- December 16, 2022
- Posted by: EBAN Team
- Category: News, Uncategorized
By the EBAN Board
Another year is nearing its end and typically this is the time when we reflect on the previous 12 months in order to formulate some conclusions and forecasts for 2023. Since the start of the Angel Observer, a year ago (yes the AO is now 1 year old), this publication has monitored and reported on European angel investing. Let’s examine how our community did in 2022 and what to keep in mind for our next trip around the sun:
2022 has proven to be an extremely challenging year. All of Europe is affected by war, rising living expenses, the consequences of climate change, political unrest, and other unfortunate issues that may be added to this depressing list. The Russian invasion of Ukraine caused a dismal start to 2022 that could not leave the angel community indifferent. EBAN immediately responded by denouncing Russia’s actions, and we moved to establish the ‘’EBAN Stands with Ukraine’’ page as a hub for the angel investing community to unite and offer support where it was needed. We were pleased to see the overall response from the EU startup and angel communities.
According to industry reports by EIF, Crunchbase, and AFME, this circumstance, along with the post-pandemic recovery, is beginning to slow down angel activity. More recently, Atomico presented its ”State of European Tech” report, where it affirmed that interest rates, inflation, geopolitics, and the sentiment of the equity market have all emerged as defining characteristics of this year. The unprecedented level of investment activity in 2021 (up by 90% as noted in the EBAN Statistics Compendium 2021) continued into 2022. At the conclusion of the first quarter, investment levels were actually tracking about 52% higher than in 2021. Even at the end of the first half of the year in June, the total capital invested was still around 4% more than it was at the same time previous year. The 18-month-long investment frenzy, however, started to calm down in July. Monthly investment levels have decreased to levels last seen in 2018, or approximately $3 to $5 billion, each month since August and September, when the real collapse began. As a result, total investment in the third quarter of 2022 was less than 40% lower than it was in the corresponding quarter of 2021, in accordance with the ”State of European Tech”’ report results. We anticipate that business angel investment activity overall will experience a modest decline through the year 2022.
The good news is that the situation can only get better from here with such severe challenges for the angel community. The current situation prompts us to think of the expression ”when times are tough, the tough get going”. Due to the current economic climate, several of the most innovative and disruptive companies will emerge in the upcoming months. Therefore, as an angel, now is the time to invest, and being an angel investor in the coming years will be very profitable and rewarding.
The angel community in Europe is currently working on important matters including deep-tech and technology transfer, impact investing, cross-border investment, and women’s involvement in angel investing. These appear to be the important issues that EU business angels will focus on during 2023 as well. EBAN is committed to addressing unresolved problems, such as advancing impact investing through research and our upcoming EBAN Impact Summit, promoting gender equality in the startup and investment ecosystem with our manifesto, and fostering cross-border investment via events in numerous European cities, such as the next edition of Annual Congress in Greece, the 2023 EAIS in Brussels, and many others.
Enjoy the holiday season and savor your winter break. See you again next year for more angel investing news!