Dec 07 – In Europe, the tech industry has lost more than $400 billion in value this year. After reaching a peak of $3.1 trillion in 2021, the combined value of all public and private European tech firms has fallen to $2.7 trillion, according to venture capital firm Atomico.
The numbers confirm what tech experts saw from the sidelines – 2022 has been a rough year for tech. An 18% venture capital funding decline, combined with a recent and massive wave of job layoffs has made the future feel messy and uncertain.
Despite the rough patch, industry insiders generally remain enthusiastic about the tech industry. A survey of founders and investors in Europe revealed that 77% were optimistic about the future of the European tech space – and some more so than in previous years.
The macroeconomic conditions surrounding the technology industry have changed. The financial markets have changed (i.e., rising interest rates have harmed valuations), demand has changed, and as a result, the tech industry is maturing in new ways.
In Europe, some technology firms have clearly ‘wobbled,’ seeing precipitous drops in value. For instance, Klarna, the Swedish ‘buy now, pay later’ company reduced its valuation from $45.6 billion to $6.7 billion. In the same regard, shares of other prominent tech firms have also lost value.
Then and now
In the first half of 2022, Europe’s tech sector seemed nearly invincible in its potential for growth. However, investments slowed starting in July, and then decelerated further in the subsequent months. Few new public market listings have appeared, and as with many regions around the globe, Europe has been affected by a wave of tech job cuts.
Is the tech industry’s overall prominence receding? Experts state that recent events need to be viewed from the lens of a more protracted time horizon. Given that technology (with a special emphasis on software) powers hospitals, financial systems, schools, and vehicles, the industry’s upcoming opportunities remain significant and transformative.
For more insights into the future of tech, please see CyberTalk.org’s past coverage. Lastly, unpack transformative insights, and learn about how to make your organization more agile and secure when you subscribe to the Cybertalk.org newsletter.