The economic turmoil surrounding the world has begun to have an enormous impact on the European tech industry. It turns out that venture capital inflows into the European tech sector have decreased by around 45% in 2023 as compared to the previous year, with high interest rates in particular leading to massive risk aversion among investors. In 2022, European tech companies received around $82 billion in investments, but this has plummeted to just $45 billion in 2023, as per State of European Tech.
It also bears mentioning that 2022 saw an 18% decline from the previous year, and this downward trajectory will be concerning because of the fact that this is the sort of thing that could potentially end up casting doubts on the industry’s future. In spite of the fact that this is the case, it appears that there is one saving grace that is continuing to pick up steam in the European tech sector, namely that of AI.
With all of that having been said and now out of the way, it is important to note that 11 AI companies in Europe received funding rounds of $100 million or more. Also, 11% of funding rounds that were of $5 million or less went towards AI, which seems to suggest that this industry will be doing a lot more heavy lifting in the future than might have been the case otherwise.
There has been a 1,000% increase in the number of tech jobs available in Europe, which has made it an even bigger hub for AI talent than the US with all things having been considered and taken into account. Another ray of hope came in the climate tech sector, which tripled its 2021 inflows and received 27% of total investments made into European tech this year.
Due to the support provided by AI and climate tech, the European tech industry has managed to surpass $3 trillion in total valuation if all public and private companies are factored in. This marks the first time the industry has reached this valuation since 2021, with 2022 eliminating a staggering $400 billion from their combined market capitalization.
It appears that the overvaluation that occurred during the pandemic is correcting itself, and the future might hold a much more sustainable framework for tech companies in Europe to work with. 2024 will prove to be a litmus test for this industry.
Read next: LLMs Are Able to Disregard Non-Pertinent Information With New Technique
It also bears mentioning that 2022 saw an 18% decline from the previous year, and this downward trajectory will be concerning because of the fact that this is the sort of thing that could potentially end up casting doubts on the industry’s future. In spite of the fact that this is the case, it appears that there is one saving grace that is continuing to pick up steam in the European tech sector, namely that of AI.
With all of that having been said and now out of the way, it is important to note that 11 AI companies in Europe received funding rounds of $100 million or more. Also, 11% of funding rounds that were of $5 million or less went towards AI, which seems to suggest that this industry will be doing a lot more heavy lifting in the future than might have been the case otherwise.
There has been a 1,000% increase in the number of tech jobs available in Europe, which has made it an even bigger hub for AI talent than the US with all things having been considered and taken into account. Another ray of hope came in the climate tech sector, which tripled its 2021 inflows and received 27% of total investments made into European tech this year.
Due to the support provided by AI and climate tech, the European tech industry has managed to surpass $3 trillion in total valuation if all public and private companies are factored in. This marks the first time the industry has reached this valuation since 2021, with 2022 eliminating a staggering $400 billion from their combined market capitalization.
It appears that the overvaluation that occurred during the pandemic is correcting itself, and the future might hold a much more sustainable framework for tech companies in Europe to work with. 2024 will prove to be a litmus test for this industry.
Read next: LLMs Are Able to Disregard Non-Pertinent Information With New Technique
