According to a recent report from Atomico, the tech investment landscape in Europe this year is estimated to be around $45 billion, which is a decline from the $82 billion invested last year. This trend is attributed to the challenges faced by companies at the growth stage that require large capital injections to scale up. However, Europe is the only region where the investment has risen from 2020 levels, with an increase of 18%.
On the other hand, the US is expected to have a tech investment figure of $120 billion, which is a drop of 1% from last year. Figures for China and RoW are expected to drop by 7% and 8%, respectively. The impact of COVID-19, geopolitical instability, and regulatory changes have been identified as a few reasons for the decline in tech investment.
One notable consequence of this decline in investment is that European late-stage tech startups have seen their funding dry up as the IPO market makes exits unappealing. This year, only four cross-over fund investments were made, compared to 82 in the previous year. Atomico also found that securing funds was the most frequently cited challenge for founders and senior startup leaders, with 38% identifying it as their biggest hurdle. Securing customers was the second-most cited challenge, with 37% reporting it as their major concern.
Despite the challenges faced by tech startups, Europe still has more new first-time founders than the US, and the rate of starting new companies has fallen by only 30% from its peak in 2020. Thus, it is clear that the tech investment landscape in Europe is facing challenges, but the entrepreneurial spirit remains strong. The importance of securing funding and customers for startups is also highlighted as they navigate the ever-changing tech landscape.
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