Investments in European tech sector plummeting; Netherlands doing relatively well

Investments in European technology companies will be 45 percent lower this year than in 2022, the British investor Atomico forecast in its State of European Tech report. However, it does see some bright spots for the future of the sector, and the Netherlands is doing relatively well, the Financieele Dagblad reports.

Declining investments showed that this year was a more difficult environment for the tech sector than the two previous years, and 2024 will likely be even more painful, Tom Wehmeier, a partner at Atomico, said. Investments will amount to 41 billion euros this year, compared to 75 billion euros in 2022. Atomico blames the decline on a combination of falling valuations, higher interest rates, and economic headwinds.

The Netherlands is doing pretty well. Investments this year will amount to 1.9 billion euros, a decrease of 21 percent. That is the lowest decrease of all European countries. “The Netherlands is rising to the top five with the highest tech investments in Europe. That shows the strength of the ecosystem,” the investor said.

This year and next will be pretty grim for the tech sector. “But if you look at the longer term, there is reason to be positive,” Wehmeier continued.

The European tech sector is growing, with more startups opening than in the United States for several consecutive years. The number of employees in the sector also keeps growing, to 2.3 million this year. Venture capital in Europe achieves better long-term returns than American competitors, and the European tech sector is currently worth around 2.740 billion euros, reversing last year’s decline.