EU Tech Sector Sees $400B in Market Cap Wiped Out

Europe’s tech sector saw $400 billion in value erased this year.

That’s according to a new report by the London-based venture capital (VC) firm Atomico, which found that the total value of public and private tech companies in Europe dropped from $3.1 trillion late last year to $2.7 trillion.

The reasons for this decline include rising interest rates and the Russia-Ukraine war, the report said, noting also that venture capital funding in the sector has fallen 18%. It also notes that 82% of founders surveyed said it was harder to raise venture capital than it was 12 months ago.

“This is, by some margin, the biggest change in founder sentiment on the fundraising environment that we have recorded over the past five years of surveying the ecosystem,” the report notes.

Atomico also found that the number of newly-minted unicorns — or companies valued at $1 billion or higher — had fallen from 105 in 2021 to 31 this year.

Of course, this trend isn’t confined to Europe. After an October in which the total value of VC funding rounds completed worldwide was the lowest of the year, PYMNTS noted this was part of an ongoing pattern. For much of the year, both the number of deals and the total value of the deals have been lower each month versus the month before.

PYMNTS discussed the venture capital/tech company landscape earlier this week in a conversation with Thomas Cuvelier, partner at Paris-based venture investment firm Alven.

Cuvelier also blamed rising interest rates for the drop in investments. He said this has led to a strategic pivot from growth in favor of profits. He added that it’s no longer safe to assume companies will get funded even if they grow at all costs.

“There’s a major focus on profitable growth which wasn’t the case in 2021. Now we look at [a company’s] unit economics much more carefully than before,” he told PYMNTS.

The Atomico report wasn’t solely bad news for the tech industry, as it argued there is still plenty of untapped capital available, and confidence among founders.

“Despite the many challenges ahead, the resilience of the European tech ecosystem and its ability to ‘weather the storm’ is reflected in a strong continued sense of optimism in the future of European technology,” the report said. “77% of all survey respondents are either more optimistic or retain the same level of optimism as they did 12 months ago.”

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