Europe, rising interest rates, surging inflation and macroeconomic uncertainty stemming from the conflict in Ukraine have significantly slowed down investment levels.
Global tech exits — through both IPOs and M&A — remain stagnant, with $21bn in value so far this year, compared to a peak of $177bn in 2020 and $166bn in 2021.
Generative AI proved a valuable premise for business, accounting for 35 per cent of all artificial intelligence and machine learning funding so far this year — the largest proportion on record.
“We should think about this period as a return to first principles,” said Tom Wehmeier, partner and head of insights at Atomico.
“2021 was a clear outlier, with investment volumes and valuations now returning to long-term averages.”
The report went on to state that the “new market reality” first identified in the second half of 2022 is “here to stay”.
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Steven Mooney, founder and CEO of business investment platform FundMyPitch, commented: “Getting access to funding is critical to enable ambitious businesses to hire fresh talent, expand, develop their product offering and grow.
“Entrepreneurs are already feeling the heat from stubborn interest rates and the cost-of-living crisis, all of which ultimately hits UK GDP. With forecasts suggesting a decrease in technology investment, the time has come to look again at how we support the next generation of business owners to achieve their full potential.
“Far too many new companies aren’t being taken seriously by the big investment houses and we need to create a level playing field where those with bright ideas get the support they need to thrive.”
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