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Europe Venture Fell In The Second Half Of 2022, But Not As Steeply As Other Regions

Illustration of injured unicorn for quarterly Europe.

Venture and growth investors invested $90 billion in European startups in 2022 — marking a 25% decline from Europe’s 2021 funding peak of $119 billion. 

Much of the slowdown was concentrated in the second half of 2022, according to an analysis of Crunchbase data. And over this past year, late-stage funding took the biggest hit, having grown more than threefold year over year in 2021. 

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Despite the decline in funding, 2022 is still significantly higher than annual funding in prior years, with 2022 close to double the $46 billion in funding raised in 2020. 

Comparing Europe

It appears that Europe has weathered the downturn better than other regions. Venture funding did not fall as sharply as North America or Asia in 2022 — markets which each declined between 36% and 39%, respectively, year over year. 

Europe has grown from a smaller foothold over the past decade compared to these leading regions — and gained a greater share of funding in the past two years, as it shot up in 2021 and did not pull back as sharply in 2022. 

This increase as a proportion of global funding, however, might not hold up in 2023. 

“Europe in general has lagged behind the U.S.,” said Hussein Kanji from Hoxton Ventures. “There’s a realistic chance that [the slowdown] might not really trigger fully in Europe until Q1 [2023],” he said, noting that Europe “fluctuates more with the markets. When times are good it goes up higher than expected, and I suspect when times are low it will go lower than expected.”

Quarterly pullback

So how does the slowdown in European venture funding look when broken down on a quarter-by-quarter basis during 2022? 

Funding for the fourth quarter was close to flat quarter over quarter and down 46% year over year. 

Again, Europe did not scale back as much as other leading regions, which declined from 58% to 63% this past quarter for the same time period.

Early stage suffered the most

The biggest cutback year over year for the fourth quarter was at early-stage funding in European startups — from $10 billion in Q4 2021 to $5 billion this past quarter. The dramatic drop at early stage is a signal that investors are adopting a wait-and-see approach to this market. 

According to Kanji, “There isn’t very much in the way of Series B, Series C, D right now in Europe. It’s really slowed down.” He acknowledged that investors seem to be oriented toward earlier fundings at seed.

Seed deals

The slowdown at seed-stage funding is also deepening, but less than the other funding stages. Seed declined by 37% year over year in the fourth quarter, totaling $1.8 billion. The fourth quarter of 2021 was around $3 billion for seed fundings.

Late stage already dropped

Late-stage funding was flat quarter over quarter, having already dropped in the third quarter. Late-stage funding was down 45% year over year for the fourth quarter, reaching $9.4 billion compared to $17 billion in Q4 2021.

European gains

Whether the gains that Europe has made over the past two years will hold will be interesting to watch in 2023. 

Late-stage funding grew threefold year over year in 2021. As global growth investors step back from investing, it is likely to continue to scale back in 2023. 

The venture community in Europe has raised more funding in recent years, primarily focused on early-stage funding. The influx of U.S. venture capital in the market — whilst they are here to stay — have the majority of their portfolio in the U.S. market, which could take some attention away from Europe in the shorter term. 

Whether the slowdown in Europe is lagging behind other leading markets and will show larger declines or is on a new footing will be interesting to watch in the volatile markets of 2023. 


The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Jan. 4, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

The most recent quarter/year will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by as much as 30 percent to 40 percent a year out.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

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