Startups Hunker Down in Europe as Funding Shrivels

livemint.com:

reality for thousands of European startups, many of which have had to scale back expansion plans as venture-capital funding plunges following sluggish economic growth and rising interest rates. Improved returns now offered by bonds and other relatively safe investments have drawn many European investors away from riskier, less familiar asset classes such as startups. Venture-capital funding has dropped significantly in the U.S.

too, but Europe’s venture-capital recession is particularly deep, reflecting the fickleness of the continent’s investor base. The amount of venture-capital funds invested in Europe dropped by 61% in the first half of this year compared with the same period in 2022, a worse decline than in the U.S., according to PitchBook Data. The European Union’s development bank, the European Investment Bank, and five of the bloc’s members are trying to bridge the funding gap and earlier this year pledged 3.75 billion euros, equivalent to about $4.1 billion, to finance European tech companies.

Without easy access to funding, startups are cutting costs and scaling back their growth plans. GoStudent, an Austrian digital-education company, has eliminated more than 10% of its workforce and withdrawn from the U.S. market.

Glovo, a Spanish food-delivery company, earlier this year fired 250 people, about 7% of its workforce. While some hiring is still going on, especially in booming sectors such as artificial intelligence, there are currently about half as many tech job listings in Germany as a year ago, according to Otta, a platform that matches tech company jobs with candidates. The fragility of startup funding threatens Europe’s goal of fostering new businesses and sectors—an area where it has long lagged behind the