Late-stage funding crunch & energy boom – EMEA startups in Q3 2022

A quick check-in on the numbers behind startups and venture capital (VC) in Europe, the Middle East and Africa (EMEA) in Q3 2022 confirms industry sentiment about a cautious outlook from investor, and turbulent conditions for late-stage tech.

Report - Startups & Venture Capital in EMEA – Q3 2022.

Public vs. private fortunes

By the end of Q3 2022, the total value of tech companies headquartered in EMEA had fallen slightly from a peak in December 2021. However, this drop is attributed to public companies, where markets have been volatile to say the least in 2022. These companies lost 35% of their value in the first three quarters of the year.

Chart showing combined enterprise value of EMEA startups as of Q3 2022.

Private tech companies in EMEA, however, have continued to grow in paper value, up 26% on year end 2021, and now worth a collective $2.4T.

Funding “return to normal?”

EMEA VC funding was at its lowest level since 2020 in Q3. EMEA startups raised $20.7B. The trend does seemingly show that 2021 was an anomalous year, and activity has returned to “normal” levels.

Chart showing quarterly EMEA VC funding since 2015.

The difference in funding totals has come from a particular pullback in late-stage funding, while early-stage funding is largely unaffected.

Chart showing breakdown of early and late-state EMEA VC funding from Q1 2021 to Q3 2022.

And different sectors have had different fortunes in Q3. Energy, Legal and Semiconductor startups saw strong growth, while consumer segments including Fashion, Gaming and Food fared worse.

Chart showing breakdown of venture capital (VC) funding growth by industry in EMEA, with Energy, Legal and Semiconductors on top.

UK and Kenya top funding charts

As usual the UK topped the list of funding by country in EMEA in Q3 2022, with UK startups raising $4B, or 20% of the region’s funding. The UK was followed by Sweden, France and Germany.

Chart showing EMEA VC funding in Q3 2022 by country, with UK, Sweden and Germany on top.

But in terms of the greatest progress made, Kenya and Iceland showed the biggest year on year growth in funding in Q3, Kenya’s funding growing 5.5x year on year.

Chart showing EMEA funding growth year on year in Q3 2022 by country, with Kenya and Iceland coming out on top.

International comparison

VC investment has been slowing everywhere, but there’s been a bit less of a shock in EMEA as in North America and the rest of Asia. Funding in EMEA was down by 43% in Q3 compared to the same quarter last year, while in the other regions the drop was over 50%.

Charts showing VC funding by global region, North America, EMEA and rest of Asia

The exit landscape for startups at the moment is looking very quiet. Public listings have all but disappeared, a trend likely to stretch through next year. Though there is a fair bit of activity in low-mid cap M&A.

Chart showing startup exit value and transaction count quarterly for 2 years to Q3 2022.

Download the full report for EMEA VC funding insights, extra analysis on unicorn creation, new VC funds, investment by investor location, and the impact ecosystem.

Report - Startups & Venture Capital in EMEA – Q3 2022.