Atomico – State of European Tech Report, 2023

The Atomico - State of European Tech Report for 2023 highlights the resilience and stabilization of the European tech ecosystem despite a challenging macro environment. The report states that the ecosystem has recovered to a value of $3 trillion, regaining the $400 billion that was lost the previous year. The worst of the layoffs have peaked and leveled off, and Europe's overall funding levels, though experiencing a pullback, are still the third highest on record at $45 billion. The report also mentions a revival in the public markets, with increased activity in the second half of the year. Arm's $50 billion IPO earlier in the year paved the way for other companies to go public. Additionally, M&A activity has picked up, adding $36 billion of value. Europe is now creating more new startups than the US, although startup formation has slowed due to the weeding out of first-time founders. The share of repeat founders remains stable, indicating a dedicated class of founders ready to face higher standards in raising money, attracting talent, and winning customers. One of Europe's strengths is its talent pool, which has not experienced a mass exodus despite challenges in the capital markets. European tech has actually seen net growth, with an expansion of the workforce from slightly over one million employees to more than 2.3 million. Europe is also gaining talent from the US, rather than losing it. In terms of technological advancements, Europe has more AI talent than the US and AI has become the number one theme at the seed stage. AI-focused companies accounted for 22% of all European megarounds this year, surpassing the levels in 2022. Furthermore, the report highlights the growing investment in the Carbon & Energy sector, which accounts for 30% of all capital invested in European tech in 2023, surpassing fintech and software. In conclusion, Atomico sees Europe as having all the ingredients to become the next tech superpower, with a strong technical foundation, the attraction of new talent, a high number of startups, and a focus on solving pressing global challenges