Don’t miss out on the GamesBeat Summit excitement! Tune in now to catch all of the live and virtual sessions here.
Are you curious about the state of the startup world? According to the Global Startup Ecosystem report, the number of tech unicorns fell by 40% in 2022 due to a decline in venture capital investments during the economic downturn.
Despite this, the report suggests that a recession can be a good time to invest in startups. High interest rates can benefit startups by concentrating capital and talent into ventures that create value. Startups funded during the Great Recession had slightly higher exit multiples over total money invested than those funded during economic expansions.
“We are confident that, equipped with the right knowledge, entrepreneurs, policymakers, and community leaders everywhere can leverage opportunities to come together and show how innovative technologies can not only continue to drive growth and job creation but simultaneously help save the planet and ensure a better future for everyone,” said JF Gauthier, CEO of Startup Genome.
VC weakening
The report also notes that VC funding globally began its downward trend in the first quarter of 2022, dropping 13% from Q4 2021. Overall, 2022 declined by 35% from 2021.
However, despite fewer startups being funded in 2022 globally, they received larger sums. The average deal size grew 2%, with an 18% decline in the number of deals and a 17% decline in deal amount.
Reflecting AI’s increasing use and intersection with other sub-sectors, AI and Big Data was the sub-sector with the highest count of total VC deals in 2022, making up 28% of the global share.
Regional VC investments
Asia was the least impacted global region in terms of early-stage funding amount, dropping just a single percentage point from 2021 to 2022. In 2022, the amount of early-stage funding in Europe was down 15% from 2021, but the average early-stage deal amount grew by 7% due to a significant reduction in the number of early-stage deals.
North America is still the world’s leading startup nation, making up 50% of the top 30, plus runners-up ranking. The top three ecosystems have maintained their ranking positions from 2020, with Silicon Valley at the top, followed by New York City and London tied at No. 2.
“Despite recent downturns in investment, this report foreshadows where we might see the world’s most disruptive and solution-driven companies emerge in the years to come — and provides unparalleled insights that policymakers and community leaders need to build resilient startup ecosystems,” said Jonathan Ortmans, president of the Global Entrepreneurship Network.
GamesBeat’s creed when covering the game industry is “where passion meets business.” We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.
A recent report by the global startup ecosystem has shown that tech unicorns have taken a 40% drop in the year of 2022. A tech unicorn is defined as a technology company that is valued at $1 billion or more, and this highly-coveted status can be achieved by meeting certain criteria such as having a vast and growing customer base.
Due to the ongoing world health crisis, many tech companies have taken a significant hit, leading to the 40% decline. Additionally, venture capital investment in tech companies from 2019 to 2020 has seen a 22% decrease due to economic instability, and this decrease has only intensified in 2020. These drops have made the process of becoming a tech unicorn difficult for many companies, even those backed by skilled and experienced entrepreneurs.
While tech unicorns have seen a drop in recent months, other areas of the startup ecosystem have seen considerable growth. The combined revenue of tech unicorn companies rose by 5% in 2020; this is largely due to a surge in demand for digital services from the general public. Companies that have adopted digital strategies and technologies have seen an increase in sales and profits, a sign of a promising and growing space for innovation.
In terms of global regions, the jump in digital growth has affected Europe and North America the most. In 2020, European tech companies grew 25%, a significant rise compared to the same time period in the previous year. This growth reflects the general comeback of European startups as well as the continent’s investments into tech.
Overall, while tech unicorns may have seen a decrease in 2020, the global startup ecosystem is continuing to progress and evolve. As the world continues to face many challenging issues, no doubt the startup space will continue to prove its resilience and importance.
