Hot or not: Where European VC funding went in 2023

Almost every European country saw a drop in venture capital investment this year when compared to 2022.

Startups in Europe and Israel secured €53.4 billion (about $58.7 billion) across 8,760 rounds as of Dec. 5, according to PitchBook data. Compared to last year, deal value fell 48.9%.

Only two countries, Iceland and Romania, registered an increase from 2022—albeit a very low bar. Russia and the Czech Republic were among the countries that saw the worst declines relative to last year's total.

See the map below for details on how VC investment broke down by country in 2023.   UK and Ireland Still the largest European VC hub, the UK saw a 49.6% fall in deal value as the downturn caused investors to pull back from outsize deals. Ireland's decline was even worse at 57.1%.

UK-based startups still managed to pull in €17.2 billion. Among the largest deals were lending specialist Abound's £500 million (about $638 million) round and dog food startup Butternut Box's £280 million raise. DACH Switzerland fared the best out of the DACH countries (Germany, Austria and Switzerland), with a 40.1% decline in deal value. Germany, the region's largest venture ecosystem, saw a fall of 47.1% with total capital raised amounting to €6.7 billion.

Only one German deal featured in Europe's 10 largest of the year: OpenAI competitor Aleph Alpha's more than $500 million Series B. France and Benelux Compared to its main competitors, France fared better than its peers, with a 38.1% decline in deal value. Some €8.5 billion was raised across the country. The largest rounds included a roughly €1.5 billion financing for battery developer Verkor.

Both Belgium and Luxembourg registered heavy declines of 58.9% and 80.2%, respectively, relative to 2022. Nordics Finland and Norway are both likely to see total venture investment fall below the €1 billion-mark this year after dealmaking in both countries pulled back.

Sweden, the region's largest hub, saw only €3.2 billion raised compared to €5.4 billion in 2022. However, the country does lay claim to the largest European VC deal this year courtesy of H2 Green Steel's €1.5 billion round. Iceland was one of two countries to see an increase in VC investment from last year with 6.7% more capital invested in its startups in 2023. Central and Eastern Europe Romania was the second country to register an increase in deal value, with a 4.6% rise to €113.8 million.

In Estonia, CEE's biggest VC ecosystem, capital raised fell below the €1 billion-mark to just €348.1 million. Tallinn-based battery maker Skeleton Technologies holds Central and Eastern Europe's largest VC deal with a €108 million round in October. Southern Europe Spain's total VC deal value nearly halved this year, reaching only €1.7 billion. Notable deals included car subscription startup Revel's €115 million round and shopping platform provider Wallapop's €81 million Series G extension.

Portugal, Italy and Greece suffered greater losses with the persisting downturn. Israel Israeli startups have raised €3.4 billion this year, less than half the amount of funding secured in 2022.

Notable deals included cybersecurity startup Cato Networks' $238 million round and large language model developer AI21 Labs' $208 million Series C.

Featured image by Javier Ghersi/Getty Images

This article originally appeared on PitchBook News