European venture funding for third-quarter 2022 continues to fall, sliding to its lowest point in nearly two years as early-stage investment shows clear signs of weakness.

Funding for the third quarter in Europe totaled $16 billion, down 44% year over year from $28 billion and down 35% quarter over quarter from $24 billion.

This downward trend for European venture funding in the past quarter is in line with global and North American funding trends. We find the largest quarterly decline on a global basis year over year since people started tracking venture funding in the mid-2000s.  

Funding in Europe is at its lowest since the fourth quarter of 2020, which totaled $13.4 billion. 

The biggest dip quarter over quarter was at early-stage funding, while late stage fell by a greater proportion year over year.

Late-stage funding

Late-stage funding continued to fall further from the second quarter into the third quarter. It reached $9.4 billion in the third quarter, down by almost a third quarter over quarter and close to half of Q3 2021 funding. 

Late-stage funding in 2021 in Europe grew over 200% year over year, as global investors sought out growth companies in Europe. Those investors have scaled back since the second quarter of 2022. 

However late-stage funding into European startups has remained a larger proportion of funding at 60% this past quarter compared to around 50% in 2020.

New unicorns 

Only four companies from Europe joined Unicorn Board this past quarter, compared to 21 new European unicorns in the second quarter of 2022. 

Cryptocurrency companies 21.co from Zurich and Copper from London joined the list. Also new to the board is sustainable blockchain provider 5ire headquartered in London. Payments company Satispay, which helps consumers and merchants avoid fees from traditional credit card providers, is the fourth European company to become a unicorn. 

It’s been a chilly time for unicorns all around: Buy now, pay later payments provider Klarnashed $39 billion in value in the second quarter and dropped off the list of the top 10 most highly valued private companies.