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EU Tech Investment Blossoms After Two-Year Drought

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Tech investments in Europe are reportedly in bloom after a long fallow period.

This turnaround is the subject of a report Monday (June 3) by the Financial Times (FT), which noted that deal making has picked-up at early stage companies, with venture capital (VC) groups raising new funds after a two-year drought.

For example, private tech investor Creandum, which has invested in Klarna and Spotify, has just unveiled a $544 mullion fund, the report said, following similar-sized deals from Accel Europe ($650 million) and Plural ($544 million, or 500 million euros).

Creandum’s fund came together “in record time,” general partner Carl Fritjofsson told the FT.

“There is a dramatic change in the sentiment, appetite and activity across the industry,” he said.

Last year saw a sharp drop in investment in the tech sector in Europe. In its yearly State of European Tech report late last year, British venture capital firm Atomico forecast funds raised by Europe’s tech startups would come to around $45 billion for the year, compared to the $82 billion raised in 2022.

But things have since turned around, Tom Weheimer, who heads Atomico’s insights team, said in an interview with the FT.

“We haven’t fully washed through the overhang from the peak years but the green shoots are all around us,” he said. “We are moving beyond the recovery phase and back into a period of growth.”

He predicted that, following last year’s decline, private tech investment into European start-ups will begin to grow once more this year.

“The market is more active at any point than we’ve seen before 2021,” he said, pointing to three continuous quarters of increased investment in “Series B” deals.

Meanwhile, PYMNTS wrote recently about the VC world’s use of artificial intelligence (AI) as a tool for making wise investment decisions. This technology can quickly analyze massive amounts of data on startups and market trends, to help VCs spot the most promising opportunities and make better-informed decisions about where to move their funds.

“The usefulness of AI in venture capital is about augmenting human capabilities with machine intelligence to sift through the noise and identify genuine opportunities with precision,” Steve Brotman, the founder and managing partner of growth equity firm Alpha Partners, told PYMNTS.

“With AI, we can analyze market trends, startup performance metrics, and other critical data points at a scale and speed that’s simply unattainable for a team of human analysts alone,” he added. “This improves efficiency and fundamentally enhances the ability to make informed, strategic decisions by providing a depth of insight into potential investments that were previously unimaginable.”