Summaries

State of European Tech Report | (Atomico) Tom Wehmeier | Slush 2023

Published
December 8, 2023
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3
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Updated
December 18, 2023
Jenna Pitkälä
State of European Tech Report | (Atomico) Tom Wehmeier | Slush 2023
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Want to learn the best business insights from remarkable speakers at Slush 2023, but don’t have the time to watch the full speeches on YouTube?

You’ve come to the right place. Below is a summary of a speech by Tom Wehmeir of Atomico.

(psst: the notes were automatically generated with Wudpecker's AI notetaking tool. If you'd like to check these notes + transcript + audio recording without needing to log in, press here.)

<p class="h1-rich">🤏 TL;DR</p>

The European tech ecosystem has faced challenges in securing new customers, partners, and access to capital due to high inflation and interest rates, but the industry has seen a recovery with an influx of new companies raising private capital. However, European startups face a gap in accessing capital compared to their US counterparts, and this gap widens over a startup's life cycle. Action items include building a stable and dedicated supply of capital in Europe, providing more capital to underrepresented founders, increasing institutional investment in venture capital, and encouraging policymakers to embrace and incentivize growth and innovation.

<p class="h1-rich">✨ Summary</p>

State of European Tech 2023

  • The European tech ecosystem has faced challenges in securing new customers, partners, and access to capital due to high inflation and interest rates.
  • Global investment levels are down, with Europe on track for $45 billion of investment this year, compared to $82 billion last year.
  • European investment levels are up 18% compared to 2020, while other regions have seen a decline.
  • Europe needs to build its own stable supply of capital as participation from investors outside of Europe has decreased.
  • Publicly listed technology companies have rebounded, but the IPO window has not fully reopened.
  • M&A activity has continued, with $36 billion in value realized this year.
  • Private valuations have corrected and returned to normalized levels, with exceptions in Series C rounds.
  • The European tech industry has seen a recovery, with the public markets rallying and an influx of new companies raising private capital.
  • 80% of all capital invested is going into rounds that are flat or up.
  • Early-stage investment remains robust, while growth-stage investment has seen a sharp drop.
  • Challenges persist for diverse founding teams, and more capital needs to flow to women and other underrepresented founders.
  • The European tech industry has seen significant growth in talent, with more international talent coming to Europe than leaving for Silicon Valley.

Trends in Tech Startup Formation and Investment

  • New tech startup formation has slowed by approximately 30% from its peak in 2020, but this slowdown indicates the presence of enduring companies.
  • Europe is outpacing the US in tech startup formation.
  • Sustainability, climate, and health are top themes for job seekers, demonstrating Europe's determination to build a better future.
  • Startups in the carbon and energy sector have captured 27% of all capital invested, making it the largest sector in funding levels.
  • AI companies have been a dominant theme in investments, especially at the early and growth stages.
  • Europe has witnessed a 10x increase in the number of people working in AI roles and claims a larger resident population of highly skilled AI professionals than the US.

Opportunities and Challenges for European Startups

  • Europe benefits from its largest ever pool of tech startups, with nearly 4000 growth-stage startups that have the potential to shape the future.
  • European startups face a gap in accessing capital compared to their US counterparts, and this gap widens over a startup's life cycle.
  • European institutional investors need to match the scale of ambition of founders and startups, as only 8% of European asset manager AUM is allocated to VC compared to 16% in the US.
  • Policy makers and institutions need to embrace and incentivize growth and innovation in the tech ecosystem.
  • Skype's success story highlights the impact of investors taking risks and leaning into European startups.
  • There is enormous potential in the European tech ecosystem, but action is needed to bridge gaps and support founders in building breakthrough companies.
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State of European Tech Report | (Atomico) Tom Wehmeier | Slush 2023
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