The total value for both private and public firms in the continent took a massive hit. We’re talking about a fall of nearly $2.7 trillion from an all-time high of $3.1 trillion during the latter part of 2021. The company mentioned these findings at its yearly report meeting on Wednesday.
These figures are clearly highlighting the bigger picture. And that’s linked to it being an awfully tough year for many such firms hailing in this sector. Such enterprises that were once known for their rich values are seen shares being affected by pressure from international factors. And the current Russian invasion of Ukraine happens to be one of them. This combined with a monetary policy that’s tighter than ever is also worth a mention.
Today, we’re watching the region’s Federal Reserve and a few other banks raise interest rates and try to rewind and attain a pandemic-era stimulus that starves away the growing inflation. This has ended up forcing investors to rethink their position regarding such firms that are literally in losses and whose real value now stands on the expectation of any cash flows coming in in the future.
As delineated by one of the leading partners at Atomico, the situation is challenging, to say the least. It’s a macroenvironment filled with issues that arose ever since the international financial crisis began and there doesn’t seem to be an end, just yet.
In the European continent, some firms have seen major drops in market values. Common names include Spotify and Klarna. Then we have the issue of startups which are highlighted to drop down to nearly $85 billion which is nearly 18% lesser than what had been raised in the previous year.
Yes, the year also saw some more lows as many stopped investing in the world of European technology. It’s a huge change from what we saw in 201, where, records had been shattered.
So today, it’s a reversal image of all the success witnessed from the previous year. Investors are no longer keen on making huge investments, especially those hailing from the US. So it wouldn’t be wrong to claim that we went from an era of abundance of capital to very little, where raising funds is as difficult as can be.
It all began during the second half of the year. At the start, the industry in Europe was on fire and investment levels, although not at peak, were greater at some point in 2021. But then, all of a sudden, the investments began to drop down during August and September and the year ended at a new low. At the same time, this is also when we witnessed public listings disappear into thin air.
All Europe can hope for is a bigger and brighter 2022 because as the old saying goes, optimism is key.
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by Dr. Hura Anwar via Digital Information World
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