2023-12-16 08:42:00
We had been fearing it for quite a while, as the negative signals accumulated over the months. Sudden rise in interest rates, persistent inflationary pressures, mediocre economic growth, worsening and extension of geopolitical tensions… With such headwinds, the venture capital market would not be able to repeat, in 2023, the performances observed in both previous years. Today we have numerical confirmation. And, to put it simply, it’s a cold shower!
As it had already done in December 2022, the “Business Intelligence” department of Finance&Invest Brussels has done its accounts. Pierre Hermant, CEO of the financial arm of the Brussels Region, and Sandrine Evrard, author of the study, presented to La Libre the results of the count of capital fundraising operations carried out, since the start of the year, by Belgian technology start-ups and scale-ups. (1)
Belgian start-ups and scale-ups raised a record amount of 2 billion euros in 2022
Everyone is affected
“After the record year of 2022 when the milestone of 2 billion euros of funds raised was reached, the Belgian venture capital market experienced a drastic reduction in 2023,” begins Sandrine Evrard. According to the latest information collected by this data analysis expert, the total amount of capital raised by Belgian tech companies increased from 2.04 billion to 817 million euros over the last twelve months. That is a drop of 58%! If we analyze the number fundraising, the drop is less severe: 213 operations were recorded at the end of November 2023, compared to 286 at the end of November 2022. That is, a quarter fewer deals compared to 2022. “The month of December, currently very calm, should not reverse these trends,” believes Sandrine Evrard.
The Belgian venture capital market in 2023 ©IPM Graphics
This dark year for venture capital is not specific to the Belgian market. The decline in venture capital investments is being felt on all continents. In its very recent European State of Tech report, the Atomico fund estimates that the amounts raised will be around 45 billion dollars this year, following 82 billion in 2022 and 100 billion in 2021.
Significantly fewer big deals
Analysis of Belgian data reveals a clear contrast, between 2022 and 2023, in the value of operations. Last year, the growth of the Belgian venture capital market was generated by 15 operations of more than 30 million euros (this was the case for scale-ups such as Cohabs, Cowboy, Keyrock, Aerospacelab, etc.) . These operations alone represented 50% of the funds raised. This year, there are only three fundraisings of 30 million or more. These are, in this case, three Flemish companies: Agomab, Aphea Bio and Dualyx (see table below).
Fundraising above 10 million euros ©IPM Graphics
The drop in fundraising has affected all financing segments. “The contraction, which began at the end of 2022, continued for ‘early stage’ financing (between 200,000 and 1 million euros), explains Sandrine Evrard. The series A segment (from 1 to 5 million euros) shows better resistance”. One explanation is that these Series A rounds this year include a good number of follow-on investments. “While waiting for better market prospects, existing shareholders continue to support their start-ups or scale-ups”. For Pierre Hermant, the riskier environment and rising interest rates contribute to putting pressure on valuations. “Fundraising takes longer to complete, adds the CEO of Finance&Invest Brussels. Start-ups must also adapt to current market conditions by prioritizing the achievement of break-even and the generation of cash flows rather than capital-intensive growth at all costs”.
Biotech and healthtech head on
At the sectoral level, the breakdown of funds raised in 2023 confirms that Belgium is a territory very popular with investors for technology companies active in the health field. Biotech and healthtech represent 44% of the total amount raised this year. Food & agritech completes the leading group of capital investments. Next is the climate tech & energy category, which demonstrates the growing interest of investors in technologies to adapt to climate change, and fintech.
The sectoral breakdown of fundraising ©IPM Graphics
A final word on the Brussels Region, where Finance&Invest Brussels operates. Since the start of the year, 141.6 million euros have been raised for the benefit of 48 tech start-ups and scale-ups. Unlike in 2022, no fundraising of more than 30 million was carried out, which explains the sharp decrease in the amounts raised (659 million as of November 30, 2022). This did not prevent Finance&Invest Brussels from confirming its position as a leading investor by taking part in the financing of half of the 48 companies.
(1) The Finance&Invest Brussels study takes into consideration fundraising in capital or in the form of convertible bonds in technological start-ups and scale-ups, including biotechs, of a minimum amount of 200,000 euros. Investments in listed companies, as well as “buy-outs” and secondary operations (transfer of shares between parties, as the company Odoo carried out this year), are not taken into account.
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