For the past three years, VC firm Notion Capital has published a top 100 list of Europe’s up-and-
coming business-to-business software startups, most of them at the Series A Stage.
Along with the ranking itself, the firm also crunches numbers from Pitchbook and others to provide an overview of the funding climate for a sector that has been seen as relatively robust in the face of economic headwinds. And while the report finds reasons to be optimistic about the coming months, it seems that 2023 was a year in which VC investment in B2B software began to falter.
Findings include:
In 2023 Investment in tech startups across all sectors continuing to fall - it was down 39% -
business software experienced a decline of 59%,
The downturn in investment last year didn’t hit all B2B software businesses equally. The later
stages were affected most, a trend that reflects a parallel downturn in IPOs.
The money released through exits went up. In terms of the number of exit events, there was little
difference between 2022 and 2023 - 828 and 780 respectively.
Cloud market will continue to grow by 19% this year - far outpacing the overall tech market at 3%.
So, the generational shift of computing from the premise to the cloud continues. Plus, AI opens up
an entirely new platform of computing.
The growth potential of b2b software companies is more predictable, something that allows VCs to
assess the risk. This bodes well for the future once economic confidence begins to pick up.
Much of the opportunity now lies in automating the work of employees in the SME and medium-
sized sector. Growing interest of investors in green solutions. This in turn provides a new market
for B2B software startups.
https://www.forbes.com/sites/trevorclawson/2024/02/29/cloudy-weather-2023-was-a-tough-year-
for-europes-saas-startups/?sh=19d216ed1eec
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