The European tech industry saw $400 billion in value wiped out this year and an 18% decline in venture capital funding, according to a report from venture capital firm Atomico.
The combined value of public and private tech firms in Europe fell to $2.7 trillion, down from $3.1 trillion in late 2021. High interest rates, the war in Ukraine, and a shrinking talent pool were among the reasons cited for the drop.
Market pressures forced a number of Europe's best-known companies to raise funds at a discount to their once sky-high valuations. For example, Swedish payments firm Klarna Bank AB raised $800 million at a valuation of $6.7 billion, an 85% drop from its 2021 price tag of $46 billion.
"The European tech ecosystem is facing the most challenging macroeconomic environment since the global financial crisis," Tom Wehmeier, partner at Atomico.
The number of new "unicorns" - firms valued at $1 billion or more - also fell this year, down from 105 to just 31 in 2022.
Despite these challenges, Atomico found industry insiders remain enthusiastic. In a survey of founders and investors on the continent, 77% said they were either as enthusiastic, or more so, about the future of the European tech industry than in 2021.
This is a new reality," Wehmier added. "The financial markets have changed, and with that, the expectations of everyone working within the European tech industry need to evolve.
