The State of European Tech: Focus on investments and challenges

Resilience and growth: Atomico's new report, "The State of European Tech 2023", sheds light on Europe's tech sector. Despite a decline in international investment, the sector remains optimistic - but what are the challenges for startups and investors?

Venture capital firm Atomico has today published its latest report "The State of European Tech". The comprehensive report provides a data-based insight into the European startup and tech economy.

A key finding of the report shows that investment in the European tech ecosystem is expected to reach 45 billion US dollars. Although this is a decrease compared to the previous year, it still marks the third strongest funding year in the history of the European tech industry. Germany in particular recorded an investment of 7.8 billion US dollars.

Difficult fundraising environment

Despite the ongoing macroeconomic downturn and the withdrawal of international investors, the European tech ecosystem remains resilient. The industry is valued at three trillion US dollars, which is back to the level of the record year 2021. However, founders and investors continue to face challenges. The decline in international investments in European tech companies, particularly by American investors, is reflected in financing gaps and a more difficult fundraising environment.

Focus on Germany

In Germany, the decline in investment from the USA is clearly noticeable. For every US dollar invested by European financiers in German startups, companies only received 41 cents from US investors compared to 93 cents in 2021. Despite this, the report shows that the number of new startups in Europe is increasing, with Germany being the third largest location for tech startups on the continent. However, access to capital remains a challenge for European startups compared to the US.

This year's report shows that European founders and tech talent are taking big risks and tackling the biggest problems, such as artificial intelligence, the climate and health. We must continue to encourage this willingness to take risks and make better use of the existing potential.

Tom Wehmeier, Partner and Head of Intelligence at Atomico, co-author of the report

The study also emphasizes the resilience of the European tech sector and its focus on important global issues such as artificial intelligence, climate and health. A growing proportion of investment is going into sustainable technologies, underlining the continued interest and commitment to these areas.

Even with the challenges, the European tech sector remains an attractive destination for talent from around the world. Europe is seeing a growing tech workforce and the continent is increasingly attracting international talent, particularly to well-funded ecosystems such as the UK, France and Germany.

The European tech community continues to innovate, disrupt and scale. Serial entrepreneurs and first-time founders are developing new technologies together

Chris Grew, Partner, Technology Companies Group at Orrick

Experts and industry leaders emphasize the need to encourage risk-taking in Europe and better harness the potential of the tech sector. Creating an investor landscape on par with the ambitions of founders and increased support for innovation through regulatory measures are seen as key factors for the growth of the European tech ecosystem.

At HSBC Innovation Banking, we are excited to see what lies ahead in 2024 and beyond. Europe is leading the way in investing in socially or environmentally sustainable technologies

Erin Platts, CEO of HSBC Innovation Banking

The full report "The State of European Tech 2023" is available on the website www.stateofeuropeantech.com The comprehensive analysis includes interviews with over 4,100 respondents and insights from 35 key figures in the European tech environment. It is also based on data partnerships with companies such as dealroom.co, Invest Europe, S&P Global Market Intelligence, Pitchbook, Preqin, Revelio Labs and Crunchbase.