It is that time of year. The turkey hasn’t even seen the oven, but we all know the year is ending. And, before we start looking optimistically towards 2023, we all cast a backward glance to 2022.
It wasn’t quite the year we deserved after the impact of Covid in 2020 and 2021. With the invasion of Ukraine at the beginning of the year, the melodrama of UK politics in the middle, and the tragicomic takeover of Twitter by Elon Musk at the end, it’s easy to think that things haven’t quite gone as they should, especially after a record-breaking 2021.
But although the bad — or bizarre — the news might have dominated 2022, it still wasn’t that bad a year. More than €100 billion were invested in European tech startups, despite the backdrop of global political and economic instability.
The environmental and social impact of startups became more important, with 35% of European VCs increasing their focus on what their investments can do in society. And 11 impact startups became unicorns this year, from a total of 31, and 60% of them were based in the UK, France, Sweden, or Germany.
The Russian invasion of Ukraine
Few were surprised when Putin launched his invasion of Ukraine after years of sabre-rattling. The action has had far-reaching consequences, and the tech sector, which was vibrant in Ukraine, has felt the effects as much as anywhere.
However, the tech sector has also used its talents to help Ukraine’s defence. Ukrainian companies have played their part, looking after their staff and redirecting resources, both practical and financial, to help their nation’s defence. And they were joined by companies outside Ukraine, too. Perhaps the most practical was the provision of drones by Peter Thiel’s Quantum-Systems.
There has also been works to keep Ukraine moving. As noted by Relevant Software’s Anna Dziuba, it is important that the Ukrainian economy survives. And venture capital has stepped in to help with that. September saw the launch of two funds, the Blue and Yellow Heritage Fund in New York, which focuses exclusively on Ukrainian startups. Meanwhile, in London, Ukraine’s President Zelenskyy joined by video link for the formal launch of Horizon Capital’s $250 million Ukraine-focused fund.
A gloomy economic outlook
Although the UK economy had some uniquely British stresses, it was not alone in feeling pressure. And the tech sector has had its fair share of failures in a difficult climate.
Made.com started with lofty ambitions of a £1 billion valuation. And it got to £775 million before a spectacular crash left it worth less than £2 million and laying off a third of its workforce. And if a staple like home furnishing can’t survive, was there any hope for air-taxi hopeful Kittyhawk? Despite backing from Larry Page, early adopters saw deposits returned after safety and battery problems. The future is not quite here yet, it seems.
Personal scooters also failed. Bird, the micromobility company, became the fastest to achieve a $1 billion valuation in 2018, but by this year, it was struggling, laying off a quarter of its workforce and facing bankruptcy. Gorillas, the rapid grocery delivery service, followed a similar path, expanding rapidly across nine countries, before seeing its valuation drop from $3 billion to $1.2 billion and a sale to Getir.
A year of layoffs…
For those working in the tech sector, layoffs loomed around the corner. Perhaps the highest profile was Elon Musk’s decision to shed thousands of staff from Twitter. But giants like Microsoft, Meta, and Salesforce all laid off staff in 2022. But even the smaller players had to downsize. Double unicorn from the UK, BNPL fintech Zilch shed off its staff, and was one of many to reduce their headcount.
It’s not all bad news, though. Despite the surge in layoffs during 2022, there were still plenty of businesses hiring.
…but also some big funding rounds
Bad news tends to get the headlines. But there were some big funding rounds there too, so there are still plenty who are optimistic about the future.
Although Tesla (yes, Elon Musk again) might grab attention when it comes to electric vehicles, every marque is developing them, and Swedish battery firm Northvolt secured $1.1 billion to expand its battery manufacture to support EVs. And in e-commerce, Turkish platform Trendyol, became Turkey’s first decacorn with a $1.5 billion round to expand its range of fulfilment, last-mile, and finance services.
But fintech did particularly well in 2022. FNZ, for example, became one of the UK’s decacorns with a $1.5 billion round. Neobank Monzo, continued to raise funds, and is valued at $4.5 billion, making it Europe’s third-largest challenger bank. And at the beginning of the year, London-based payments processor Checkout.com raised $1 billion in series D funding to increase its valuation to $40 billion.
A stampede of unicorns
Finally, 2022 saw 31 new unicorns across Europe.
Payhawk, a platform that combines and simplifies processes for finance teams, closed a Series B round that made it Bulgaria’s first unicorn. In Croatia, EV supercar maker Rimac Group became a unicorn after a funding round in which investors included Porsche. And in Lithuania, Nord Security, best known for its NordVPN product, also became a unicorn after raising funds to support its continued growth. Meanwhile, closer to home, London’s Thought Machine, which sells cloud-based B2B banking services, joined the unicorn club with a $200 million Series C round.
Finally, motivated by Amazon’s decision not to share its robotics technology, French startup Exotec designed its own robot, and took their valuation to $2 billion this year.
2022 might have brought flying taxis closer, but at least we will enter the future — or at least 2023 — with more robots!
Picture credits: Depositphotos
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