In Q1 2023, VC deal value fell 32.1% quarter-over-quarter (QoQ) to €11.8 billion, and deal count fell 19.2% QoQ amid a challenging dealmaking environment in Europe.

2022 signalled a deceleration in deal activity across the continent, and 2023 has followed thus far. Growth has been increasingly harder to capture as inflation and monetary policy tightening have dampened capital deployment.

Furthermore, inflated pandemic-driven growth rates and bloated workforces have exacerbated the need to reduce costs and improve margins for companies across the financial landscape, ranging from startups to international, publicly listed companies. While the majority of the startups in the VC ecosystem are loss-making, capital efficiency and robust paths to profitability are the priority for investors and operators now that capital availability is constricting.