The trend is global and is largely explained by the rise in interest rates. 2023 is therefore characterized by a decline in startup fundraising. Over the period, EY identified 715 transactions for a total of 8.3 billion euros.
“2023 will remain a year of disruption for the ecosystem,” believes the firm. Breaking, because after more than a decade of growth, French Tech recorded a drop in investments: -38% in value and -3% in volume.
GreenTech ahead of software
The decline, however, is not the only break observed. “The transformation of sectors is notable,” adds EY. Illustration with GreenTech, which is taking the lead in fundraising for the first time.
The sector “occupies first place” with 2.7 billion euros. It jumped 30% in value and 44% in volume over one year. The podium is profoundly upset. Indeed, GreenTech is supplanting software (-40% in value).
Despite the boost from AI projects, the application totals 2.1 billion euros in 2023, ahead of Life Sciences at one billion euros (volume increase of 1% and drop in value of 29%) . The sectors most affected by the decline are fintech (-73% in value) and internet services (-66%).
The United Kingdom is “struggling”
Another trend over the year: the “significant” reduction in the size of operations. Indeed, funding rounds above 50 million are those which have fallen the most, both in value (€3.8 billion, or -53%) and in volume (31 operations, or -47%).
Raises of less than €50 million also fall in value, but less sharply (€4.5 billion, or -15%). In addition, they are increasing in volume (684 operations, or +1%).
“This trend should be put into perspective with the drop in valuations, considerable for series C and much more limited for lower rounds,” analyzes EY in its venture capital barometer.
Acceleration expected for FrenchTech in 2024
In the European landscape, France consolidates its first place. It is even widening the gap with Germany, “its main contender”, whose fundraising is estimated at 6.6 billion euros (-34% in value and -19% in volume).
“The United Kingdom remains very active in Europe but remains struggling since the amounts raised have fallen this year by 39% in value and 21% in volume, although they still stand at €16.8 billion ”, number EY.
2024 should not reshuffle the cards. The firm is nevertheless counting on an “interesting” year in the field of venture capital. Thus, “the rise of sectoral growth drivers (AI, Greentech) and the announced drop in rates” should guarantee an acceleration of investments for FrenchTech. See you in early 2025 for the results.