{"id":13131,"date":"2023-06-15T10:00:43","date_gmt":"2023-06-15T10:00:43","guid":{"rendered":"http:\/\/TheNextWeb=1397438"},"modified":"2023-06-15T10:00:43","modified_gmt":"2023-06-15T10:00:43","slug":"startup-genome-2022-was-tough-but-a-recession-is-a-great-time-to-invest-in-tech","status":"publish","type":"post","link":"https:\/\/www.londonchiropracter.com\/?p=13131","title":{"rendered":"Startup Genome: 2022 was tough \u2014 but a recession is a great time to invest in tech"},"content":{"rendered":"\n

The tech sector is experiencing an unprecedented slowdown, but analysts see immense opportunities for startups<\/a> that survive the downturn.<\/span><\/p>\n

Across the world, VC funding<\/a> in 2022 plummeted by 35% from the previous year, according to a new study from Startup Genome and the Global Entrepreneurship Network (GEN). The Global Startup Ecosystem Report 2023<\/a><\/span> <\/span>(GSER 2023) also observed slowdowns in deal counts, exits, and unicorns. But a deeper dive unearths grounds for optimism.<\/span><\/p>\n

After a year of heavy market losses, inflation is now slowing and economic growth appears to be holding up. The headwinds remain challenging, but the GSER 2023 notes that recessions are good times to invest in startups. <\/span><\/p>\n

Historical trends substantiate the theory. Startups funded during the Great Recession had higher exit multiples over total money invested than those funded during economic expansions. During downturn years, startups that achieved Series A financing were able to multiply by 20 the value of that round by the time of exit. <\/span><\/p>\n

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\u201cLean economic times can produce high-performing startups.<\/p>\n<\/p><\/div>\n<\/blockquote>\n

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Tangible examples of successful startups born in a recession include Spotify raising a Series A in 2008, Twitter doing the same in 2007, and Flipkart in 2009. Similar successes emerged after the 2001 dot-com crash. When the bubble burst, pessimists tolled the death knell for the tech industry. Within a few years, their prediction was proven entirely wrong.<\/span><\/p>\n

The spree of mass layoffs is also set to unleash a fresh wave of startups. A vast pool of elite talent with tech know-how and industry expertise is now looking for new ventures. <\/span><\/p>\n

\u201cGiven that over half the companies on the 2009 Fortune 500 list launched during a recession or bear market, we know that lean economic times can produce high-performing startups,\u201d said Jonathan Ortmans, Founder and President of GEN. <\/span><\/p>\n

\u201cDespite recent downturns in investment, this report foreshadows where we might see the world\u2019s most disruptive and solution-driven companies emerge in the years to come \u2014 and provides unparalleled insights that policymakers and community leaders need to build resilient startup ecosystems.\u201d<\/span><\/p>\n

Furthermore, the report notes that high-interest rates can actually benefit startups. They concentrate capital and talent into ventures that create value, weeding out the less competitive ventures. Indeed, while fewer startups were funded in 2022, they received larger sums. According to the GSER, the average deal size grew by 2%.<\/span><\/p>\n

Increasingly, those investments target artificial intelligence. AI and big data was the sub-sector with the highest count of total VC deals in 2022, making up 28% of the global share. <\/span><\/p>\n

European prospects<\/h2>\n

The report highlights numerous positives for European startups. Despite macroeconomic woes and geopolitical tensions, 2022 was the second-biggest year overall for European VC activity after 2021, with deal count and amount surpassing pre-2021 numbers.<\/span><\/p>\n

The continent has also captured more unicorn land. While there\u2019s been a global slowdown in the number of startups valued at over $1 billion, Europe\u2019s share of unicorns increased from 14% to 20% in 2022.  <\/span><\/p>\n

Of the seven ecosystems that produced their first tech unicorn in 2022, three were in Europe: the Sofia-based Payhawk, Zagreb\u2019s Rimac, and Rohlik Group in Prague.<\/span><\/p>\n

Europe is also the most represented region in the GSER\u2019s \u201cEmerging Ecosystems,\u201d which is comprised of startup communities at earlier stages of growth. The continent expanded its share from 37% to 41% since last year, and contains the number one ranked ecosystem: Copenhagen. <\/span><\/p>\n

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<\/i><\/a>Europe\u2019s top five ecosystems in each category. Credit: Startup Genome<\/figcaption>