Apr. 04th, 2023
Have we reached the bottom?
When January is up, the year is up. Let’s hope this saying will come true as the BVP Nasdaq Emerging Cloud Index, which tracks public tech valuations in the US, rose 11.9% in January (and even 25.8% if measured until Feb 3rd).
However, the optimism was short-lived, as SVB, Signature Bank and Credit Suisse collapsed in March. Despite this crisis, the EMCloud Index has surprisingly shown some resilience, still up by 13.9% since the beginning of the year.
Looking forward, macroeconomic conditions are not promising for 2023. The International Monetary Fund predicts inflation to remain high at 6.6%, compared to 8.8% in 2022, while global GDP growth is expected to remain low at 2.9%, compared to 3.4% in 2022. The situation in Ukraine appears stable, but there is still the possibility of escalating tensions, which could drive up global food prices.
In the Tech industry, Q1-23 saw a decrease in startup funding, with only $90bn raised, the worst quarter since Q1-20 and a 50% drop from Q1-22. However, there are signs of stabilization, as Q1-23 only saw a 9% decrease compared to the previous quarter.
French Tech experienced a similar trend, with only €1.8bn raised in Q1-23, a 66% decrease from Q1-22, its all-time high. Despite this, the sector is showing signs of stabilization, with a 13% decrease from the previous quarter. Q1-23 also saw 129 exits, an all-time high, but only €615m in total exit value.
Expectations are that the next two quarters will remain slow, but the market may pick up at the end of the year if the IMF’s 2024 forecasts hold true, with GDP growth expected to increase to 3.1% and inflation to drop to 4.3%.
Arthur Porré, Founding Partner, Apr. 4th, 2023