After an exceptional 2021, when money was virtually free, startups around the world have experienced a brutal year in 2022.

As inflation started to ramp up and central banks increased rates, the BVP Nasdaq Emerging Cloud Index, which tracks public tech valuations in the US, saw a 50% drop in one year, bringing valuations back to pre-Covid levels. This drop in public tech valuations had a knock-on effect on private tech valuations with €500bn in total funding in 2022 (a 33% decrease from the previous year) and just €73bn in Q4-22 (a 65% decrease from Q4-21).

France, however, has managed to weather the storm somewhat, possibly due to the support of the BPI (the French State Bank), which has invested massively in the French Tech ecosystem for the last ten years. As a result, France saw an all-time high in total funding for 2022, reaching almost €14bn, though the €2bn total raised in Q4-22 suggests that the trend is now much lower. French Tech exits also returned to their long-lasting trend of €5bn in total annual deal value with no real outlier apart from Deezer, which lost 50% of its value from its initial quotation at €1bn six months ago.

As we look towards 2023, the question on everyone’s mind is: what’s next?

Public tech valuations appear to be stabilizing in H2-22, with the BVP Nasdaq Emerging Cloud Index only dropping by 5%. In addition, as inflation and interest rate increases show signs of stabilization at the end of the year – the US consumer price index (CPI) rose only 0.1% from October to November – some VC investors and acquirors may anticipate an upturn in the economy in H2-23.

Arthur Porré, Founding Partner – Jan. 3rd, 2023