Just four weeks after launching, a team of former Meta and Google artificial intelligence researchers raised $113 million in June for a new AI startup. The Mistral team’s pitch to build Europe’s answer to OpenAI garnered the continent’s largest-ever seed round and one of the few to hit eight figures in a year where growth was hobbled by high interest rates, and the lingering impact of the war in Ukraine.
Investors backed only 36 rounds of $100 million or more for European startups in 2023, a precipitous decline from 163 rounds backed in 2022. The slump is the result of a continued slowdown of investment in Europe’s startups with $45 billion forecast to be invested this year down 38% from last year. That’s less than half of the $100 billion invested in Europe’s startups in 2021.
Valuations of Europe’s unicorns have also slipped with the herd of “dehorned” beasts now topping 52 companies, according to venture capital firm Atomico’s annual State of Europe Report. That said, the value of Europe’s tech ecosystem has bounced back to its former peak of $3 trillion thanks to new companies being formed, and down rounds, and follow-on capital invested in older startups.
“Last year we talked about a new reality and a reset after the overheated and unsustainable growth period we saw in 2021 and 2022 and now we see that’s been embedded and green shoots emerging,” Atomico partner Tom Wehmeirer told Forbes.,.
American investors have continued to pull back from European startups despite moves by Andreessen Horowitz and IVP this year to open offices in London following in the footsteps of Sequoia Capital, Bessemer Venture Partners and others. The level of growth rounds with U.S.-based investors involved have fallen to the lowest level since 2019 with a smaller dip in early stage rounds, according to the report.
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