Thursday, December 8, 2022

"The State of European Tech 2022"

This is the big one.

If Europe is to have any chance at avoiding the economic abyss, with all the major industrial corporations expanding outside of the Eurozone, it will have to be in futureco that growth is developed.

Or else the European future will be resigned to becoming a backwater, something akin to Fordlandia in Brazil, with nature slowly retaking its own:

Fordlândia hospital in ruins, image by RodrigoCruzatti (CC BY 4.0)

From TechCrunch, December 6:

Atomico report: European startups on track to raise $85B this year, down from $100B+ in 2021

Startups across Europe are on track to raise $85 billion in funding this year — a drop of $15 billion on 2021 when funding passed $100 billion, according to a new report published today. The figures come from London VC firm Atomico’s annual State of European Tech, which has become a bellwether for the tech industry in the region, and they underscore the pressure bearing down on it as the region grapples with an ongoing war in Ukraine, a sagging economy and specifically tech industry, and a population wobbling to get back on its feet and productive again after two years of the COVID-19 pandemic.

Altogether, the European tech industry has lost about $400 billion in value, Atomico said: It is now valued at $2.7 trillion. And in keeping with those losses, it also notes that tech layoffs in the region will shape up to be about 14,000 for the year — a giant figure, but still only 7% of the total number of layoffs globally, which number about 200,000.

The report encompasses a survey of VCs and founders, as well as research from third-party firms like Dealroom.

The total-raised figure is not entirely a grim message when put into context. Atomico noted that funding for the year actually started out looking like it would exceed 2021 levels. Then in July, activity dropped off a cliff and hasn’t come back.

That’s not a great sign going into 2023, but it also seems to indicate that 2021’s $100 billion raised was also an outlier year. The total funding raised in 2020, for example (a year when all kinds of activity ground to a halt with the start of the pandemic), was just $39 billion....


As we have said for years, it is not small companies that create jobs, it is new companies.*

From Atomico:

*January 2013 
One More Time: It's Not Small Businesses that Create Jobs...'s small YOUNG businesses.

Long time readers are probably getting sick of the topic but it really matters when targeting government efforts at job creation. The sole-proprietor attorney making a couple hundred K in Chattanooga is not going to be creating jobs even if you cut his top marginal tax rate to 5%.

There are millions of people who have small businesses as a way to create a job for themselves and don't want the headaches and/or risks of expanding. There are millions more that are in declining businesses that can't expand. And on and on.... 

However!!, If the big guys leave, the implications for small and medium enterprises are millions of job losses, something the Germans used to understand:

The German concern for their small and medium sized enterprises goes back quite a ways. Here's an old-timey pic via Wikipedia:
Representation of the supporting
role of the Mittelstand in Walter Wilhelms
„Mission des Mittelstandes“ (Mission of the Mittelstand, 1925)

Without the Mittelstand you are without Germany's export engine and without exports (and with Mutti's recent comments on free speech, yikes!) you are left with a Teutonic Belarus.
But without the charm.