And yet, this year European tech has proven its resilience and shown signs of stabilisation. De- spite this tough macro environment, the ecosystem has bounced back to a value of $3 trillion, recovering the $400 billion that was wiped out last year; the layoffs that plagued 2022 have peaked and levelled off, with the worst of them seemingly behind us; Europe’s overall funding levels, while experiencing the same pullback being felt across the globe, is still the third high- est on record at $45B, indicating that the ecosystem remains resilient, and is correcting itself following the highs of 2021 and early 2022. Looking at the exit environment, the public markets have started to wake from their slumber after an incredibly quiet 昀椀rst half of the year with signs of activity in H2. Arm’s $50 billion IPO made the headlines earlier this year, paving the way for others to 昀氀oat and prising open the IPO window, ready for next year. M&A activity also picked up this year, adding $36 billion of value, but this is far from the levels recorded in 2020 and 2021. In terms of startup formation, Europe is now creating more new startups than the US, and while startup formation has slowed this year, this is largely due to the weeding out of 昀椀rst-time founders, with the share of repeat founders remaining stable. That means a class of dedicated founders who are ready to face a higher bar to raise money, attract talent and win customers. This is now critical, given the easier access to capital in the US, despite both regions having the same likelihood to scale to a $1B+ outcome. We’ve also found that talent in Europe’s ecosystem is proving to be one of Europe’s key strengths. Despite challenges in the capital markets and a subsequent risk of layoffs, Europe- an tech is not losing its strong appeal to talent; there has not been any type of mass exodus of talent out of the industry, but rather, we have seen net growth. In the last 昀椀ve years, European tech has expanded its workforce from slightly over one million employees to more than 2.3 million today. Even more encouraging is the fact that Europe is gaining from talent 昀氀owing into the ecosystem from the US, rather than losing out to them. We’re also seeing the proliferation of early-stage startups driving job creation; early-stage companies typically account for almost double the number of new joiners to the tech industry in each period, compared to growth- stage companies. This talent advantage is also bearing out in AI. Naturally, advancements in AI have dominated the media landscape, with fears that Europe is in danger of falling behind the US. The data, however, tells a different story. Not only does Europe have more AI talent than the United States, with 108,000 AI operators in Europe vs. 87,00 in the US, but also we’ve seen AI become the number one theme at Seed stage, including Mistral AI securing the largest seed round in Eu- ropean history. AI-focused companies made up 22% of all European megarounds this year, even surpassing the levels in 2022, indicating that investors’ appetite to fund the sector remains strong despite the macro turbulence. This achievement is especially impressive when com- pared with the trend in the US, where the availability of growth-stage capital has a substantial impact on the number of $100M+ rounds raised. | 8