European tech industry sees $400 billion in value

According to a report from venture capital firm Atomico, the European tech industry saw $400 billion in value wiped out this year and an 18% decline in venture capital funding.

The combined value of public and private tech firms in Europe fell to $2.7 trillion, down from $3.1 trillion in late 2021. There were high interest rates, a shrinking talent pool and a decline in the talent pool that were cited as the reasons for the drop.

Market pressures forced a number of Europe's best-known companies to raise funds at a discount to their once sky-high valuations. Swedish payments firm Klarna Bank AB raised $800 million at a valuation of $6.7 billion, an 85% drop from its 2021 price tag of $46 billion.

Since the global financial crisis, the European tech ecosystem is facing the most challenging macroeconomic environment, according to Tom Wehmeier, partner at Atomico.

Venture capital funding in Europe was down to $85 billion for the year, an 18% decline from the $100 billion raised in 2021, according to data collected across 41 countries.

The number of new unicorns - firms valued at $1 billion or more fell this year, from 105 to just 31 in 2022.

Despite these challenges, Atomico found industry insiders enthusiastic. According to a survey of founders and investors in the continent, 77% said they were either as enthusiastic or more so about the future of the European tech industry than in 2021.

Wehmier said that this is a new reality. The expectations of everyone working within the European tech industry need to change as a result of the changes in the financial markets.